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Social Security Question
Old 04-27-2010, 11:41 AM   #1
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Social Security Question

Hi all

I have a general question about SS.

Suppose I am 50 yo and I am qualified for SS, completed all units, and at 62 1/2, say for example, could start receiving monthly check $1,200.

If I stop working at 55 - what will happen to my SS monthly amount?

Regards
wanaberetiree
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Old 04-27-2010, 11:49 AM   #2
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Quote:
Originally Posted by wanaberetiree View Post
Hi all

I have a general question about SS.

Suppose I am 50 yo and I am qualified for SS, completed all units, and at 62 1/2, say for example, could start receiving monthly check $1,200.

If I stop working at 55 - what will happen to my SS monthly amount?

Regards
wanaberetiree
You can go to the www.ssa.gov website and use their calculator. http://www.socialsecurity.gov/OACT/quickcalc/index.html

or you can ballpark your reduction at 1% less per year early you stop working. Since you indicate you'll stop at age 55 I would ballpark the reduction at 7% giving you a benefit (at 62 1/2) of around $1116.

Also, as you know, SS is in financial jeopardy. So It is possible that congress will mess with the formulas before you actually collect anything. It's all up in the air. So don't hang your hat on any specific number you get.
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Old 04-27-2010, 11:51 AM   #3
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Quote:
Originally Posted by wanaberetiree View Post
Hi all

I have a general question about SS.

Suppose I am 50 yo and I am qualified for SS, completed all units, and at 62 1/2, say for example, could start receiving monthly check $1,200.

If I stop working at 55 - what will happen to my SS monthly amount?
I believe the SSA has benefit estimate calculations on its web site. You can use the detailed one that would "zero out" all the years between age 55 and 62. Chances are if you've been working for all your adult life, the reduction won't be as much as you might expect.
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Old 04-27-2010, 12:30 PM   #4
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For me it is surprisingly little - they only count 35 years - as long as you have 33 or 34 or 35 years of working (i.e. not averaging in too many zeros) then another couple of years even at the $106K max doesn't add much to the monthly bennie....

But do use the calculator at ssa.gov and see for yourself.
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Old 04-27-2010, 02:11 PM   #5
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Direct from SSA webpage (Benefits Planner: Frequently asked retirement questions):

Q. I stopped work at the end of last year at age 52. I don't expect to work again before I start my Social Security benefits when I turn 62. Will I still get the same benefit amount you showed for age 62 on the Social Security Statement that you recently sent me?
A. Probably not. When we averaged out your 35 highest years of earnings to estimate your benefits on your Statement, we assumed you would continue to work up to age 62, making the same earnings you made last year. If, instead, you have $0 earnings each year over the next 10 years, your average earnings will probably be less and so will your benefit. You can use our Retirement Estimator or Benefit Calculators to see how this will affect your monthly benefit amount.
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Old 04-27-2010, 07:46 PM   #6
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OP:

In my case, I retired at 55. At 62, I collected SS. The number on my SS statement which listed the amount I would receive at 62 turned out to be fairly accurate.

I had the same question as you. So I was curious, and asked around like you when I was 55. Got the same kind of answers you are getting now.

I started collecting SS about 1 1/2 years ago, so my numbers are fairly current.

Again, in my case, the number on my SS statement was the amount I received. ( actually it was a little higher).
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Old 04-28-2010, 11:45 PM   #7
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could that be a result of the COLA adjustments to SS -offsetting the reduction due to not working?
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Old 04-29-2010, 07:12 PM   #8
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Yes, when I turned 62, there was a large cost of living increase granted.( to all SS recipients) Which is why I received more than the amount stated on my SS statement.

But as I mentioned earlier, I stopped working at 55, received SS statements yearly, and when I colleced , at 62, received what my SS statement said I would.

Also, in the years I received my yearly SS statement, starting at 55, the amount I would receive at 62 never fell. Some years there was an increase.

OP: hope this helps. like I said, I had the same questions you are having when I stopped working at 55.
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Old 04-29-2010, 07:45 PM   #9
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I should add that there are two "bend points" in the SS formula. After they calculate your average monthly earnings, counting up to 35 years (they adjust early years for inflation), you get 85% of the first 1000 or so then 40% of the next 4000 or so then only 15% of everything over that.

So my observation that a bit more in average monthly earnings gets you very little in the way of increased benefit is true for people in the 15% "bracket" (high earners).
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