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Old 10-03-2015, 08:21 PM   #1
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SS and ER

I went for Schwab sponsored Demystifying Social Security event and it was to my surprise actually interesting and helpful.

One thing that I wanted to run by smart people of this group.

Say I am 56 yo and not working anymore.
At 62 - SS - $1,700
At 67 - SS - $2,500

I was told that if I am already qualified for SS then 'not working' years actually won't make much difference vs if I continued to work.

Can someone comment on this from personal experience?
Thx
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Old 10-03-2015, 08:37 PM   #2
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Yes, I would agree the difference is minor. You can get an idea as to the difference if you poke around on the SSA website... there is a tab somewhere that would answer your question.
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Old 10-04-2015, 08:05 AM   #3
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Quote:
Originally Posted by wanaberetiree View Post

I was told that if I am already qualified for SS then 'not working' years actually won't make much difference vs if I continued to work.

Can someone comment on this from personal experience?
Thx
I'm not an expert on this but from my own personal experience when I ran the numbers in my late 50's, it didn't add much. I had been contributing since I was ~16 and contributing the max for at least the last decade. Working a few more years didn't add much to my projected SS numbers.
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Old 10-04-2015, 08:17 AM   #4
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I was earning at the top of the SS ceiling for something like 25 years before I retired, so I doubt that working more years would have added much since they average the last 30 years, indexed for inflation. And think about Medicare. According to SS records, my employers and I paid in $168K, or about $250K if accumulated at 6% interest. I get the same Medicare at age 65 as someone who worked for 10 quarters at minimum wage then left the workforce. Working longer sure won't get you any more Medicare.


We get a lot of notices on seminars, webinars, etc. on navigating SS. Now that the one author has discovered the file-and-suspend tactic (higher wage earner files at FRA, immediately suspends benefits, but lower-earning spouse can collect spouse benefits), every "advisor" acts as if he/she just discovered it. I read it here first!


I'm impressed at the difference between SS at 62 (my current age) and SS at 70 and definitely plan to wait to age 70 to collect.
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Old 10-04-2015, 08:39 AM   #5
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For me (ER at 55) the difference looks to be about $30/month at age 62, maybe $100/month at 70. I did not work high income jobs all my life either, but did have 35 years of earnings so there were no zeroes in the earnings record. Still remains to be seen if my current PT gig at ~$15K per year replaces one or two of my lowest earnings years.
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Old 10-04-2015, 09:09 AM   #6
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Originally Posted by wanaberetiree View Post
I went for Schwab sponsored Demystifying Social Security event and it was to my surprise actually interesting and helpful.

One thing that I wanted to run by smart people of this group.

Say I am 56 yo and not working anymore.
At 62 - SS - $1,700
At 67 - SS - $2,500

I was told that if I am already qualified for SS then 'not working' years actually won't make much difference vs if I continued to work.

Can someone comment on this from personal experience?
Thx
I ran numbers a decade ago (54 now) and stopping work then vs working until 70 (taking ss @ 70) was about a 20% difference. Now it might be 10% or less... have not run the numbers...I'm RE.

go here
hit the estimate retirement benefits (this should be the ssa.gov page and after hitting that button should be in https protocol.
input your information. I believe after submitting it will want information from last year's taxes (your personal --not joint) SS taxable income to prove you are you. --note I did not go through this to validate instructions.
it should show you the typical 3 cases and have some button to add a new case, so add a new case. Here you select your retirement age as when you want to start receiving ss benefits. Use 0 for the earned income between now and starting benefits, then have it calculate. If you choose a normal starting age, you should have the benefit estimation of no income and taking SS verse the normal working until the same age benefits.

Once you are above the last bend point, working longer has marginal effect on the benefit.
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Old 10-04-2015, 09:42 AM   #7
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I no longer work (I am 56 years old, like you) and if I kept on working this is what I would get

At 62 - SS - $1,775
At 67 - SS - $2,604

Quite close to what you would be getting.

But if I put $0 as what I made last year, I get

At 62 - SS - $1,624 ($151 less)
At 67 - SS - $2,253 ($351 less)

It is what it is, I guess. It would be nice to get the same amount, but not having to go back to work is more appealing to me at this point... The resulting numbers for you with $0 will most likely be better than mine. I only had about 25 "good" working years.
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Old 10-04-2015, 10:08 AM   #8
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I no longer work (I am 56 years old, like you) and if I kept on working this is what I will get

At 62 - SS - $1,775
At 67 - SS - $2,604

Quite close to what you would be getting.

But I put $0 as what I made last year, I get

At 62 - SS - $1,624 ($151 less)
At 67 - SS - $2,253 ($351 less)

It is what it is, I guess. It would be nice to get the same amount, but not having to go back to work is more appealing to me at this point... The resulting numbers for you with $0 will most likely be better than mine. I only had about 25 "good" working years.
My numbers are very close to yours. I have ~26 good years of work in the US, and also was told that 26 vs 35 years is not a big difference as long as you have high earnings for 10 years.

I wrongly thought that "not working" years are like penalty been deducted from your SS and I see now that that was a wrong way of thinking.

If we assumed that in 25 years of work you were making lots of money and are qualified for maximum SS, then hypothetically I think that the amount would not change if you stopped working early.
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Old 10-04-2015, 10:14 AM   #9
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Originally Posted by tmm99 View Post
I no longer work (I am 56 years old, like you) and if I kept on working this is what I will get

At 62 - SS - $1,775
At 67 - SS - $2,604

Quite close to what you would be getting.

But I put $0 as what I made last year, I get

At 62 - SS - $1,624 ($151 less)
At 67 - SS - $2,253 ($351 less)

It is what it is, I guess. It would be nice to get the same amount, but not having to go back to work is more appealing to me at this point... The resulting numbers for you with $0 will most likely be better than mine. I only had about 25 "good" working years.
13.5% @67
8.5% @62

It really is dependent on number of years of qualified earnings and what those earnings are. The next wild card is when should you take it. Another very personal situation based decision.
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Old 10-04-2015, 10:39 AM   #10
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Originally Posted by wanaberetiree View Post
My numbers are very close to yours. I have ~26 good years of work in the US, and also was told that 26 vs 35 years is not a big difference as long as you have high earnings for 10 years.

I wrongly thought that "not working" years are like penalty been deducted from your SS and I see now that that was a wrong way of thinking.

If we assumed that in 25 years of work you were making lots of money and are qualified for maximum SS, then hypothetically I think that the amount would not change if you stopped working early.
SS takes your 35 highest inflation adjusted earning years where SS was paid and creates an average inflation adjusted income. Then they create 3 bands where they allot at FRA a % of each band to be your SS benefit.
(0 to X) 90%
(X to Y) 30%
(Y to max) 10%

I think my % are close and I don't know the exact bend points (they change with inflation). But once you are above Y, the delta in dollars is less as incremental changes are at 10%. Note that changes for when you take SS are additional...
This is why you don't see the huge change you expected and how the progressive nature (better return for lower income participants) works.
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Old 10-04-2015, 10:47 AM   #11
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SS takes your 35 highest inflation adjusted earning years where SS was paid and creates an average inflation adjusted income. Then they create 3 bands where they allot at FRA a % of each band to be your SS benefit.
(0 to X) 90%
(X to Y) 30%
(Y to max) 10%

I think my % are close and I don't know the exact bend points (they change with inflation). But once you are above Y, the delta in dollars is less as incremental changes are at 10%. Note that changes for when you take SS are additional...
This is why you don't see the huge change you expected and how the progressive nature (better return for lower income participants) works.
So basically I've assumed having gotten to Y, that any loss could easily be made up by just delaying taking my SS a few months. Thinking about working 10 more years vs. planning over the next 20 years how to save enough to hold off 6 months of SS seems like a good bang for buck exercise.
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Old 10-04-2015, 01:31 PM   #12
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So basically I've assumed having gotten to Y, that any loss could easily be made up by just delaying taking my SS a few months. Thinking about working 10 more years vs. planning over the next 20 years how to save enough to hold off 6 months of SS seems like a good bang for buck exercise.
This is true, but only if you decided to take SS at the FRA (e.g. ~67) and that won't work if you started early at 62 yo.
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