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Estimating Social Security
Old 01-24-2016, 09:41 AM   #1
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Estimating Social Security

Hello,

Since this is an 'early retirement' forum, I'm assuming many of you know the answer to this question...but, I don't, which is why I'm asking. I'm on my Social Security online profile and viewing my past earnings and estimated benefits. As you know, on the page for estimated benefits, it says:

"Your estimates are based on the assumption that you will earn $xxx a year from now until retirement."

So, what if you retire early, say at 55? Is there a calculator that you can use to plug in numbers to see how much that will change your monthly estimate if you don't work between 55 and 62?

Thank you.
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Old 01-24-2016, 09:54 AM   #2
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Quote:
Originally Posted by HomesteadDreamer View Post
Hello,

Since this is an 'early retirement' forum, I'm assuming many of you know the answer to this question...but, I don't, which is why I'm asking. I'm on my Social Security online profile and viewing my past earnings and estimated benefits. As you know, on the page for estimated benefits, it says:

"Your estimates are based on the assumption that you will earn $xxx a year from now until retirement."

So, what if you retire early, say at 55? Is there a calculator that you can use to plug in numbers to see how much that will change your monthly estimate if you don't work between 55 and 62?

Thank you.
Download and use the AnyPIA calculator at the Social Security website. You will need to enter your data including earnings record.
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Old 01-24-2016, 09:55 AM   #3
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https://www.ssa.gov/planners/retire/AnypiaApplet.html
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Old 01-24-2016, 10:20 AM   #4
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The Social Security site has a retirement estimator;

https://www.ssa.gov/retire/estimator.html

All you need do is estimate you will make zero dollars for future years.

I was amazed at my results. I retired at 56. My estimation if I continued to work and earning the same I did the last year I worked (max SS income) and if I earned zero was under $100 a month. Max SS right now would be a bit over $7,200 a year. From 56 to 66 (my FRA) would add up to $72,000. For that $72K, I would get a return of under $100 a month??

Just another reason ER looked attractive to me; it really didn't hit my SS benefits.
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Old 01-24-2016, 10:25 AM   #5
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go to retirement estimator
click on Estimate Your Retirement Benefits
You will need to fill out info identifying yourself. I believe this will include info about previous years SS earnings.
When you get through this it will provide the 3 typical estimates that assume you work until you start withdrawing. It will also allow you to add a new estimate, do this. Select the age you want to start taking SS and the assumed earned income for the intervening years. For this select 0. This should give you the estimate you are looking for.
AnyPIA is good. Downside is that you need to populate all your historic data. It does allow you to make many other test cases. But for a quick check when you can assume all future earnings are 0, the retirement estimator is a quick way to get it done.
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Old 01-24-2016, 12:02 PM   #6
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Quote:
Originally Posted by HomesteadDreamer View Post

So, what if you retire early, say at 55? Is there a calculator that you can use to plug in numbers to see how much that will change your monthly estimate if you don't work between 55 and 62?

Thank you.
your prior earnings are indexed using national average wages - if you have worked 30 years or so I doubt that projecting pay past 55 will make that much difference, depends on what you were paid early on, SS is an indexed career-average formula
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Old 01-24-2016, 12:24 PM   #7
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Bend points of monthly average
$826 at 90%
Over $826 and < $4980 at 32%
> $4980 at 15%

Once your monthly average goes over $4980 it only adds 15% to the SS payment. Extra work is not rewarded.
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Old 01-24-2016, 12:59 PM   #8
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In October, November and December of 2015, Wade Pfau published some excellent articles regarding social security on his blog:

Insights and Research by Wade Pfau - Retirement Researcher
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Old 01-24-2016, 01:31 PM   #9
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Originally Posted by skipro33 View Post
The Social Security site has a retirement estimator;

https://www.ssa.gov/retire/estimator.html

All you need do is estimate you will make zero dollars for future years.

I was amazed at my results. I retired at 56. My estimation if I continued to work and earning the same I did the last year I worked (max SS income) and if I earned zero was under $100 a month. Max SS right now would be a bit over $7,200 a year. From 56 to 66 (my FRA) would add up to $72,000. For that $72K, I would get a return of under $100 a month??

Just another reason ER looked attractive to me; it really didn't hit my SS benefits.
I originally had some trouble getting the AnyPia calculator to work, so I created a spreadsheet to mimic its calculations. A few years later, I was able to get the AnyPia calculator to work, and its results were very nearly the same as my spreadsheet's.

I also had done an experiment similar to yours which assumed my final, part-time salary increasing at about 3% a year for enough years to fill in all those zeroes or near-zeros (i.e. college summers), about 11 in all. I was on the cusp of the 15% bend point, so those extra years of earnings would have increased my monthly SS benefit by 10%, hardly worth the extra years of working, as you have also concluded.
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Old 01-24-2016, 03:30 PM   #10
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Quote:
Originally Posted by skipro33 View Post
The Social Security site has a retirement estimator;

https://www.ssa.gov/retire/estimator.html

All you need do is estimate you will make zero dollars for future years.

I was amazed at my results. I retired at 56. My estimation if I continued to work and earning the same I did the last year I worked (max SS income) and if I earned zero was under $100 a month. Max SS right now would be a bit over $7,200 a year. From 56 to 66 (my FRA) would add up to $72,000. For that $72K, I would get a return of under $100 a month??

Just another reason ER looked attractive to me; it really didn't hit my SS benefits.

Good to know because I retired at 55, but I have 35 years of earnings. No zero years.


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Old 01-24-2016, 10:16 PM   #11
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I prefer to understand what's going on, rather than rely on a black box. So, like Scrabbler, I created my own spreadsheet.

It's straightforward if you follow the example here https://www.ssa.gov/oact/progdata/retirebenefit1.html
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Old 01-24-2016, 10:30 PM   #12
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Good to know because I retired at 55, but I have 35 years of earnings. No zero years.
In that case, future earnings only affect SS if they are higher than the lowest of your 35 years of earning adjusted for inflation. This can mean you pay full SS tax for minor (if any) benefit. If you are part time or earning less in a different job, you might see no change at all.
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Old 01-25-2016, 02:21 PM   #13
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The bend points have changed slightly for 2016. http://www.ssa.gov/pubs/EN-05-10070.pdf
$856 and $5157
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