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Old 02-08-2014, 02:22 PM   #21
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Originally Posted by Major Tom View Post
That sounds about right - see what growing_older said.

I only worked and contributed to SS for about 22 years. I stopped work at the age of 45 but was quite surprised to find that although I would have received more SS had I continued to work, it wasn't that much more - ~$200 more/month at age 62 and ~$300 more/month at age 67 - for an extra 20 years of work! My average earnings were about the same as yours.
Pretty much the same here. I worked for 23 years, spanning 24 different calendar years for SS purposes (before ERing at age 45 five years ago). But because my last 7 years were part-time, had I kept working part-time and received average raises for all those "zero" years in my SS calculation, my projected SS monthly benefit would be about 10% higher, or about $165 a month.

Like what mpeirce wrote, I have a few very small earnings years (summer jobs) before I began working full-time. My SS wages were between $500 and $600 each year.
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Old 02-08-2014, 03:01 PM   #22
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I ran the numbers through the social security web site to find out how not working would impact my future social security benefits. It was an interesting exercise. One thing I noted was that the spread between ages 62, 67 and 70 appear to reflect a 7% increase each year, not 8%.

If I continue working from now until I retire, my numbers would be:

Age 62 $1,896
Age 67 $2,710
Age 70 $3,369

If I stop generating any future income as of this year, my age 62 number drops to $1,631. I then adjust the numbers up by adding a 7% per year increase, so age 67 becomes $2,288 and age 70 becomes $2,802.

I'm planning on delaying social security until age 70. So for me, it's the difference between $3,369 and $2,802. It's not an insignificant amount, but I would have to work ten more years to get the full amount, and it doesn't seem like it's worth 10 years of work for an extra $567 per month.

I'm still wondering why the figures are supposed to increase 8% per year though, and my numbers only seem to be increasing by 7% each year. What am I missing?
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Old 02-08-2014, 03:24 PM   #23
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You only have three years from your full retirement age (67) until age 70. Three years of 8% increase is 24%. Yes, there is no compounding and that is how they figure "8% increase for each year" you delay. 24% of 2710 is 650 and when you add 650 to 2710 you get 3360, which is pretty much what the calculator is showing you. They actually do an analogous calculation based on number of months from FRA to age 70, so that's probably where the $9 rounding came from.

The element you may have been missing is the weird way they do their calculations.
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Old 02-08-2014, 03:36 PM   #24
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The element you may have been missing is the weird way they do their calculations.
Very interesting - thank you. I found the section on the ssa web site that describes this. Apparently to get from the age 67 number down to the age 62 number you subtract 30%.

So I guess I can deduce that if my age 62 number without working any further is $1,631, then my age 67 number is $1,631 / .7 = $2,330, and my age 70 number is $2,330 x 1.24 = $2,889.

So the $2,889 figure is $480 lower than the figure I would earn if I keep working for another decade. Well, that makes me feel even better, since I have no desire to work ten more years to earn an extra $480/month.
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Old 02-11-2014, 11:02 AM   #25
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What is interesting/perplexing is that when I run the numbers in the spreadsheet I have constructed (which allows me to plug in all sorts of scenarios for diff. returns, tax brackets, ss age, 'death') - I end up with more assets to pass on to heirs if I start collecting SS at 62 vs 70.

By starting at 62, I think I am not drawing down as much on my assets and they actually grow from age 80 thru 100.

When I delay ss to age 70, my overall assets still grow over time, but the final amount at 'death' is lower than if I start ss at 62.
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Old 02-11-2014, 11:15 AM   #26
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Originally Posted by BBQ-Nut View Post
What is interesting/perplexing is that when I run the numbers in the spreadsheet I have constructed (which allows me to plug in all sorts of scenarios for diff. returns, tax brackets, ss age, 'death') - I end up with more assets to pass on to heirs if I start collecting SS at 62 vs 70.

By starting at 62, I think I am not drawing down as much on my assets and they actually grow from age 80 thru 100.

When I delay ss to age 70, my overall assets still grow over time, but the final amount at 'death' is lower than if I start ss at 62.
Yep. That is how it works!
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Old 02-11-2014, 11:42 AM   #27
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What is interesting/perplexing is that when I run the numbers in the spreadsheet I have constructed (which allows me to plug in all sorts of scenarios for diff. returns, tax brackets, ss age, 'death') - I end up with more assets to pass on to heirs if I start collecting SS at 62 vs 70.

By starting at 62, I think I am not drawing down as much on my assets and they actually grow from age 80 thru 100.

When I delay ss to age 70, my overall assets still grow over time, but the final amount at 'death' is lower than if I start ss at 62.
Your spreadsheet allows you to vary the assumed investment return. You should find that this result is very sensitive to that assumption.

Be careful how you handle inflation, remember that SS is CPI adjusted.
When I do this calculation, I find that if I'm looking at net worth at age 100, I need to assume more than CPI+6% to make the start-at-62 option look better.
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Old 02-11-2014, 12:15 PM   #28
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Your spreadsheet allows you to vary the assumed investment return. You should find that this result is very sensitive to that assumption.

Be careful how you handle inflation, remember that SS is CPI adjusted.
When I do this calculation, I find that if I'm looking at net worth at age 100, I need to assume more than CPI+6% to make the start-at-62 option look better.
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Old 02-17-2014, 11:33 AM   #29
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Very interesting - thank you. I found the section on the ssa web site that describes this. Apparently to get from the age 67 number down to the age 62 number you subtract 30%.

So I guess I can deduce that if my age 62 number without working any further is $1,631, then my age 67 number is $1,631 / .7 = $2,330, and my age 70 number is $2,330 x 1.24 = $2,889.

So the $2,889 figure is $480 lower than the figure I would earn if I keep working for another decade. Well, that makes me feel even better, since I have no desire to work ten more years to earn an extra $480/month.

Between the link Gauss posted and the details on the SSA.gov site, I have constructed my spreadsheet to forecast benefits at various ages and with various work stop dates. Both sources mention addition of COLA if collecting after age 62. Unable to determine if the estimates from SSA.gov included COLA projections or not. Does anyone know? How do folks here handle that aspect of estimating SSA Benefits? Project based on average CPI over recent periods, leave it out since it is unknown, etc.?

Thanks.
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Old 02-17-2014, 12:04 PM   #30
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Between the link Gauss posted and the details on the SSA.gov site, I have constructed my spreadsheet to forecast benefits at various ages and with various work stop dates. Both sources mention addition of COLA if collecting after age 62. Unable to determine if the estimates from SSA.gov included COLA projections or not. Does anyone know? How do folks here handle that aspect of estimating SSA Benefits? Project based on average CPI over recent periods, leave it out since it is unknown, etc.?

Thanks.
I assume it goes up with the average wage index which is already part of the calculations for wage normalizing and the estimate calculation. Your estimate is based on today's dollars, it will rise with inflation, but there is talk of changing it, in other words, lower it, not sure that idea got very far.
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Old 02-17-2014, 12:46 PM   #31
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I assume it goes up with the average wage index which is already part of the calculations for wage normalizing and the estimate calculation. Your estimate is based on today's dollars, it will rise with inflation, but there is talk of changing it, in other words, lower it, not sure that idea got very far.
The benefit increases with wage increases till age 62. At that point since some folks at least start taking SS it switches over to cola for all even those who have not started, because that maintains the actuarial equivalence of benefits no matter when they are started.
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Old 02-18-2014, 09:03 AM   #32
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Interesting. I tried the Northwestern Mutual Life "Longevity Game" and picked answers that I thought were "most healthy". I got a life expectancy of 95 for a male who has already reached 70. So your 30 years doesn't look overly optimistic.
FWIW, we had another one in the obit's this morning that passed at age 101 (and a man, no less ).

I've mentioned this on another thread; living in a state (PA) which has a lot of elderly, I'm surprised at the number (multiples) of those that have passed at/above the century mark, in a monthly period.

While DW/me have planned our retirement income (including SS) for 100 years (taking SS at age 70; I'm 66, DW will be the same in May), we've always planned for meeting our income needs assuming a long life.

If we're wrong? So what. Money is for the living, not the dead , and like I've always said I would rather die with money than live without it ...

FWIW...
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Old 02-18-2014, 09:24 AM   #33
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Between the link Gauss posted and the details on the SSA.gov site, I have constructed my spreadsheet to forecast benefits at various ages and with various work stop dates. Both sources mention addition of COLA if collecting after age 62. Unable to determine if the estimates from SSA.gov included COLA projections or not. Does anyone know? How do folks here handle that aspect of estimating SSA Benefits? Project based on average CPI over recent periods, leave it out since it is unknown, etc.?

Thanks.
The SS numbers are in current dollars. They assume no change in the wage index or the CPI between now and when you start benefits.

You should be able to verify this by matching the SS with your worksheet.

I plan based on "real" dollars. My simple assumption is that my basic spending goes up with the CPI, and SS goes up with the CPI, so SS gives me a constant real income.

As others have mentioned, SS actually goes up with a wage index prior to retirement. The historic difference between wages and CPI has been about 1.0 - 1.5%. I have just ignored that difference for planning.
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