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Old 04-05-2008, 11:07 PM   #21
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Originally Posted by Shawn View Post
I believe a lot of people are in this situation (probably without knowing it). I don't think it is all that rare to be at the "15%" social security level, where a person gets very little added benefit for each additional dollar contributed to social security. Not counting high school and college jobs (grad school RA/TA stipends being exempt from SS deductions), I've been in the workforce for only 16 1/2 years (with about 10 above the SS limit). However, in a couple of years I will be in this situation.

Have you gone through the numbers using the web site you referenced to compute where you are at? Basically, all you need to do is input your (wage adjusted) salary over your working career, and crunch a few numbers.

BTW, I laughed when you said you edited your post to be more positive. I don't how anyone can be more positive than you.
Aw, thank you! That makes me feel better. I do try to be positive and to contribute what I can to the forum. I was feeling a little down at the time.

Yes, the reason I brought this link to the website is that I have crunched the numbers now and then for nearly a decade, using my own numbers and sometimes other possible scenarios. I enjoy feeling familiar with exactly how SS computes benefits.

In order to get into the 15% bracket, you have to have earned over 4288*420=$1,800,960 in adjusted wages. In the 18 years in the workforce that it will take for you to get there, that would mean you would have averaged $100,053 in adjusted wages. Pretty good for your first year on the job, so I would suspect you started lower and are doing considerably better by now. Congratulations on finding such a high paying career!

Looking at the table in the original link, it appears that one would have to make over the maximum social security yearly wage for each of 19 years in order to move into the 15% category for most of the qualified wages earned during the 19th year.

So, suppose you would be making $200K in adjusted yearly salary from age 50-55, and are in the 15% category. How much extra would that money add to your SS? At first I thought that it might be

(($200,000 x 5yrs)/420)*.15 = $357/mo increase in monthly SS

But then in your relatively stratospheric salary range, there are upper limits to how much of your salary are social security wages ($97,500 for 2007, though that is far more than I make so I have been ignoring it). That would cut the increase in half,

(($97,500 x 5 yrs)/420)*.15 = $174/mo increase in monthly SS

Also there might even be upper limits on what your monthly payments can be as well, I suppose! Such limits will never apply to me, so I really have never looked into them.
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Old 04-06-2008, 12:05 AM   #22
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Originally Posted by Want2retire View Post
In order to get into the 15% bracket, you have to have earned over 4288*420=$1,800,960 in adjusted wages. In the 18 years in the workforce that it will take for you to get there, that would mean you would have averaged $100,053 in adjusted wages. Pretty good for your first year on the job, so I would suspect you started lower and are doing considerably better by now. Congratulations on finding such a high paying career!

So, suppose you would be making $200K in adjusted yearly salary from age 50-55, and are in the 15% category. How much extra would that money add to your SS? At first I thought that it might be

(($200,000 x 5yrs)/420)*.15 = $357/mo increase in monthly SS

But then in your relatively stratospheric salary range, there are upper limits to how much of your salary are social security wages ($97,500 for 2007, though that is far more than I make so I have been ignoring it). That would cut the increase in half,

(($97,500 x 5 yrs)/420)*.15 = $174/mo increase in monthly SS
Your analysis is quite correct. Very few people are aware of how SS benefits are obtained. Thank you for posting the web site. It is one of my favorites, as they update the wage adjustment factors each year (as you know).

In summary, people who are at or above the social security maximum (roughly 100K/yr in today's wages) need to work about 18 years before they reach the "level of little return." The extra $174/mo requires an additional 5 years of labor. Not worth it in my opinion.

While 100K/yr is good, it is not an astronomical salary. About 75% of the scientific/engineering professionals at my organization are at that level. As for careers, ours are not too dissimilar. I'm a solid earth geophysicist. However, I'm not a fed, even though I work at a government laboratory.
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Old 04-06-2008, 02:22 AM   #23
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I am already in the '$174' range... but, I still need the salary for a few more years to get where I want to be.... but I will not work the final 10 years to get the extra $348 per month.... not worth it...

NOW, when my sister was about to retire (teacher)... she did EVERYTHING that paid money because they used the top 3 years... I said, 'think that you get this for the rest of your life'.... it made it a lot easier to do thing you would not 'normally' do...
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Old 04-06-2008, 07:09 AM   #24
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Can't comment on the exact payout based on monies paid in.

However, when I look at the likely budget deficits (more due to Medicare costs doubling between 2010-20 rather than Social Security itself) I think its unlikely that social security payouts will remain stable. Who knows when it occurs, but it seems highly likely that 2 things happen over time:

1) Payout of social security gets postponed over time with standard retirement age getting moved later over time

2) Payout gets moved downward based on income

As a result, anyone who prepares for retirement should stress test their withdrawal rates based on lower social security payouts just to be safe.
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