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Estimated SS Benefit is LOWER in 2010?
Old 12-23-2010, 03:12 PM   #1
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Estimated SS Benefit is LOWER in 2010?

I am not a Social Security guru, but I was surprised to receive my annual earnings statement today and find that the estimated benefits for ages 62, 66 and 70 were $30 to $50 per month lower than they were last year and than the SSA's online estimator gave me three months ago. I am nearly 61, and my 2009 earnings were my highest. I thought this was pretty much impossible, and I am not finding any answers on the SSA's site or through Google. Am I missing some obvious explanation?
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Old 12-23-2010, 03:16 PM   #2
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I'll venture a guess: The new numbers reflect the latest changes (reduction) in estimated future benefits due to the impact of a second consecutive year with no cost of living increases.
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Old 12-23-2010, 03:21 PM   #3
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Ah, that may be the answer. Hadn't occurred to me, and didn't occur to the SS rep with whom I spoke. Thanks. I've never seen the numbers go down in 40 years of working and was baffled.
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Old 12-23-2010, 03:30 PM   #4
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Originally Posted by Runner View Post
I've never seen the numbers go down in 40 years of working and was baffled.
I think we're all a bit baffled - this is the first time it's happened since SS COLA's began in 1975:

Cost-Of-Living Adjustments
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Old 12-23-2010, 03:32 PM   #5
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While you are working I believe the future SS payments are based on projected wage increases and I expect that wages have been stagnant or even gone down this last couple of years. (I didn't keep my last year's statement to compare).

Interesting that the on-line calculator is different.

I just got my SS statement a couple of weeks ago, so I went to the online estimator and the estimates match exactly.
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Old 12-23-2010, 04:12 PM   #6
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While you are working I believe the future SS payments are based on projected wage increases and I expect that wages have been stagnant or even gone down this last couple of years.
This sounds like a plausible explanation to me. I would assume the decrease might even be larger next year when the statement reflects the two percentage point drop in SS withholding for 2011.
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Old 12-23-2010, 04:12 PM   #7
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Wow deja vu, I have always heard that benefits go down as
goose eggs no earning show up on your statement. This is the first time I have had reduced benefits.

Any truth to that.

Retired 5 years with no salary income.
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Old 12-23-2010, 04:17 PM   #8
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Wow deja vu, I have always heard that benefits go down as
goose eggs no earning show up on your statement. This is the first time I have had reduced benefits.

Any truth to that.
Sure, that's true.

When I get an on-line estimate on the SS website it always defaults to the assumption that my earnings stay at the same level. When I then do an estimate showing zero earnings starting at age 56 then I get a lower estimate.
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Old 12-23-2010, 04:23 PM   #9
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Quote:
Originally Posted by grasshopper View Post
Wow deja vu, I have always heard that benefits go down as
goose eggs no earning show up on your statement. This is the first time I have had reduced benefits.

Any truth to that.

Retired 5 years with no salary income.
They project that future income will be same as last years.

The avg wage index did drop, from 41335 -> 40712, which is used as their inflation factor, they just published this, so online calc was right for the time you did it.
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Old 12-23-2010, 05:31 PM   #10
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Thanks, Alan and TJ. I used the online calculator and it gave the same figure that my statement gave. I did show zero's for 2007 and 2008.

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Old 12-23-2010, 05:32 PM   #11
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Figures, I'll be 62 in a few months and was looking forward to the amount I received on my last statement. Never realized with no COLA increase that the amount would go down.

REW, if you are already receiving SS does the amount also go down?
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Old 12-23-2010, 05:39 PM   #12
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So... based on all that information, does it make sense to wait longer to take SS? I retired but haven't started SS yet. Didn't want my 2010 income to be higher.
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Old 12-23-2010, 05:56 PM   #13
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-1.51% AWI.

Average Wage Index (AWI)

Unlike COLA, which won't decrease your current benefit if CPI goes down, AWI will decrease future benefits if it goes down.

I would guess this would have more effect on those that are ER'ed, and have no SS earnings for a few years. Those who have year to year earnings, are not likely to notice it as much.
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Old 12-23-2010, 06:07 PM   #14
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Originally Posted by 73ss454 View Post

REW, if you are already receiving SS does the amount also go down?
No. I received a letter from SS last week saying my monthly check would be the same in 2011 as it was in 2010.
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Old 12-23-2010, 06:46 PM   #15
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No. I received a letter from SS last week saying my monthly check would be the same in 2011 as it was in 2010.
So, let me get this straight in my pea brain. Let's say you took SS 2 years ago at 62 and I take it next year at 62. We both earned the same income through the years and worked the same amount of years. Yet I'll be getting less than you 2 years later. Is this correct?
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Old 12-23-2010, 07:03 PM   #16
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So, let me get this straight in my pea brain. Let's say you took SS 2 years ago at 62 and I take it next year at 62. We both earned the same income through the years and worked the same amount of years. Yet I'll be getting less than you 2 years later. Is this correct?
As bad as I want to say, "Yup, how do you like them apples?" , I really don't know the answer. Doesn't seem right.
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Old 12-23-2010, 07:23 PM   #17
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Wonder if this scenario alters the thinking on taking it at 62 vs 70 for those at 62 now?

But without knowing the rules, it's a crap shoot.
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Old 12-23-2010, 08:23 PM   #18
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Wonder if this scenario alters the thinking on taking it at 62 vs 70 for those at 62 now?

But without knowing the rules, it's a crap shoot.
We live in interesting times. This is the first time in over 50 years that the AWI has been negative.

National Average Wage Index
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Old 12-23-2010, 08:33 PM   #19
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They probably had a historical cola built in .
How much lower was it percentage wise?
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Old 12-23-2010, 08:47 PM   #20
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We live in interesting times. This is the first time in over 50 years that the AWI has been negative.

National Average Wage Index
Funny you should mention that. I just finished a spreadsheet with as much historical data as I could find from inception of records of each.
AWI
GDP
Fed Rates
Unemployment
CPI
S&P 500
Deficit as % of GDP
And some I'm forgetting.

I was looking to see if there are patterns, and so far not seeing any.

This may be a unique few years.

Lowering the SS tax is just baffling. Let me see: "SS is running short on funds", OK "let's collect less money". Baffled, I say.
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