Social Security calculator error for ages 67, 68, & 69?

[anethum]

I was born in 1954, so my Social Security FRA is exactly 66 years old. When I use the SSA calculator entering $0 for last year's earnings, it shows my FRA benefits amount at 66, and the amount if I delay until 70, which is 132% of the FRA amount, as expected. However, when I use the calculator for estimates for starting benefits at 67, 68, & 69, always entering $0 for future earnings, the benefit estimate for 67 is not 108% of my FRA amount. Rather, it is 104.6%. Age 68 is 112.6% of FRA, and age 69 is 120.6%. It jumps 8% of FRA from 67 to 68 and from 68 to 69, but not from 66 to 67. However, the SSA website clearly states if I delay beyond FRA age, the benefit amount increases 2/3 of 1% for each month between 66 and 70.

If I use the calculator on the following page, it shows 108% of FRA if I begin to collect benefits the month I turn 67. (This calculator doesn't give $ amounts, only percentages based on dates you enter).

https://www.ssa.gov/oact/quickcalc/early_late.html

Is there something I'm missing, or does the $ benefits calculator have a bug?

[joeea]

Which calculator do you think is wrong?

[Golden sunsets]

I remember (vaguely) reading that claiming after your FRA but before age 70, but not at an exact birth date, or 1/1 of a specific year, changes that percentage temporarily until the next year (1/1 ) occurs. But that changed percentage trues up at the next 1/1 date.

[anethum]

Quote:

Originally Posted by joeea Which calculator do you think is wrong?

The main one where you have to verify your identity. Then you give it your earnings for last year. It gives you benefit estimates for FRA, age 70, and current age if you're between 62 and FRA, or 62 if you're not yet 62. Then you can "Add a new estimate" by giving it an age and your earnings until then.

[joeea]

Quote:

Originally Posted by anethum The main one where you have to verify your identity.

Do you have a link for the "main one"?

[Independent]

I'll guess that your birthday is pretty close to the middle of the year.

Try this thread: http://www.early-retirement.org/foru...0-a-73525.html

[anethum]

Quote:

Originally Posted by Independent I'll guess that your birthday is pretty close to the middle of the year. Try this thread: http://www.early-retirement.org/foru...0-a-73525.html

Thank you, Independent. Now I understand what is happening with the estimate. It sounds crazy, but I guess it is what it is.

In that 2014 thread you wrote:

"As close as I can follow, the benefit is recalculated the next January, and benefits paid after that reflect all the earned DRCs. But, there is no retro-active lump sum payment for the benefits lost in the first year."

Is that still your understanding?

[Perryinva]

Yes, that is correct. It is an idiosyncrasy of when the DRCs are earned and when they are applied (always 1/1) and when your birthday is. They do no one any favors by always referring to your increased SS based on age. What matters is when you apply relative to the first of the year and how many MONTHLY DRCs you have between when you apply and 1/1. If you have an FRA of 66 & a July birthday, and then apply to collect when you are 67 the following year, you get no credit in that year for the DRCs earned that year. So you “lose” 6 months DRCs of the 12 you earned, for 6 months. They get counted starting 1/1 of the year you turn 68. If your birthday is in Jan, and you apply to collect in Feb, to you “lose” that 1 month DRC for 11 months. So regardless of when you apply, there is a loss of some DRC increases in the first year. The full 2/3 % per monthly earned DRC in the year you file, is only fully credited on 1/1 of the following year. It is actually about as unfair as changing the FRA dates after you were born, as it is FRA relative to birthday based and that partial one year loss is never recouped.

Or as fair as the fact that benefits are reduced percentage wise as your average top 35 year lifetime earnings increase closer to the max, but you can pay in for many more years than 35. My FRA is 66 and 8 months, which luckily is in the same year as my birthday. But instead of 48 months of 2/3% DRCs maximum, I can only get 40 months max. If I retire at 62, I will have paid the max in for 38 years, so 3 extra years and get no credit at all for it.

The max AIME (average indexed monthly earnigns) for 2017 is about $9200/mo. So the SS payout is 90% of about the first 10% plus 32% of the next 48% plus only 15% of the last 42%. So earning and paying in the last 42% of maximum SS only increases ones SS by 20.5%. The 1st 10% counts for 29%, the next 48% counts for 50.5%. So paying in 58% of the max yields 80% of the return.

[marko]

Quote:

Originally Posted by joeea Which calculator do you think is wrong?

"An man with two watches....."

[Golden sunsets]

Quote:

Originally Posted by Independent I'll guess that your birthday is pretty close to the middle of the year. Try this thread: http://www.early-retirement.org/foru...0-a-73525.html

Yep - that's the rule I was "vaguely" recalling.

[Independent]

Quote:

Originally Posted by anethum Thank you, Independent. Now I understand what is happening with the estimate. It sounds crazy, but I guess it is what it is. In that 2014 thread you wrote: "As close as I can follow, the benefit is recalculated the next January, and benefits paid after that reflect all the earned DRCs. But, there is no retro-active lump sum payment for the benefits lost in the first year." Is that still your understanding?

Yes
I just accessed this link https://www.law.cornell.edu/cfr/text...=0#qt-cfr_tabs

Section (c) still reads the same as I remember it.