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General Discussion => Post-FIRE => Topic started by: hoping2retire35 on August 24, 2017, 11:10:31 AM

Title: FICA-if you worked less than 10 years?
Post by: hoping2retire35 on August 24, 2017, 11:10:31 AM
Has anyone worked less than 10 years and not counting on this benefit? I would guess missing out on SS would be acceptable but what about Medicare? What is your plan?
Title: Re: FICA-if you worked less than 10 years?
Post by: GenXbiker on August 24, 2017, 11:22:47 AM
I think there are purchase options for Medicare if you haven't worked the minimal requirement.
Title: Re: FICA-if you worked less than 10 years?
Post by: Mr. Green on August 24, 2017, 12:25:14 PM
Not earning 40 credits for Social Security might just be the worst thing one could do financially. Its the ultimate safety net and will be there regardless of what might happen to one's own personal fortune before 65 (or 67). At just over $1,000 per credit it's almost impossible not to earn 40 credits. I suppose if one we're self employed and grossly underreported profits it could be possible.

I'm not including someone who might be entitled to a spousal benefit or disability, and has not earned credits, but rather someone who doesn't earn the 40 and the result means no SS income in old age.
Title: Re: FICA-if you worked less than 10 years?
Post by: MrMoogle on August 24, 2017, 01:31:27 PM
Not earning 40 credits for Social Security might just be the worst thing one could do financially. Its the ultimate safety net and will be there regardless of what might happen to one's own personal fortune before 65 (or 67). At just over $1,000 per credit it's almost impossible not to earn 40 credits. I suppose if one we're self employed and grossly underreported profits it could be possible.

I'm not including someone who might be entitled to a spousal benefit or disability, and has not earned credits, but rather someone who doesn't earn the 40 and the result means no SS income in old age.
I was FI ~18 months ago.  I hit 40 credits after the first quarter of this year.  It's not impossible to save up before that 10 year mark.  I personally just have bigger plans in retirement than I do while I'm working, so I'm saving up a bit more.
Title: Re: FICA-if you worked less than 10 years?
Post by: tralfamadorian on August 24, 2017, 03:50:56 PM
I agree- get those credits.  If you are FI before the 40 credit mark, then find a fun part time job. 
Title: Re: FICA-if you worked less than 10 years?
Post by: Mr. Green on August 24, 2017, 05:49:13 PM
I'm sure its possible to FIRE before earning 40 credits if you have a high income right out of the gate and save a ton right from the beginning. I still think it's unwise not to earn them. Social Security is the best safety net you can have. It's guaranteed income that isn't based on your own personal investing or spending decisions. It's exactly what it was created for, to ensure old people aren't on the street. I take incredible comfort in knowing that I could FIRE in my 30s and fuck it up later in life, ending up penniless in my mid-60s and social security will keep me from being homeless. Someone only earning 40 credits may not get much of a benefit but it beats having absolutely no income and possibly being too old to do anything about it.
Title: Re: FICA-if you worked less than 10 years?
Post by: Lives to travel on August 25, 2017, 10:29:58 AM
Also remember that while you're in at 10 years, your final payment stream is calculated based on income received over 35 years of work.  So you could potentially retire after 10 years, and have 25 years worth of zeros factoring in to your averages.

Maybe not a reason to keep working, but keep it in mind...
Title: Re: FICA-if you worked less than 10 years?
Post by: Paul der Krake on August 25, 2017, 10:50:57 AM
Also remember that while you're in at 10 years, your final payment stream is calculated based on income received over 35 years of work.  So you could potentially retire after 10 years, and have 25 years worth of zeros factoring in to your averages.

Maybe not a reason to keep working, but keep it in mind...
The way SS is calculated, working longer improves the payout only very marginally for most people in a position to FIRE.

http://rootofgood.com/early-retirement-social-security/

OP, just get the 40 credits. It's absurdly easy to get them. Any seasonal or part time job for a couple weeks every couple years until you have them.
Title: Re: FICA-if you worked less than 10 years?
Post by: GenXbiker on August 25, 2017, 11:05:09 AM
I think there are purchase options for Medicare if you haven't worked the minimal requirement.

To add to my previous post regarding Medicare:

Part A premium

Most people don't pay a monthly premium for Part A (sometimes called "premium-free Part A"). If you buy Part A, you'll pay up to $413 each month. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $413. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $227.

Part B premium

The standard Part B premium amount is $134 (or higher depending on your income). However, most people who get Social Security benefits will pay less than this amount ($109 on average)

https://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html
Title: Re: FICA-if you worked less than 10 years?
Post by: spud1987 on August 25, 2017, 03:02:33 PM
I was worried about this until I saw my SSA report (you can look this up online). I had random part-time jobs until my first "real" job at age 23, meaning I hit 40 credits pretty easy. That being said, I only have about 7 years of high earnings, so my SS check would be quite small if I FIRE soon and you include the highest 35 years of earnings in the SS calc.
Title: Re: FICA-if you worked less than 10 years?
Post by: CanuckExpat on August 25, 2017, 10:41:40 PM
My wife and I may or may not be in the retired but not yet 40 credit club. I think it's smart to get to 40 credits by the time you are sixty five, but if you stop working in your 30s, you'll probably find enough fun work now and then that will get you to 40 credits even if by accident.
Title: Re: FICA-if you worked less than 10 years?
Post by: StetsTerhune on September 01, 2017, 02:14:32 AM
"Retired" with 8 years of credits. I have over 30 years to worry about it, so I'm not concerned. I think there's a pretty small chance I won't do some paid work at some point in my life just for fun. If I get to 60 and still need some, I'll go work part-time at Walmart or something for a few months at a time.

Medicare is a much bigger deal than the social security for me, but both are a big enough deal to get done.

It's been a long time since I ran the calculations.  The final payout is based on the average of your top 35 years (individual years are maxed out), but it's regressive, so even though I only have 8 years of salary and my average is only ~25% of my salary, my payout would be more like 70% of what it would be if I had 35 years of that salary.
Title: Re: FICA-if you worked less than 10 years?
Post by: Dicey on September 02, 2017, 10:39:55 AM
I hit 40 quarters well before FIRE, because I didn't retire especially young. In reviewing my 35 years of earnings records, there were a couple of years of very low wages when I was in college. I debated working a few more years, or just getting a PT job to knock out those low numbers. Turns out they're adjusted for inflation, so not quite the drag they seem. Pulled the trigger, never looked back.

That said, get the 40 quarters. It might prove to be the best investment you'll ever make.
Title: Re: FICA-if you worked less than 10 years?
Post by: tj on September 02, 2017, 01:34:41 PM
Quote
Someone only earning 40 credits may not get much of a benefit but it beats having absolutely no income and possibly being too old to do anything about it.

What's your definition of low? 10 years at 50k the last 10 years would get you at just under $1,400 per month of benefits.

The "first bend point", where you get the most bang for your buck, is just under half of that.

https://thefinancebuff.com/early-retirement-social-security-benefits.html


Title: Re: FICA-if you worked less than 10 years?
Post by: jim555 on September 02, 2017, 02:18:48 PM
It is SO worth it to get the 40 quarters!
Title: Re: FICA-if you worked less than 10 years?
Post by: Mr. Green on September 02, 2017, 02:43:19 PM
Quote
Someone only earning 40 credits may not get much of a benefit but it beats having absolutely no income and possibly being too old to do anything about it.

What's your definition of low? 10 years at 50k the last 10 years would get you at just under $1,400 per month of benefits.

The "first bend point", where you get the most bang for your buck, is just under half of that.

https://thefinancebuff.com/early-retirement-social-security-benefits.html
The median household income is a little under 60k so there are many who probably never make 50k in their life. The average payout for SS is less than $1400 a month, though I imagine a lot of people don't wait for Full Retirement Age to start drawing.
Title: Re: FICA-if you worked less than 10 years?
Post by: BTDretire on September 06, 2017, 08:32:47 PM
Quote
Someone only earning 40 credits may not get much of a benefit but it beats having absolutely no income and possibly being too old to do anything about it.

What's your definition of low? 10 years at 50k the last 10 years would get you at just under $1,400 per month of benefits.

The "first bend point", where you get the most bang for your buck, is just under half of that.

https://thefinancebuff.com/early-retirement-social-security-benefits.html

  Very surprised by this, I have 44 years in and will only get about $1,650 a month. But then back in the 70s I had incomes
in the $9k to $15k range. My income now is not enough to wipe out any of my better 35 years, so I'm not increasing my SS
check by working. I'm shifting work and income to my wife, because it will increase her SS. (we're self employed)
  My sister has a rather sparse work history, but has her 40 credits.
She says her SS statement says she will receive a little over $500 a month.
 She will probably collect more from her ex husbands account.
This is sad, because she has absolutely no savings.
Title: Re: FICA-if you worked less than 10 years?
Post by: tj on September 06, 2017, 08:39:20 PM
Quote
Someone only earning 40 credits may not get much of a benefit but it beats having absolutely no income and possibly being too old to do anything about it.

What's your definition of low? 10 years at 50k the last 10 years would get you at just under $1,400 per month of benefits.

The "first bend point", where you get the most bang for your buck, is just under half of that.

https://thefinancebuff.com/early-retirement-social-security-benefits.html

  Very surprised by this, I have 44 years in and will only get about $1,650 a month. But then back in the 70s I had incomes
in the $9k to $15k range. My income now is not enough to wipe out any of my better 35 years, so I'm not increasing my SS
check by working. I'm shifting work and income to my wife, because it will increase her SS. (we're self employed)
  My sister has a rather sparse work history, but has her 40 credits.
She says her SS statement says she will receive a little over $500 a month.
 She will probably collect more from her ex husbands account.
This is sad, because she has absolutely no savings.

The $$ earned a long time ago is super valuable. $15k earned in 1980 would get you a around $57k of elgible earnings in today's dollars for that year.

https://www.ssa.gov/oact/cola/awifactors.html
Title: Re: FICA-if you worked less than 10 years?
Post by: Paul der Krake on September 06, 2017, 09:59:28 PM
Yeah SS is super progressive, by design.

The maximum check you can get in 2017 is around $2,600, and that's if you've been at or above the SS cap (currently at $127,200) for 35 years.

Inversely, there are special provisions for super low earners that essentially disregards the actual earnings and just looks at how long they've been working. You can make under $5,000/year for 30 years and receive about $800/month.
Title: Re: FICA-if you worked less than 10 years?
Post by: GenXbiker on September 06, 2017, 10:20:56 PM

I'll retire at 53 to 55, but I plan to start drawing SS at age 62, so I'll get a reduced benefit vs. waiting until age 67.

If you want a greater benefit, you can start drawing later than 62 or even wait until you're 70 to get extra.

Title: Re: FICA-if you worked less than 10 years?
Post by: StetsTerhune on September 07, 2017, 01:28:38 AM

I'll retire at 53 to 55, but I plan to start drawing SS at age 62, so I'll get a reduced benefit vs. waiting until age 67.

If you want a greater benefit, you can start drawing later than 62 or even wait until you're 70 to get extra.

Just curious, why would you draw SS early and not wait for the max payout at 70?
Title: Re: FICA-if you worked less than 10 years?
Post by: tj on September 07, 2017, 07:07:13 AM

I'll retire at 53 to 55, but I plan to start drawing SS at age 62, so I'll get a reduced benefit vs. waiting until age 67.

If you want a greater benefit, you can start drawing later than 62 or even wait until you're 70 to get extra.

Just curious, why would you draw SS early and not wait for the max payout at 70?

If you are single it's actuarally equal. If you have a spouse it's much more beneficial to wait. You also would take it early if you need the cash. The breakeven point between 62 and 70 is going to be quite a bit of years.
Title: Re: FICA-if you worked less than 10 years?
Post by: maizefolk on September 07, 2017, 07:20:31 AM
One gotcha to be aware of is that, depending on how you are paid, many grad school stipends don't have SS withheld and hence don't count towards earning your 40 SS credits for eligibility. It's easy to end up in your late twenties with 4-6 years of making $20-$30k/year but essentially no income history as far as the social security office is concerned.

I think I should hit 40 credits before I hit FI, but it's going to be a near-ish thing and it may end up that I only manage it because of some side jobs I had back in undergrad. If I'd been thinking about FIRE and conscious about the implications of the lack of social security withholding I would have at least thought about whether it would make sense to find some SS withholding eligible ways to make an extra couple of thousand dollars a year.
Title: Re: FICA-if you worked less than 10 years?
Post by: seattlecyclone on September 07, 2017, 02:09:32 PM

I'll retire at 53 to 55, but I plan to start drawing SS at age 62, so I'll get a reduced benefit vs. waiting until age 67.

If you want a greater benefit, you can start drawing later than 62 or even wait until you're 70 to get extra.

Just curious, why would you draw SS early and not wait for the max payout at 70?

If you are single it's actuarally equal. If you have a spouse it's much more beneficial to wait. You also would take it early if you need the cash. The breakeven point between 62 and 70 is going to be quite a bit of years.

It's actuarially equal, true. I tend to view social security as insurance for living a very long time. My savings should be more than enough to get me to 70 or 80 without social security, but if I have a bad sequence of returns early in retirement and end up living to 100, those social security checks become more important and I will be glad to have waited to start collecting.
Title: Re: FICA-if you worked less than 10 years?
Post by: Rubic on September 07, 2017, 03:56:05 PM
It's actuarially equal, true. I tend to view social security as insurance for living a very long time. My savings should be more than enough to get me to 70 or 80 without social security, but if I have a bad sequence of returns early in retirement and end up living to 100, those social security checks become more important and I will be glad to have waited to start collecting.

+1

Assuming I'm relatively healthy in my mid-60's, I'm likely to wait until age 70, but certainly no
earlier than age 67 (fate permitting) to draw SS benefits.

My parents -- both ex-smokers -- are actually raising the bar by living past 80 in reasonably
good health, since delaying the maximum number of years has a break-even age of 84 for
men.  Addressing the longevity risk by deferring SS benefits is an awesome benefit.

Even better is having a "call option" that I can consider taking SS benefits anytime after
age 62 if a Great Recession event recurs in that 8-year time frame.  I'll probably be secure
enough to continue to delay social security, but it would be available as an option.

Relevant article:

https://www.kitces.com/blog/how-delaying-social-security-can-be-the-best-long-term-investment-or-annuity-money-can-buy/
Title: Re: FICA-if you worked less than 10 years?
Post by: CanuckExpat on September 07, 2017, 07:45:14 PM
If you have (or plan to have) international experience, there are a bunch of U.S. International Social Security Agreements (https://www.ssa.gov/international/agreements_overview.html) that may also help you earn credits.

It had appeared that both my wife and I would be FIRE'ing without 40 credits, but someone suggested we check the Canada-US agreement. It appears my wife might in fact have enough credits factoring in her Canadian work experience and the US-Canada agreement. I still wouldn't reach 40 credits, but would qualify through her assuming we stay married long enough. The international agreements don't seem to cover medicare however.

With the international agreements, you seem left a bit to yourself to figure it out. None of the online tools will help you, and the only guidance I could find online was that when you reach eligibility age, the social security administration will research the agreements and your eligibility. It would be nice to know ahead of time.

Our plan will still be to find a few credits here and there every year through side hustles or any taxable income that comes our way.
Title: Re: FICA-if you worked less than 10 years?
Post by: tj on September 07, 2017, 07:52:38 PM
I don't understand why someone would willingly not get the 40 credits. You only need to earn $5,200 in today's dollars to get 4 credits per year. Are you planning on no earned income in early retirement, ever? I'm at 39 credits, but I've only had a professional career of 8 years. 7 of my 39 credits were from high school and summer jobs.

Title: Re: FICA-if you worked less than 10 years?
Post by: BTDretire on September 08, 2017, 07:15:37 AM
It's actuarially equal, true. I tend to view social security as insurance for living a very long time. My savings should be more than enough to get me to 70 or 80 without social security, but if I have a bad sequence of returns early in retirement and end up living to 100, those social security checks become more important and I will be glad to have waited to start collecting.

+1

Assuming I'm relatively healthy in my mid-60's, I'm likely to wait until age 70, but certainly no
earlier than age 67 (fate permitting) to draw SS benefits.

My parents -- both ex-smokers -- are actually raising the bar by living past 80 in reasonably
good health, since delaying the maximum number of years has a break-even age of 84 for
men.  Addressing the longevity risk by deferring SS benefits is an awesome benefit.

Even better is having a "call option" that I can consider taking SS benefits anytime after
age 62 if a Great Recession event recurs in that 8-year time frame.  I'll probably be secure
enough to continue to delay social security, but it would be available as an option.

Relevant article:

https://www.kitces.com/blog/how-delaying-social-security-can-be-the-best-long-term-investment-or-annuity-money-can-buy/
That article deserves it's own thread and may have one.
 One thing I looked for and didn't find is,
"How does waiting until FRA vs 62 change the breakeven point?"
Title: Re: FICA-if you worked less than 10 years?
Post by: Rubic on September 08, 2017, 07:40:09 AM
Relevant article:

https://www.kitces.com/blog/how-delaying-social-security-can-be-the-best-long-term-investment-or-annuity-money-can-buy/

 That article deserves it's own thread and may have one.
 One thing I looked for and didn't find is,
"How does waiting until FRA vs 62 change the breakeven point?"

Here's a break-even calculator for social security benefits:

https://www.standard.com/individual/retirement/planning-tools-calculators/social-security-break-even-calculator

You can log into https://ssa.gov to look up your estimated benefits, then
input them into the calculator.  It will produce the break-even points with
a nice graph.
Title: Re: FICA-if you worked less than 10 years?
Post by: MrMoogle on September 08, 2017, 07:43:17 AM
I don't understand why someone would willingly not get the 40 credits. You only need to earn $5,200 in today's dollars to get 4 credits per year. Are you planning on no earned income in early retirement, ever? I'm at 39 credits, but I've only had a professional career of 8 years. 7 of my 39 credits were from high school and summer jobs.
I wasn't planning on holding any jobs in retirement.  Is that a common thing?  I don't know anyone who has done that.
Title: Re: FICA-if you worked less than 10 years?
Post by: tj on September 08, 2017, 08:47:00 AM
I don't understand why someone would willingly not get the 40 credits. You only need to earn $5,200 in today's dollars to get 4 credits per year. Are you planning on no earned income in early retirement, ever? I'm at 39 credits, but I've only had a professional career of 8 years. 7 of my 39 credits were from high school and summer jobs.
I wasn't planning on holding any jobs in retirement.  Is that a common thing?  I don't know anyone who has done that.

Well the obvious example is every monetized blogger?
Title: Re: FICA-if you worked less than 10 years?
Post by: MrMoogle on September 08, 2017, 12:18:29 PM
I don't understand why someone would willingly not get the 40 credits. You only need to earn $5,200 in today's dollars to get 4 credits per year. Are you planning on no earned income in early retirement, ever? I'm at 39 credits, but I've only had a professional career of 8 years. 7 of my 39 credits were from high school and summer jobs.
I wasn't planning on holding any jobs in retirement.  Is that a common thing?  I don't know anyone who has done that.

Well the obvious example is every monetized blogger?
That it happens, yes, but not to how common it is.  I'm not questioning that it happens.  Maybe we need a poll to see how many people plan to work some after FIRE.  I thought I would be in the majority that don't plan to work, but maybe I'm in the minority.  Statistically speaking, without data, you're more likely to be in the majority.  Now you and I have equal weighting with opposite plans, we both cannot be in the majority :)

Also, most bloggers don't make much, probably not the $5200/year.

While I have hobbies that could make money, I would not enjoy them if I tried to make money with them.  They may help reduce some expenses though.
Title: Re: FICA-if you worked less than 10 years?
Post by: BTDretire on September 08, 2017, 08:00:37 PM
Relevant article:

https://www.kitces.com/blog/how-delaying-social-security-can-be-the-best-long-term-investment-or-annuity-money-can-buy/

 That article deserves it's own thread and may have one.
 One thing I looked for and didn't find is,
"How does waiting until FRA vs 62 change the breakeven point?"

Here's a break-even calculator for social security benefits:

https://www.standard.com/individual/retirement/planning-tools-calculators/social-security-break-even-calculator

You can log into https://ssa.gov to look up your estimated benefits, then
input them into the calculator.  It will produce the break-even points with
a nice graph.

 A little thinking require, please critic my calculation.
 Here are my numbers and my logic (if it is logical)
I see major difference between this calculator and Kitces, his adds in growth of the money if taken early.
I think that is what this means;

"Since benefits not paid from age 62 to 70 represents a foregone investment opportunity (either the money could have been invested if it wasn’t needed, or it could have been consumed and thereby allowed other assets to remain invested), we must account for not only the $750/month (at age 62) versus $1,320/month (at age 70) benefits, but also for inflation itself (assumed here to be 3%) and this time-value-of-money factor (projected at 6%, a “balanced” portfolio rate of return that could have been earned on the money invested or not-consumed)."

From The standard.com site, using my SS numbers I get, "After 30 years: 62-$518,760; 66-$591,240; 70-$654,456."
So by waiting until 70y/o I would have collected $135,696 more from SS vs collecting at 62.
BUT, if I collected at 62 and didn't have to spend that money out of my nestegg and it collected only 4% after inflation, I would have $159,332 after 8 years when I start to receive my Bigger SS check at 70y/o.
 Then after 22 more years at 4% my $159,332 would be $377,604. This compared to the $135,696 30 year difference between retiring at 62 vs 70 is pretty big. I see an extra $241,908 by collecting early.
Since this is contrary to all I read, I must have it wrong.
  Where did I get it wrong?

PS, In my case because my wife insists on working, I would pay taxes on the SS, so that messes things up, in my case.
That's another calculation.

Edit,   Sheesh, 22 hrs and no response, is everyone just watching the hurricane or is math hard?  :-)

 
Title: Re: FICA-if you worked less than 10 years?
Post by: CanuckExpat on September 10, 2017, 10:43:49 PM
That it happens, yes, but not to how common it is.  I'm not questioning that it happens.  Maybe we need a poll to see how many people plan to work some after FIRE.  I thought I would be in the majority that don't plan to work, but maybe I'm in the minority.  Statistically speaking, without data, you're more likely to be in the majority.  Now you and I have equal weighting with opposite plans, we both cannot be in the majority :)

There's a poll and related thread on this subforum related to that:
https://forum.mrmoneymustache.com/post-fire/post-fire-unplanned-incomecashflow/
https://forum.mrmoneymustache.com/post-fire/how-much-did-you-end-up-working-post-fire/

If you are talking about having less than 40 credits, I imagine you are retiring in your 20s and 30s. That's a long time until SS eligibility age, which means you don't have to work that hard to get the credits, even if you don't plan to. You may accidentally?

Even if you really don't want to work, I think the difference between 40 credits and not having 40 credits is big enough to consider it, even if it is one credit a year very slowly.

Occasionally I'm at stores/places I find interesting and I see a "help wanted" type ad, and every now and then my mind thinks "Oh, I wonder what it would be like to work here". I don't think I'd do some of them for the money, but maybe for the fun/experience, and earning SS credits would be extra incentive. (Have no idea if any of them would be silly enough to hire me)
Title: Re: FICA-if you worked less than 10 years?
Post by: TheAnonOne on September 11, 2017, 11:52:57 AM

I'll retire at 53 to 55, but I plan to start drawing SS at age 62, so I'll get a reduced benefit vs. waiting until age 67.

If you want a greater benefit, you can start drawing later than 62 or even wait until you're 70 to get extra.

Just curious, why would you draw SS early and not wait for the max payout at 70?

For someone living off of their investments already, the reduced-early-payout might be the better option. Consider that any extra money is immediately invested instead of being spent for someone in the FIRE zone. For this reason, taking it early may.....

1. Save your portfolio
2. Cause it to explode upwards

Title: Re: FICA-if you worked less than 10 years?
Post by: pdxmonkey on September 12, 2017, 09:04:38 PM
One gotcha to be aware of is that, depending on how you are paid, many grad school stipends don't have SS withheld and hence don't count towards earning your 40 SS credits for eligibility. It's easy to end up in your late twenties with 4-6 years of making $20-$30k/year but essentially no income history as far as the social security office is concerned.

I think I should hit 40 credits before I hit FI, but it's going to be a near-ish thing and it may end up that I only manage it because of some side jobs I had back in undergrad. If I'd been thinking about FIRE and conscious about the implications of the lack of social security withholding I would have at least thought about whether it would make sense to find some SS withholding eligible ways to make an extra couple of thousand dollars a year.

I have two years in undergrad where I worked work study jobs, but as far as social security is concerned I made $0 those years. So it's not applicable to just grad school.
Title: Re: FICA-if you worked less than 10 years?
Post by: pdxmonkey on September 12, 2017, 09:16:58 PM
As far as the bend points the 2017 bend point is 885/month in earnings. or...multiply by 35 years...
$371,700 of adjusted lifetime earnings.

The 2017 second bend point is 5336 per month or...
$2,241,120 in adjusted lifetime earnings


The 2016 and 2015 limit were 118500 each. Both years have a multiplier of 1.0 for 237,000 of that 371,700.
The 2014 max was 117,000 with a multiplier of 1.0347904 for another 121070.4768 which gives a total of a bit over 358,000 if you managed to max out the last three years. Earnings up to the first bend point pay out at a 90% rate. So in a bit over 3 years a high earner could hit the first bend point.

$885 * .9 is 796.50 per month. You still need to get the remainder of the 40 credits to qualify though.

Earnings between the first and second bend point pay out at only 40% so are much less valuable. Earnings between the 2nd 2.2M and change point and the max if you max out all 35 years are worth only 10%...
Title: Re: FICA-if you worked less than 10 years?
Post by: arebelspy on September 12, 2017, 09:49:29 PM
Not earning 40 credits for Social Security might just be the worst thing one could do financially.

I agree- get those credits.  If you are FI before the 40 credit mark, then find a fun part time job.

As a teacher in NV, I didn't pay into Social Security.

Are you two suggesting I go back to work for 10 years, even though I don't need the money, to pay into social security, to eventually collect something that I'm unlikely to need?

That seems silly.

If you don't earn 40 SS credits, I think you can be just fine. I'm not worried about it in the slightest.
Title: Re: FICA-if you worked less than 10 years?
Post by: seattlecyclone on September 12, 2017, 10:26:16 PM
In your case, no, that probably wouldn't be worth it.

For someone with 36 credits...I'd say that finding a way to earn $5,200 doing something at some point before they turn 65 would be a very prudent thing to do.
Title: Re: FICA-if you worked less than 10 years?
Post by: Paul der Krake on September 12, 2017, 10:32:40 PM
Not earning 40 credits for Social Security might just be the worst thing one could do financially.

I agree- get those credits.  If you are FI before the 40 credit mark, then find a fun part time job.

As a teacher in NV, I didn't pay into Social Security.

Are you two suggesting I go back to work for 10 years, even though I don't need the money, to pay into social security, to eventually collect something that I'm unlikely to need?

That seems silly.

If you don't earn 40 SS credits, I think you can be just fine. I'm not worried about it in the slightest.
Did you walk away from your NV pension with no vesting whatsoever and no cash value payout? If not, that's not a fair comparison.

The comments are true for almost everyone who pays into Social Security, which is almost every potential early retiree. Somebody who doesn't get the 40 credits will have wasted 7.5% of their salary (and the 7.5% employer contribution) with nothing to show for it. It's obviously surmountable, but it doesn't change the fact that it's money that was spent with no chance of ever seeing any of it back. The difference in between 9.75 years and 10 years is infinity times more money, which is one hell of a fiscal cliff. 
Title: Re: FICA-if you worked less than 10 years?
Post by: arebelspy on September 12, 2017, 10:49:36 PM
Sure, I'll totally agree that if one is close to getting the credits, it could well be worth it to get it.

But it also might not be.  I'm questioning the blanket statements made about it being a huge mistake to not get enough SS credits.

There are plenty of scenarios where I think it's fine to throw that money away (the money "earned" towards SS), because it's only money. Once you stop valuing money, it may not be worth it.

One example: What if you are a sub-2% WR, and need another year's worth of work? 

If that person doesn't want to sell more of their life for money (SS money), I can't fault them.

That being said, I do think it's prudent for most people to earn it (and most people naturally will anyways). But it's not a blanket thing. It's up to the individual, and there are reasons why they might be okay not doing so.  That's what I'm trying to point out.  :)
Title: Re: FICA-if you worked less than 10 years?
Post by: tj on September 12, 2017, 11:02:28 PM
Not earning 40 credits for Social Security might just be the worst thing one could do financially.

I agree- get those credits.  If you are FI before the 40 credit mark, then find a fun part time job.

As a teacher in NV, I didn't pay into Social Security.

Are you two suggesting I go back to work for 10 years, even though I don't need the money, to pay into social security, to eventually collect something that I'm unlikely to need?

That seems silly.

If you don't earn 40 SS credits, I think you can be just fine. I'm not worried about it in the slightest.

It's irrelevant if you are going to "need" it or not. What is relevant is if it's a good financial deal for you to take advantage of it or not.

You certainly don't need to "go back to work" to obtain your 40 SS credits. You could be paying into FICA on your self employment income (like, the tradelines you sell and the referral commissions that you collect). Contributing 10 years of the bare minimum into SS for you and your spouse seems like it would be a pretty damn good investment to me.

Paying 15.6% of FICA on $5,200 of self employed profit per year would be a cost of $811.20 per year. Except $405.60 of that is a tax deduction for your self employment. Based on the previous 10 years of inflation data, a social security benefit  with only $5,200 of coverage income for the past 10 years would be an annual benefit of $1,608 per year @ FRA. In today's dollars..

Hell, 10 years @ $25k (or 20 years at 12.5k) still doesn't even get you to top of the the first bend point. But 10 years @ $25k would have you paying a total of $39k in fica taxes less $19.5k in tax deductions for future annual benefits of $7.7k in today's dollars.

Bottom line, social security gives you 90% of income replacement up to $885 in averaged monthly earnings over a 360 month period. That's a good deal. And mirror it for a spouse.  It's after that first $885 where social security become pretty meh.

Of course if you have a NV government pension that offsets your social security, that's something entirely different.

But if you don't, i don't know why you wouldn't be optimizing your potential social security benefits to the best of your ability. If nothing else, i's just more that you can give to charity.

https://www.ssa.gov/oact/cola/piaformula.html
Title: Re: FICA-if you worked less than 10 years?
Post by: Paul der Krake on September 12, 2017, 11:08:22 PM
I think we agree that there are no absolutes. If I stumble across 8 figures tomorrow, I won't care very much about my 40 credits either.

That being said, there is great value in having an absolute minimum floor. There is a risk I could be convinced to invest all my money in a risky venture. Or I could be fantastically reckless and have a plaintiff get a judgement for everything I own. Or I could slowly become senile and lose track of what's going on in my affairs.

With Social Security, I could take out an entire bus of high school cheerleaders, an other entire bus of neurosurgeons, and still receive 75% of by monthly benefit.
Title: Re: FICA-if you worked less than 10 years?
Post by: arebelspy on September 12, 2017, 11:12:14 PM
Bottom line, social security gives you 90% of income replacement up to $885 in averaged monthly earnings over a 360 month period. That's a good deal. And mirror it for a spouse.  It's after that first $885 where social security become pretty meh.

You're still missing my point.

It's not a good deal if you don't need the money. Then you're selling your time for money, which may not be worth it to you.

As for my pension: It exists. It's very small (and not inflation adjusted until I start it about 30 years from now, so it'll be extremely small in real dollars by that point.

Besides, it's irrelevant to the argument, if the argument is "earning 40 SS credits is a good deal". It the argument is "earning 40 SS credits is a good deal if you need the money" sure. Duh.

If you're saying the pension matters, because then maybe you don't need the SS money, then you're agreeing with my point: SS is only a good deal if you need it. If you don't need the money, then you're trading time for money you don't need, which is a bad deal. It shouldn't matter if that money that causes you to not need it is from a large stache, or a pension, or whatever. If you're at the point where SS won't make your life better, trying to earn it is silly.
Title: Re: FICA-if you worked less than 10 years?
Post by: arebelspy on September 12, 2017, 11:20:24 PM
I think we agree that there are no absolutes. If I stumble across 8 figures tomorrow, I won't care very much about my 40 credits either.

That being said, there is great value in having an absolute minimum floor. There is a risk I could be convinced to invest all my money in a risky venture. Or I could be fantastically reckless and have a plaintiff get a judgement for everything I own. Or I could slowly become senile and lose track of what's going on in my affairs.

With Social Security, I could take out an entire bus of high school cheerleaders, an other entire bus of neurosurgeons, and still receive 75% of by monthly benefit.

There are other ways to mitigate those risks.

Working 10 years is a pretty poor way to do so, IMO.

I bet with just a few years working I could save enough to more than duplicate SS's effect, plus buy plenty of insurance for your scenarios (and/or an annuity).

One can easily completely FIRE in less than a decade.  Another decade of working for me would have us earning multiple mllions more than we need. I just cjan't see SS being super important there.

Here's the thing: At what point would you agree that one should no longer trade that life for money?  Let's say, for example, I'm at scenario A, which includes full FI, but 0 SS credits.  Compare that to scenario B, where you're full FI, with SS credits.  Cool.  B seems better off. You'd say that maybe A should earn their credits to be like B.

Now say person in scenario A works another 2 years and earns enough to give them the NPV of the SS income. They're in the exact same scenario as person B now. Do they still need their credits?  Let's say they work 5 years, and end up with 3x the NPV of the SS credits, and nwo have much more than person B. Do they still need to work 5 more years?  If not, clearly there's some amount of money you're okay with them having where they don't need the SS credits anymore, or at least it's no longer worth trading years of their life for.

This all is the fundamental OMY question.

You all are just trading in the words "SS credits" for "bigger stache," but either way, at some point one has to ask themselves when they're okay with their buffer, whether that buffer be in extra diversification and a lower SWR, or in SS credits, and when they have "enough," including multiple backup plans (one of which may be SS, or it may not).

You all are arguing for OMY, essentially.

It makes sense, in some cases, because of that huge cliff. 9.75 credits to 10? Sure, probably. (Though if someone won the megamillions, and were a smart enough Mustachian that they won't lose it all, I'd be okay if they quit right away.) Before that point though? I think there are legit reasons for someone to draw a line and say "No more. I am not selling my time for dollars any more. I have enough."
Title: Re: FICA-if you worked less than 10 years?
Post by: tj on September 12, 2017, 11:38:26 PM
If you're saying the pension matters, because then maybe you don't need the SS money, then you're agreeing with my point: SS is only a good deal if you need it.

Besides, it's irrelevant to the argument, if the argument is "earning 40 SS credits is a good deal". It the argument is "earning 40 SS credits is a good deal if you need the money" sure. Duh.


You having a pension has absolutely nothing to do with the bolded, I'm saying the pension matters because of the windfall elimination provision  That's why it's relevant to if "earning 40 SS credits is a good deal"...if you have a state pension.  It could be far less lucrative for you to pursue .You'd have to research it if you cared.

https://www.ssa.gov/planners/retire/wep.html

Quote
You're still missing my point. It's not a good deal if you don't need the money. Then you're selling your time for money, which may not be worth it to you.

That's subjective. What is objective if the marginal financial costs to obtain the benefits.  If you can't think of a way to use extra money for minimal effort, then sure, don't consider pursuing social security. Most Americans saving for FIRE aren't going to have 0 SS credits.

The point is that people should be educated on what they can purchase with their tax dollars and they can then choose to pursue it or not. Rather than just abandoning the idea of social security because they "don't need it".

OMY would be staying in a specific job for multiple decades to get a pension. Plenty of more creative ways to earn income for SS credits.
Title: Re: FICA-if you worked less than 10 years?
Post by: arebelspy on September 13, 2017, 12:13:50 AM
The point is that people should be educated on what they can purchase with their tax dollars and they can then choose to pursue it or not.

Yep. That's exactly what I was arguing for.  :)

Quote
Rather than just abandoning the idea of social security because they "don't need it".

I don't think anyone was arguing for that.

Quote
OMY would be staying in a specific job for multiple decades to get a pension. Plenty of more creative ways to earn income for SS credits.

Definitely. A pension is a great example of golden handcuffs.  SS credits may be another one (just often with a shorter timeframe).  ;)
Title: Re: FICA-if you worked less than 10 years?
Post by: seattlecyclone on September 13, 2017, 12:14:04 AM
It is essentially the same argument as OMY, agreed. At some point you're trading time for money that you probably won't need.

That word probably can have a big impact though. It's the main reason people do OMY in the first place. They don't believe in their heart that "probably" is close enough to "certain" for their tastes. We can never be truly certain, and that's something we all have to accept before we take the plunge into retirement.

At the same time, earning $1,300 for one credit takes hardly any time at all. It's not OMY, it's more like a couple weeks at minimum wage. During decades of retirement I expect to have several years where I earn $0 from work, but I also expect to find plenty of opportunities to make a difference doing something enjoyable and also earn a few bucks doing it. That's what I'd encourage someone a few credits short to look for. It doesn't need to be right away. You can earn nothing for a decade and then finish up your credits later when the right gig comes along.
Title: Re: FICA-if you worked less than 10 years?
Post by: arebelspy on September 13, 2017, 12:21:55 AM
Good post, SC.

One minor quibble:

At the same time, earning $1,300 for one credit takes hardly any time at all. It's not OMY, it's more like a couple weeks at minimum wage.

That's 80 weeks, so 1.5 years of work. But, of course, you need 10 years for SS. So those 80 weeks need to be spread out.

Since you can't earn it contiguously, you have to add on the work of finding (or creating) said job. So it'll be a bit more effort than that.

During decades of retirement I expect to have several years where I earn $0 from work, but I also expect to find plenty of opportunities to make a difference doing something enjoyable and also earn a few bucks doing it. That's what I'd encourage someone a few credits short to look for. It doesn't need to be right away. You can earn nothing for a decade and then finish up your credits later when the right gig comes along.

Definitely.
Title: Re: FICA-if you worked less than 10 years?
Post by: pdxmonkey on September 13, 2017, 12:31:00 AM
If you were making enough to retire before accumulating 40 credits it seems likely you could probably swing some high paying or consulting work making $1300 for a credit more like a couple of days and a full years 4 credits more like a week. If you've got 8 years in you could probably get that kind of rate in the first couple years. If you wait until later you'd be much more likely to have a no longer valued skill set and have to do 3-5 months around minimum wage to get 4 credits which is much less palatable
Title: Re: FICA-if you worked less than 10 years?
Post by: pdxmonkey on September 13, 2017, 12:33:07 AM
Also I don't think anyone is arguing that you work 10 years if you already have 5 million and 0 credits and can only get the federal minimum.
Title: Re: FICA-if you worked less than 10 years?
Post by: tj on September 13, 2017, 07:13:07 AM
Quote
Yep. That's exactly what I was arguing for.  :)

You argued that you could just buy an annuity equivalent to what social security is:

Quote
I bet with just a few years working I could save enough to more than duplicate SS's effect, plus buy plenty of insurance for your scenarios (and/or an annuity)

 You can't. There are not any insurance policies or annuities that are mathematically equivalent to the $$$ level provided in the first bend point. That's why it's such a good deal. You'd have to spend drastically more capital to buy an annuity to get your the same.

You also repeatedly used a term like "go back to work" to make it sound like it's more effort than it actually is to earn social security credits.

Quote
Rather than just abandoning the idea of social security because they "don't need it".

Quote
I don't think anyone was arguing for that.

Mr. Moogle apparently hadn't even considered earning whatever is left between what he will have after he retires and what would be eligible to collect benefits. Sounds like abandoning the pursuit of SS to me:

Quote
I wasn't planning on holding any jobs in retirement.  Is that a common thing?  I don't know anyone who has done that.
Title: Re: FICA-if you worked less than 10 years?
Post by: maizefolk on September 13, 2017, 08:04:12 AM
So just to get this out of the way up front, ARS I completely agree with you that there are edge cases were the effort of generating earned income to get the extra credits to qualifying for SS just aren't going to make sense. You've got a great example personally where essentially none of your income was taxed by social security, which means that A) you'd need to earn all or nearly all of the 40 credits in FIRE B) because you'd be generating the income just to get credits, you'd probably only generate enough to get the credits which, at $1,300/credit would be only a little more than $50k of lifetime income to determine benefit levels.

But putting that aside, I thought it'd be interesting to run back of the envelop numbers on what a reasonable "worst case" for social security in FIRE assuming a person did have to pay into social security while accumulating their stash. The two factors we can adjust are savings rate (higher savings rate = fewer years to FIRE = fewer social security credits), and spending in FIRE (lower spending = smaller stash = less lifetime social security earnings).

Let's set savings rate to 80% with a goal of saving only $300k (so our hypothetical FIREee is living on $1,000/month, not quite Jacob numbers but reasonably close). 80% savings with $1,000/month of spending means an income of $5,000/month and 75 months (6.25 years) to save $300k. Even working a quarter year is enough to get all four social security credits for the year, so the our hypothetical retiree has 28 credits and and $375k of lifetime earnings in retirement. To qualify for social security they'd need another ~$5k/year in three additional years ($390k in lifetime earnings). If you could find a way to generate apparent self employment earnings from your stash,* $15k of "income" over three years would cost you ~$2,300 in self employment taxes (and nothing in federal taxes).

$390k/35 years/12 months = ~$930/month which is past the first bend point so our hypothetical retiree would receive ($826*.9) + ($930-826)*.32 = $776.7/month from social security.

776.7*12 = $9,320/year

So an annual income steam of $9,320/year costs $2,300 in extra taxes. As ARS says, in some situations even that level of return isn't going to matter because you already have enough money. But it is a pretty impressive return on investment.

*For example being an "active" owner within many types of partnerships or LLCs is a great way to generate a bit of self employment income.

This analysis neglects (among other things), income taxes during accumulation phase (our hypothetical retiree would actually need to earn more to have $5k/month of after tax savings increasing the payout from social security) and investment returns during the accumulation phase (our hypothetical retiree would probably work a little less than 6.25 years which would decrease social security credits earning and lifetime earnings).
Title: Re: FICA-if you worked less than 10 years?
Post by: seattlecyclone on September 13, 2017, 08:55:50 AM
Good post, SC.

One minor quibble:

At the same time, earning $1,300 for one credit takes hardly any time at all. It's not OMY, it's more like a couple weeks at minimum wage.

That's 80 weeks, so 1.5 years of work. But, of course, you need 10 years for SS. So those 80 weeks need to be spread out.

Since you can't earn it contiguously, you have to add on the work of finding (or creating) said job. So it'll be a bit more effort than that.

Sure, in your case where you're starting from zero credits you'd have to make an effort. People who earned their FI stash on jobs that paid social security taxes (which I would guess is the vast majority these days) would likely not have retired before earning at least 20 credits, likely more as maizeman points out. That cuts down on the number of calendar years where you would need to earn a bit of money.

The manufactured self-employment is an interesting idea. You could find another retired person and pay each other to do yard work or something.
Title: Re: FICA-if you worked less than 10 years?
Post by: Paul der Krake on September 13, 2017, 09:33:04 AM
Yeah, the vast majority of early retirees either already have them, or just need a handful of credits. Has anyone fired in less than 5 years? That'd be absurdly fast.

I don't see myself breaking the 10 year mark, but on the off-chance that I do, I have an infinite list of fun part-time jobs that I'd like to try at some point.
Title: Re: FICA-if you worked less than 10 years?
Post by: Mr. Green on September 13, 2017, 09:44:31 AM
If I had more than enough .one that I was retired with plenty to spare I would absolutely manufacture 40 credit hours. However, if starting from 0 that only gives you a monthly check of about $130 if you only claim the $1300 to get the credit. However, equally important is the Medicare piece. Not having paid 30 quarters of Medicare taxes means hospital insurance will cost almost $500 per month. So the two combined are worth a minimum of $600 to anyone.

My generalization was really targeted at the person considering stopping short of the 40 credits. Making sure you can have SS is the lowest hanging fruit of a safety net there is for the typical working person.

Don't forget about the disability aspect of SS either. Developing one might mean a significant increase in annual expenses, breaking a retirement plan. Unless you're dying life insurance is no help there. One could always go buy it but it comes gratis with SS if you meet the qualifications.
Title: Re: FICA-if you worked less than 10 years?
Post by: arebelspy on September 13, 2017, 10:11:37 AM
Quote
Yep. That's exactly what I was arguing for.  :)

You argued that you could just buy an annuity equivalent to what social security is:

Quote
I bet with just a few years working I could save enough to more than duplicate SS's effect, plus buy plenty of insurance for your scenarios (and/or an annuity)

 You can't. There are not any insurance policies or annuities that are mathematically equivalent to the $$$ level provided in the first bend point. That's why it's such a good deal. You'd have to spend drastically more capital to buy an annuity to get your the same.

Again, you are missing my point.  You're so focused on the money.

My focus is the time.  Sure, it's a great deal. To get more money. By trading your time.  If you have way more money than time though, you don't care about that.

If you had an extra 10MM, but needed a few more years of work to get SS credits, and didn't want to trade that time, you could buy that annuity. It's a WAY worse deal money-wise than the SS based on the amount of money you pay into SS to get it, but the annuity ony costs you money. The SS credits cost you money and years of your life ("years" could be months, or whatever.. time).

Your point that SS is a much better deal if you're only comparing the amount you contribute to SS versus the amount you'd have to pay for the annuity is true, but you're ignoring the time SS also cost. That's something that may not be worth any price.

(FWIW, I'm not arguing for an annuity. I'm just pointing out that you may have a  surplus of money over time, and in that case, earning SS credits may not make sense. You point out that it's such a great deal though, but at that point, you probably don't care.)

Yeah, the vast majority of early retirees either already have them, or just need a handful of credits. Has anyone fired in less than 5 years? That'd be absurdly fast.

THere's some on here that say they ER'd between ages 25-28, they might be right around 5 years working.

(They tend to be semi-ER, when they describe it, every time I've seen details though.)

We ER'd at age 29, and that still took nearly 8 years of working, so 5 would be quite fast.

Quote
I don't see myself breaking the 10 year mark, but on the off-chance that I do, I have an infinite list of fun part-time jobs that I'd like to try at some point.

Totally.  The wife has more SS credits than I, due to working through high school and college. Right now she's self-employed writing romance novels (though that won't count for SS, as it's been excluded via FEIE).  It will probably be worth having her earn the rest of her credits, though it'll likely happen naturally.

That's the key, to me. You aren't earning credits for the sake of doing so (aka literally OMY, selling time for money), you're pursing what you want to do, and it happening to earn some money is fine.
Title: Re: FICA-if you worked less than 10 years?
Post by: hoping2retire35 on September 13, 2017, 10:19:14 AM
I am really more concerned with the Medicare aspect. This seems to be something everyone relies on, and unless you are a multi-multi millionaire it seems it would behoove everyone to seek this benefit.

Just curious for folks, like ARS, who have no plan of pursuing this, what is your health insurance plan as you age? "that is over 30 years from now, a lot will change, I'll worry about it as it approaches"?
Title: Re: FICA-if you worked less than 10 years?
Post by: CanuckExpat on September 13, 2017, 10:36:28 AM
*For example being an "active" owner within many types of partnerships or LLCs is a great way to generate a bit of self employment income.

This is a good point. I know some investments I've seen issue K1s, and depending on how the payout is structured and how you report it, that may end up with you paying "self employment tax" (more complicated then I understand)

Similarly, if you have any self employment income, normally people would try to shelter most of it from FICA if possible, but if you are short of 40 credits, you might want to do the opposite, at least until you get the four credits for the year.

If anyone wants a personal example, last time I checked, at retirement my wife has roughly seven years of eligible work (28 credits), and I have three (12 credits). So she would be close-ish to making 40 credits with minimal work, it would be a stretch for me. (Our "short" working careers as far as SS goes aren't that interesting, it has more to do with having worked in a different country, and me spending a long time in school.)
Title: Re: FICA-if you worked less than 10 years?
Post by: arebelspy on September 13, 2017, 11:07:01 AM
Just curious for folks, like ARS, who have no plan of pursuing this, what is your health insurance plan as you age? "that is over 30 years from now, a lot will change, I'll worry about it as it approaches"?

Or medicare, same as most people.

(Our earnings were taxed for medicare, but not for SS. This discussion has focused on getting 40 credits for SS to get that sweet, sweet SS monthly check. We both earned enough credits to qualify for medicare. Last I checked, I was just short, but it looks like I made it? With the caveat of the below, it may be based on assumed credits from last year/this year that I didn't earn.)

If anyone wants a personal example, last time I checked, at retirement my wife has roughly seven years of eligible work (28 credits), and I have three (12 credits). So she would be close-ish to making 40 credits with minimal work, it would be a stretch for me. (Our "short" working careers as far as SS goes aren't that interesting, it has more to do with having worked in a different country, and me spending a long time in school.)

Interesting.  Another scenario where earning the 40 credits may not make sense.

You also made me curious, so I went to look it up. Having to change a password every 6 mo is silly, SSA website. That effectively means you change it each time you log in.

Right now I have "at least" 7 credits and the wife has "at least" 25? (they say "at least X, including assumed credits for last year--we haven't filed yet--and this year if we continue working. Neither is the case, so IDK what credits we have exactly.) Weird way to do things, statement. Why not just say X credits as of dd/mm/yyyy, rather than "at least" and assumed credits.

Oh well, somewhere around 7 and 25, it looks like.

(Random things like self employment on flipping houses got me some credits, apparently).
Title: Re: FICA-if you worked less than 10 years?
Post by: tj on September 13, 2017, 01:03:32 PM
When you start getting into time cost vs. Money cost, i dont personally relate to do because i have always had an abundance of free time when choosing not to work, so it would not have been a big dent into my time to manufacture some earned income. Like the other poster mentioned about yard work, it doesnt even need that much effort you could just pay someone to be a personal consultant and vice versa.

When throwing out figures like $10mm, you start getting into the territory of large inheritances or some other windfall like rapidly selling a startup for unexpected big bucks. I dont think thats relevant to most people posting here, but who knows.

Obviously, if you value your time more highly than the money you can receive from a given activity, take the time. For me getting to 40 credits would drastically reduce the stash that is needed to survive indefinitely.

The way ss shows your credits on the website is definitely odd, but they do show you an earnings record and if you only have a decade or so of work, its fairly easy to figure out what you actually have.
Title: Re: FICA-if you worked less than 10 years?
Post by: hoping2retire35 on September 13, 2017, 01:24:32 PM
Just curious for folks, like ARS, who have no plan of pursuing this, what is your health insurance plan as you age? "that is over 30 years from now, a lot will change, I'll worry about it as it approaches"?

Or medicare, same as most people.

(Our earnings were taxed for medicare, but not for SS. This discussion has focused on getting 40 credits for SS to get that sweet, sweet SS monthly check. We both earned enough credits to qualify for medicare. Last I checked, I was just short, but it looks like I made it? With the caveat of the below, it may be based on assumed credits from last year/this year that I didn't earn.)


Actually per my OP I was more concerned what folks will do about a lack of Medicare. Though confused by your statement, it seems as if you have to work 10 years(40 credits) to get part A(no premium hospital insurance)
http://www.aarp.org/health/medicare-insurance/info-04-2008/ask_ms__medicare_9.html

So, with the exception of others like yourself who did not pay SS tax, what are others planning on doing about health insurance who may think SS is unimportant.
Title: Re: FICA-if you worked less than 10 years?
Post by: Mr. Green on September 13, 2017, 03:35:32 PM
Just curious for folks, like ARS, who have no plan of pursuing this, what is your health insurance plan as you age? "that is over 30 years from now, a lot will change, I'll worry about it as it approaches"?

Or medicare, same as most people.

(Our earnings were taxed for medicare, but not for SS. This discussion has focused on getting 40 credits for SS to get that sweet, sweet SS monthly check. We both earned enough credits to qualify for medicare. Last I checked, I was just short, but it looks like I made it? With the caveat of the below, it may be based on assumed credits from last year/this year that I didn't earn.)


Actually per my OP I was more concerned what folks will do about a lack of Medicare. Though confused by your statement, it seems as if you have to work 10 years(40 credits) to get part A(no premium hospital insurance)
http://www.aarp.org/health/medicare-insurance/info-04-2008/ask_ms__medicare_9.html

So, with the exception of others like yourself who did not pay SS tax, what are others planning on doing about health insurance who may think SS is unimportant.
You can get Part A with 0 credits, it just costs you something. It's currently $413/month if you paid in medicare taxes less than 30 quarters. If you paid in between 30-39, it's $227/month. A couple with no credits is will pay $9,912 a year for Part A, plus the premium (income based) for Part B.
Title: Re: FICA-if you worked less than 10 years?
Post by: Dicey on September 19, 2017, 07:17:39 AM
If I had more than enough .one that I was retired with plenty to spare I would absolutely manufacture 40 credit hours. However, if starting from 0 that only gives you a monthly check of about $130 if you only claim the $1300 to get the credit. However, equally important is the Medicare piece. Not having paid 30 quarters of Medicare taxes means hospital insurance will cost almost $500 per month. So the two combined are worth a minimum of $600 to anyone.

My generalization was really targeted at the person considering stopping short of the 40 credits. Making sure you can have SS is the lowest hanging fruit of a safety net there is for the typical working person.

Don't forget about the disability aspect of SS either. Developing one might mean a significant increase in annual expenses, breaking a retirement plan. Unless you're dying life insurance is no help there. One could always go buy it but it comes gratis with SS if you meet the qualifications.
Just curious for folks, like ARS, who have no plan of pursuing this, what is your health insurance plan as you age? "that is over 30 years from now, a lot will change, I'll worry about it as it approaches"?

Or medicare, same as most people.

(Our earnings were taxed for medicare, but not for SS. This discussion has focused on getting 40 credits for SS to get that sweet, sweet SS monthly check. We both earned enough credits to qualify for medicare. Last I checked, I was just short, but it looks like I made it? With the caveat of the below, it may be based on assumed credits from last year/this year that I didn't earn.)


Actually per my OP I was more concerned what folks will do about a lack of Medicare. Though confused by your statement, it seems as if you have to work 10 years(40 credits) to get part A(no premium hospital insurance)
http://www.aarp.org/health/medicare-insurance/info-04-2008/ask_ms__medicare_9.html

So, with the exception of others like yourself who did not pay SS tax, what are others planning on doing about health insurance who may think SS is unimportant.
You can get Part A with 0 credits, it just costs you something. It's currently $413/month if you paid in medicare taxes less than 30 quarters. If you paid in between 30-39, it's $227/month. A couple with no credits is will pay $9,912 a year for Part A, plus the premium (income based) for Part B.
I'm with Mr. Green. The Medicare aspect of this discussion is equally, if not more important, particularly if one is close to the qualifying levels.
Title: Re: FICA-if you worked less than 10 years?
Post by: Drifterrider on September 19, 2017, 08:15:09 AM
I'm questioning the blanket statements made about it being a huge mistake to not get enough SS credits.

Because:   A lot of younger people (perhaps even older people) don't realize that in the US not everyone is under OASDI for "retirement".  Therefore, they don't consider that one might have a different system.

For those under OASDI, there is more to consider than just "retirement".  Think "disability".  One may choose not to work but if one becomes disabled, there in another avenue of income.  Additionally, for those determined to be disabled and that last more than two years, those people will be covered under Medicare regardless of age.

Title: Re: FICA-if you worked less than 10 years?
Post by: JoJo on September 20, 2017, 11:46:46 AM
Just a chime in that hitting FIRE without 40 quarters credit is pretty impressive.  I already had 40 quarters by the time I was 28 due to high school & college jobs to pay my way thru school (no loans!) but no where near FIRE.
Title: Re: FICA-if you worked less than 10 years?
Post by: arebelspy on September 20, 2017, 11:51:00 AM
Just a chime in that hitting FIRE without 40 quarters credit is pretty impressive.  I already had 40 quarters by the time I was 28 due to high school & college jobs to pay my way thru school (no loans!) but no where near FIRE.

I view THAT as pretty impressive/badass.  Good for you.
Title: Re: FICA-if you worked less than 10 years?
Post by: Lives to travel on September 20, 2017, 03:37:26 PM

This is a good point. I know some investments I've seen issue K1s, and depending on how the payout is structured and how you report it, that may end up with you paying "self employment tax" (more complicated then I understand)


Are you referring to publicly traded partnerships that trade on the exchanges, but issue K-1s?  I can't think of any of those that wouldn't be passive income, and you won't be able to use them as self employed income.