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Old 11-25-2014, 05:52 PM   #21
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Sure, it is similar to tax brackets, except it is based on lifetime earnings instead of yearly earnings.

There is a marginal return on each additional dollar earned as well as an average return.

-gauss
Then like I said originally. BTW, that marginal return is less & less on additional dollars.
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Old 11-26-2014, 05:39 PM   #22
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I don't think there are bend points.
There are bend points - tax brackets are an appropriate analogy

I.e., once you qualify for minimum SS benefits, each additional dollar of pay-in results in a lesser incremental increase in benefits till you each the maximum benefit & then get zero return on additional pay-in.

Wrong - the incremental increase in benefits for each additional dollar earned will be a constant until you move through a bend point. After this the constant changes value -- it decreases to a smaller incremental value.
Perhaps the picture and historical value of the 2 bend points for each year at the following link will help to illustrate this.

Benefit Formula Bend Points - SSA

-gauss
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Old 11-26-2014, 06:45 PM   #23
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Good stuff! According to the spreadsheet, I'll hit the 2nd bend point in 2017 if I keep my current salary + small annual raises through 2016.
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Old 11-26-2014, 09:40 PM   #24
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That spreadsheet is great. Thank you for linking to it. I early retired 3 years ago without doing any research into the impact of my retirement on future SS benefits. Subsequent calculations revealed that I should expect about 85% of my full benefit. This spreadsheet confirmed that and showed that I had reached the second bend point all the way back in 2007. I really didn't give up much in SS benefits by retiring when I did, 20 years prior to age 67 which is my SS full retirement age.


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Old 11-27-2014, 09:11 AM   #25
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If I go through with my ER plan as it currently stands, I won't even reach the second bend point. If I continue to work longer, hitting that second bend point may give me another reason for a new/revised "goal date."
I fired being midway between the first and second bend points. At this level SS still yields a respectable amount per month.

I calculated my marginal benefit by working an additional year. It came out to an additional $108/month (taking SS at 70) under the assumption of max income for that year. It wasn't a factor into my decision whether to continue working or not.
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Old 11-27-2014, 09:17 AM   #26
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I fired being midway between the first and second bend points. At this level SS still yields a respectable amount per month.

I calculated my marginal benefit by working an additional year. It came out to an additional $108/month (taking SS at 70) under the assumption of max income for that year. It wasn't a factor into my decision whether to continue working or not.

For me, i have the choice to pay ourselves wages or dividends. Essentially, i have the power to avoid SS tax, within reason. For me, its a factor while i am still working.


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Old 11-27-2014, 08:46 PM   #27
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For me, i have the choice to pay ourselves wages or dividends. Essentially, i have the power to avoid SS tax, within reason. For me, its a factor while i am still working.


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How long have you been doing this?

I have heard that this is one of the IRS looks for if your salary/wages are too small if you are running a small business.

-gauss
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Old 11-29-2014, 12:40 PM   #28
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How long have you been doing this?

I have heard that this is one of the IRS looks for if your salary/wages are too small if you are running a small business.

-gauss

Yes, they do check, and if i paid my self 0 wages they might care. I pay myself a decent, albeit low, wage our accountant suggested guidelines to stay within. We have to make this choice every year, how much to pay ourselves. This year the revenue has jumped, so the "problem" is getting larger.


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