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View Poll Results: What % of your Medicare Earnings have you saved?
0-20% 1 4.35%
20-40% 3 13.04%
40-60% 3 13.04%
> 60% 16 69.57%
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% of Lifetime Earnings Saved based on SSA Medicare Earnings
Old 07-31-2013, 07:35 PM   #1
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% of Lifetime Earnings Saved based on SSA Medicare Earnings

So I get my "Time to review your SS Statement online" email from the SSA.

When I saw the numbers, I thought it would be an interesting exercise to divide my "Investible Assets" by my lifetime "Medicare Earnings."

Came out to 50%. I was stunned.

"Investible Assets" for me was assets minus value of car(s), real property equity and checking account.

What is your % saved?
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Old 07-31-2013, 08:41 PM   #2
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Did you index your "Medicare Earnings"?
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Old 07-31-2013, 10:30 PM   #3
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Quote:
Originally Posted by Independent View Post
Did you index your "Medicare Earnings"?
I don't know what this means.
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Old 08-01-2013, 07:33 AM   #4
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I don't know what this means.
Did you adjust for inflation? For example, if you earned $50,000 back around 1987 or 1988, adjusting for inflation, that would be about $100,000 today.

In my case, my SS earnings only go back to 1986, when I was just 16. I didn't break $10K in any given year until 1993, my last year in college. If I just use the raw number, my ratio is actually an impressive 83.7%. But if I index it, it's 68.4%.

For me, the difference isn't *that* huge, because the bulk of my earnings have been in more recent years. But if you've been in the workforce for a longer period of time, the difference will probably be greater. My uncle is about to turn 61, and has 46 years of SS earnings in! He used to work as a roofer in the 1970's, and worked a lot of overtime. In 1975 for example, he mad about $10K, which would be about $50K adjusting for inflation. Now he's on dialysis, and only working 3 days per week as a truck driver/general labor, and in 2011, made about $18K. In his case, his indexed earnings would be about twice what his raw earnings are, so if I ran the calculation on him, there would be a bigger swing.
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Old 08-01-2013, 07:46 AM   #5
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Added up the Medicare taxed earnings off the latest statement. Was surprised how much I've earned over my lifetime (retired but consult part-time). Came up with > 60 (unadjusted earnings). Not sure I follow the logic.
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Old 08-01-2013, 07:54 AM   #6
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What's the point of indexing earnings for inflation? If you did that, wouldn't you also need to index the savings you put aside each year? It's just a simple exercise that probably doesn't have much meaning. It doesn't need to be analyzed and perfected, and couldn't be anyway.
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Old 08-01-2013, 08:04 AM   #7
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What's the point of indexing earnings for inflation? If you did that, wouldn't you also need to index the savings you put aside each year? It's just a simple exercise that probably doesn't have much meaning. It doesn't need to be analyzed and perfected, and couldn't be anyway.
Well, the formula is investable assets/lifetime earnings. Your investible assets already are in today's dollars. Lifetime earnings are not, and you need to use a multiplier for each year.

In my case, my first year of SS earnings was 1986. I earned $1637. However, the SSA's multiplier for that year, to get it up to today's numbers, is 2.41. So for SS purposes, my 1986 earnings, indexed for inflation, is more like $3945.

It would actually be a little bit more, as that 2.41 is last year's number. One day last year, I was bored and put in all my past earnings, projected future earnings, the SS index numbers for each year, etc, to see just how it all played out.
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Old 08-01-2013, 08:20 AM   #8
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OK, yes, you're right that investible assets are in today's dollars. I still don't think it has much meaning either way, so if it's just for fun you might as well keep it simple.
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Old 08-01-2013, 08:51 AM   #9
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OK, yes, you're right that investible assets are in today's dollars. I still don't think it has much meaning either way, so if it's just for fun you might as well keep it simple.
+1

I thought about indexing, taking out any earnings/capital gains etc, adjusting for the fact that I'm 48 and was only in the workforce for ~25 years knowing that others may have saved more earlier and have a higher percentage.

However, I quickly dismissed the additional steps in the exercise as the whole point was just for fun. I was amazed at how much I kept...and how much I spent (UGH!).
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Old 08-01-2013, 10:12 AM   #10
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The title of the poll is a bit misleading. Gains in accounts weren't my savings. Folks might have investable assets that came from other sources than savings (inheritance, lottery, lawsuit judgements... whatever.)

It also doesn't address debt - you exclude cars - do you also exclude car loans? How about credit card debt? (Granted - this forum is debt adverse - as am I... but most of my peers have debt to go along with their "investible assets".0

Even so - it's nice to my ratio, even if it's mistitled as $ of life time earnings saved. And that was with adjusting the investible assets down by my remaining mortgage, and not including 529's. etc.
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Old 08-01-2013, 10:35 AM   #11
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This is an interesting exercise, although I'm not sure exactly what it tells you.

I calculated what % of my lifetime gross earned income did I have as investible assets on the day I retired.

38%.
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Old 08-01-2013, 10:49 AM   #12
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Portfolio divided by lifetime Medicare earnings = 112%. Wow - we have more invested today than what we have earned throughout our entire lives. Feels pretty good to have kept everything you earned and then some!

And to know that half of those lifetime earnings happened in the last 4 years and we have still kept everything we have earned and then some.
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Old 08-01-2013, 11:09 AM   #13
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Old 08-01-2013, 12:29 PM   #14
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The ratio of current portfolio (brokerage accounts plus IRA) divided by career wage earnings is 109% (right up there with you, Fuego!). My highest years of wage earnings were 1996-2001 when I was still working full-time with a high hourly wage. Those 6 years have 35% of my total wage earnings. I worked from 1986-2008 and half a year in 1985 and summer jobs with tiny wage earnings in 1982 and 1983 (no Medicare taxes withheld in 1984's summer job). I worked part-time from 2002-2008 and for part of the 2001 year.

I see the arguments for and against indexing. I did not do any indexing, though.
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Old 08-01-2013, 02:25 PM   #15
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To the OP: I can't answer your question since I worked more than 10 years in Europe. No SS was taken into account during these years.
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Old 08-01-2013, 03:55 PM   #16
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Well I came in around 50%. I took half of our liquid assets and divided by my estimated lifetime medicare earnings (I divided the total medicare taxes paid by my employer by .0145 to estimate lifetime earnings). I left DW's earnings out of it since I didn't have her SS form handy and adjusted above by only using half of the liquid assets.

Compared to the poll results, I had a lower percentage of only around 51%.

I wonder if this is because I may be younger (age 48) than the average board member? Perhaps my investments have been more conservative than average or maybe my view of my LBYM'ness is higher than it really is (retirement budget going forward for 2 is $80k/year including taxes,replacement costs and health care for reference).

-gauss
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Old 08-01-2013, 04:39 PM   #17
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Given the voting so far, might want to redo the poll to add (many) more options beyond the top one.
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Old 08-01-2013, 07:51 PM   #18
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56% - I guess I'm lagging behind, though my earnings are heavily weighted towards my later years.
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