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Social security benefit for early retirees
Old 11-14-2010, 11:22 AM   #1
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Social security benefit for early retirees

Hi,

I understand this question has likely been answered many times in this forum, though I have not found it yet. I apologize for a redundent question.

If I retire at the age of 55 (soon), and start receiving benefits at 62, or 66, what would be the dolloar amount difference?

This is what I see from my SS Statement:
If I stop work at 62 and begin the benefits at 62, I will receive $1656
If I stop work at 66 and begin the benefits at 66, I will receive $2398. A 44% increase comparing to age 62.


Using the SS website Retirement Estimator, I see this senario:
If I stop work at 55 and begin the benefits at 62, I will receive $1441

What I failed to find, is this senario:
If I stop work at the same age of 55, and begin the benefits at 66 in stead, what amount will I receive?

Thanks
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Old 11-14-2010, 11:31 AM   #2
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Here are a couple of threads on the same subject:

Social Security and Retiring at 54
Social Security Beneift Penalized by Early Retirement?

Bottom line, the impact to your SS check will be very small.
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Old 11-14-2010, 12:25 PM   #3
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Quote:
Originally Posted by fh2000 View Post
Hi,

This is what I see from my SS Statement:
If I stop work at 62 and begin the benefits at 62, I will receive $1656
If I stop work at 66 and begin the benefits at 66, I will receive $2398. A 44% increase comparing to age 62.


Using the SS website Retirement Estimator, I see this senario:
If I stop work at 55 and begin the benefits at 62, I will receive $1441

What I failed to find, is this senario:
If I stop work at the same age of 55, and begin the benefits at 66 in stead, what amount will I receive?

Thanks
It won't be exact, but a good estimate likely is $1441, plus (($1441*(4*.08))=$1902, in 2010 dollars.
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Old 11-14-2010, 12:46 PM   #4
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The tricky part is making sure you have the right amount computed for age 62 - - in other words, use the SS calculator where you can fill in zero earnings for the years between age 55 and 62.

Your yearly statement from SS assumes that you will continue working until age 62, at the same salary that you earned last year. So, it is too large. The amount of difference is usually not too big, but might be for some people depending on work history. You need to go to Social Security Online - The Official Website of the U.S. Social Security Administration and to use the calculators there. Use the one that allows you to manually fill in the earnings listed on your statement from SS, and also $0 in earnings during those years between age 55 and 62.

Once you get the right amount computed for SS taken at age 62, then if your full retirement age is 66, all you need to do is divide by 0.75 .
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Old 11-14-2010, 08:13 PM   #5
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Quote:
Originally Posted by fh2000 View Post
...
This is what I see from my SS Statement:
If I stop work at 62 and begin the benefits at 62, I will receive $1656
If I stop work at 66 and begin the benefits at 66, I will receive $2398. A 44% increase comparing to age 62.


Using the SS website Retirement Estimator, I see this senario:
If I stop work at 55 and begin the benefits at 62, I will receive $1441

What I failed to find, is this senario:
If I stop work at the same age of 55, and begin the benefits at 66 in stead, what amount will I receive?

Thanks
if the $1441/mo number is computed correctly then the answer to your question will be $1441 *(2398/1656) = $2086/mo
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Old 11-14-2010, 08:57 PM   #6
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It took the SS dept. several years after I quit working before they changed their assumptions on my future wages. One of the factors in my early retirement was realizing the shockingly small difference that working extra years on your SS payments. Mine is $1317 despite my wages stopping at age 40. At age 66 and 10 months they increase to $1848. So your extra 15 years resulted in a $125/month more.
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Old 11-14-2010, 09:39 PM   #7
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Quote:
Originally Posted by jdw_fire View Post
if the $1441/mo number is computed correctly then the answer to your question will be $1441 *(2398/1656) = $2086/mo
I would like to see what algorithm you used to get this, and what your assumptions were.

My algorithm and assumptions were as follows: 1) the $1441 is taken as correct at FRA.
If your FRA is 66, you get 8% simple interest on FRA amount each year, until you reach age 70. So, It won't be exact, but a good estimate likely is $1441, plus (($1441*(4*.08))=$1902, in 2010 dollars.

What does $2398, or $1656 have to do with anything?

Ha
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Old 11-14-2010, 11:04 PM   #8
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Quote:
Originally Posted by haha View Post
I would like to see what algorithm you used to get this, and what your assumptions were.

My algorithm and assumptions were as follows: 1) the $1441 is taken as correct at FRA.
i made 2 assumptions: 1)that the $1441 is taken as correct at 62 y.o., and 2) that given an amount of benefit at 62 y.o. the SSA knows how to compute the amount of benefit at 66 y.o.

Quote:
Originally Posted by haha View Post
What does $2398, or $1656 have to do with anything?

Ha
they are the numbers for benefits for this particular person given a certain work history at the ages of 66 y.o. and 62 y.o. respectively.

however i am now thinking a simple algabraic computation wont work here because the SSA number given at age 66 is based on working till age 66, so my answer is incorrect however i dont think an answer can be given based on the info provided because per the SSA
Quote:

Workers can still retire as early as age 62, but the monthly
benefit is reduced by 5/9 of 1 percent for each of the first
36 months of entitlement immediately preceding the FRA. If
the number of months preceding FRA exceeds 36, then the
benefit is further reduced 5/12 of 1 percent for each of up to
24 earlier months.
and this will require knowing the ops birthdate inorder to determine his FRA
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Old 11-14-2010, 11:18 PM   #9
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Quote:
Originally Posted by jdw_fire View Post
i made 2 assumptions: 1)that the $1441 is taken as correct at 62 y.o., and 2) that given an amount of benefit at 62 y.o. the SSA knows how to compute the amount of benefit at 66 y.o.



they are the numbers for benefits for this particular person given a certain work history at the ages of 66 y.o. and 62 y.o. respectively.

however i am now thinking a simple algabraic computation wont work here because the SSA number given at age 66 is based on working till age 66, so my answer is incorrect however i dont think an answer can be given based on the info provided because per the SSA


and this will require knowing the ops birthdate inorder to determine his FRA
This is true; I made the asumption that he was born in the very broad band or FRA at age 66 people as he specified taking it at 66. True he could take it any time after 62, but if he is going to wait, why not wait until FRA at least?

Birth years 1943 through 54 inclusive have FRA of 66. Then it increases gradually until it reaches 67 for birth years 1960 and later.

Thanks for showing your work.

Ha
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Old 11-15-2010, 04:24 AM   #10
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Whatever it calculates to be today... for some group of people the rules will change... some changes may apply to all.

They are talking about introducing:

  • Another bend point
  • COLA reduction
  • Extend the Age for FRA (which probably means a larger reduction for ER at 62)

On top of increasing the income cap for money paid into the fund.

The impact will be significant to the solvency of the overall fund... but the impact to most individuals probably will be at the margins.

Still, if one is planning and making assumptions at the outer edge of being able to fund their retirement (in a gray area)... I think it might be a good idea to keep w*rking until the issue is settled to understand the full impact to one's plan.

Continuing to work now is much easier (and probably more profitable) than attempting to restart after a couple of years out of the workforce.
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Old 05-06-2011, 09:07 AM   #11
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Rather than start a new thread I thougth I'd add to this one. Lots of good stuff in here that helps me understand. I have worked (and paid into SSA) 30 years, but my first couple years were only part time and very low income. When I run the estimator and put in zero income from this point forward to my FRA I am seeing 671 less per month, than if I use my current income.

It seems like with only 5 years short of the 35 max I wouldn't be whacked this hard. I've never made the maximum wage for SSA, so I am thininking that is part of why I am seeing such a reduction. Is my assumption correct that SSA is averaging 35 years of income, which for me would be the first couple at very low income (less than 10k) and also affected by the 5 more years at zero?
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Old 05-06-2011, 12:09 PM   #12
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In short, yes.

See Social Security Benefit Amounts


Quote:
Social Security benefits are typically computed using "average indexed monthly earnings." This average summarizes up to 35 years of a worker's indexed earnings. We apply a formula to this average to compute the primary insurance amount (PIA). The PIA is the basis for the benefits that are paid to an individual.
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Old 05-06-2011, 03:10 PM   #13
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Fortunately or UN-fortunately I have at least 5 more years to work, and possibly 8. I need to find my last print out and see how many really low years I had back in the day. Luckily I kept the last statement as I understand that SSA is not sending out statements anymore.
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Old 05-06-2011, 04:49 PM   #14
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Don't forget, you can always get an accurate estimate on their website.
Benefits Calculators: About the Social Security Retirement Estimator
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