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Old 01-02-2015, 10:32 AM   #21
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Looks like I misread the age at which wage indexing stops. Am I correct in concluding the CPI is applied to the PIA in addition to the actuarial increase between age 62 and FRA? For someone that reaches 62 in December, is there a CPI benefit to waiting and using a January retirement date? Or is the CPI applied anyway?
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Old 01-02-2015, 12:47 PM   #22
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Thanks to this thread and it being the first of the year, I decided to bite the bullet and put all my earnings into the SSA detailed calculator and see what it said. I have been receiving SSA benefits since I retired on my late DW's account and all the reports and on-line SSA calculators say I can't use them to determine benefits under my account because I already am receiving benefits. I plan to switch to my account when I turn 70. I have been using a Benefit Matrix that was printed at my local SS office in January of 2012. I retired in July, 2013. The calculator says I will receive an additional $13,420/yr above the amount shown in the 2012 Benefit Matrix.

I think the Benefit Matrix probably only went up to 2009 with earnings so I have some very low years in my teens replaced by max earnings in the years prior to retirement. I will need to check this with the SSA folks and if the calculator is correct, figure out what to do with all the extra loot!
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Old 01-02-2015, 04:02 PM   #23
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Looks like I misread the age at which wage indexing stops.
1) Am I correct in concluding the CPI is applied to the PIA in addition to the actuarial increase between age 62 and FRA?
2) For someone that reaches 62 in December, is there a CPI benefit to waiting and using a January retirement date? Or is the CPI applied anyway?
1) Yes. This is from page 2 of the sample calculation:

Quote:
The worker in case B is first eligible in 2011 (the year case B reached age 62). Thus the case-B PIA is the case B amount computed above truncated to the next lower dime and increased by cost-of-living adjustments, or COLAs, for 2011 through 2014. These COLAs are 3.6 percent, 1.7 percent, 1.5 percent, 1.7 percent, respectively. The resulting PIA is $2,663.80.
2) My wife has a Sept birthday, got her first check in October 2014, and gets her first CPI increase in January 2015. It is for 1.7%, which is the same amount as everyone else getting benefits.
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Old 01-02-2015, 04:22 PM   #24
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Once you reach age 62, the only benefit to working longer is increasing your highest 35 years. Your taxable wages are no longer indexed up annually by the NWI.
The critical part of this is that the annual maximum wage subject to SS will continue to rise after your age 60, so if you are still working and at or near your highest earnings years, the years after age 60 are likely to be among the 35 highest. The earlier years will not index any higher after age 60, but people still working will presumably be earning wages that are at least higher by a CPI amount, so there is a "benefit" for working at higher ages. But because the calculation is limited to the high 35 years, people still working after age 60 likely have long careers with more than 35 years , so the newer higher wage only displaces an earlier lower year, so although you pay SS tax on the whole amount, you only benefit to the extent this new higher year exceeds the lowest of your high 35.

Also, I did see a proposal to consider increasing 35 to 38 years, along with the usual proposals to change inflation index and raise minimum and full retirement ages. Not speculating what will happen, but for planning purposes this is still a program that could change, so I tend to discount it in calculations.
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Old 01-02-2015, 04:28 PM   #25
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If you have a birthday on any other day except the first of the month, you are not eligible to receive benefits until you have been 62 for the entire month. So if you are born in December anytime other than December 1, you are not eligible until January. However, you are 62 years and one month when you technically become eligible. That age ties to the Age 62 benefit in my current statement when I do the spreadsheet calculations. If you are born in December and take the annuity immediately, you get your first check in February.


It's not clear to me what happens if you file at FRA. The payment shown on the current statement is the PIA I calculated from AIME derived from the taxable wages shown on the statement and the SSA index factors from the SSA website. Does that mean if you file at FRA you don't have to be FRA the entire month, and you get the payment the next month?


If I understand the COLA calculation correctly, it is effective in December for payments starting in January. I would therefore conclude that the COLA is baked into the adjusted PIA for someone with a 62nd birthday in December and would appear in the very first check in February.


If that is NOT the case, does it make a difference if you wait to file until January?
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Old 01-02-2015, 04:48 PM   #26
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Has anyone else used this planner (rated by WSJ article as the "best" free SS analyzer in summer 2014): SSAnalyze - Bedrock Capital Management Need your PIA from the SS calculator first, but gets into couple's claiming strategies and projects the optimal approach (after you put in life expectancy).

EDIT: I forgot to note that I used it out of curiosity and was surprised at the sums that we would be paid under current law; plus the claiming strategy was slightly different than I anticipated, although it made sense once I thought it through. (Still penciling in "$0," but am willing to be pleasantly surprised.)
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Old 01-02-2015, 05:00 PM   #27
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Has anyone else used this planner (rated by WSJ article as the "best" free SS analyzer in summer 2014): SSAnalyze - Bedrock Capital Management Need your PIA from the SS calculator first, but gets into couple's claiming strategies and projects the optimal approach (after you put in life expectancy).
Yes I have. My wife is 60 and I am 56 so we are not quite 2 years from the first ss decision.
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Old 01-03-2015, 12:06 PM   #28
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If you're comfortable with spreadsheets, you can build your own calculator based on this example: Social Security Retirement Benefit Calculation
I once thought that I would want to dig deeper into how SS benefits are actually calculated in order to satisfy my curiosity. But then that knowledge would lead to more questions as to the rationale behind all those "bend points", and the reverse-engineering to understand the underlying reasons for all those complicated non-linear calculations. Whether I get successful in trying to understand it, it will just lead to more frustration.

So, I just take anypia32.exe as it comes, and type in my data. What they give me is what I'll get. However, I still need to study the different arrangements my wife and I can withdraw our SS to chose one that works best for our situation. And I still have a few years to do that.

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Originally Posted by sengsational View Post
It was a longer while back than version 2014.1, so maybe it's time to try it again.
I looked and it is up to Version 2014.2. So, I downloaded it again. I do not understand the posted explanation of the difference with the previous version, but it imported without problem my previous data files. A cursory view shows that the interface and input screens look the same as before. Most importantly, the calculated benefits stay the same for me, down to the last penny.

They also have a Mac version now.
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Old 01-03-2015, 03:33 PM   #29
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If you use the SSA online calculator where you give it your SSN and it pulls up your wage history, then just enter 0 for last years earnings and it will assume 0 for future years earnings.

The answer that you will get will be close, but a conservative estimate, to what you have accrued so far under current law.

The actual number will rise, as others have pointed out, between now and when you turn 60 as adjusted by average wage growth of the nation.

If CPI is close to average wage growth, then the number you get can be an approximate of the buying power you will receive when you actually start to draw SS benefits.

-gauss
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Old 01-04-2015, 01:16 AM   #30
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Don't forget the torches and pine tar. Oh and chicken feathers.


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Old 01-04-2015, 03:24 PM   #31
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If you have a birthday on any other day except the first of the month, you are not eligible to receive benefits until you have been 62 for the entire month. So if you are born in December anytime other than December 1, you are not eligible until January. However, you are 62 years and one month when you technically become eligible. That age ties to the Age 62 benefit in my current statement when I do the spreadsheet calculations. If you are born in December and take the annuity immediately, you get your first check in February.
All this agrees with the explanation here: http://www.ssa.gov/policy/docs/ssb/v62n3/v62n3p51.pdf

Note, however, that if your FRA is 66, your benefit will be reduced by 35 months of early claim reductions, not 36 months.
Quote:
... the major effect of the “throughout the month” provision is a delay in benefit entitlement
for most of the earliest retirees. That delay, in turn, means
a reduction for early-retirement benefits for most workers based
on their retirement occurring 35 months before age 65 (rather
than 36 months).

Quote:
It's not clear to me what happens if you file at FRA. The payment shown on the current statement is the PIA I calculated from AIME derived from the taxable wages shown on the statement and the SSA index factors from the SSA website. Does that mean if you file at FRA you don't have to be FRA the entire month, and you get the payment the next month?
Based on the quote above, you get your full PIA if your first check is paid in the month following your birthday.


Quote:
If I understand the COLA calculation correctly, it is effective in December for payments starting in January. I would therefore conclude that the COLA is baked into the adjusted PIA for someone with a 62nd birthday in December and would appear in the very first check in February.
If that is NOT the case, does it make a difference if you wait to file until January?
The COLA math does not rely on the benefit you received in December. The COLA is applied to your PIA, then the benefit you get (if it's not the PIA) is determined by applying the early/late factors to the new PIA.
Quote:
When a COLA occurs, we increase the PIA as described above, and we repeat the steps required to calculate the new benefit amount based on the new, higher PIA.
Application of COLA to a Retirement Benefit
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Old 01-04-2015, 03:43 PM   #32
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the benefits estimator on line will calculate effectively what you want. you can use it to calculate for another retirement date. So you set the date and you can put in the assumption of 0 income for the intervening years.

using the regular calculation could be off if you have greatly varying pay. It uses the highest 35 years inflation adjusted income. It may be adding high pay years and dropping off really low pay years if you run it blindly.
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Old 01-04-2015, 03:56 PM   #33
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I understand that the COLA is applied to the PIA before your benefit is calculated and that with a December birthday you are "62 enough" in January to get the benefit. I also understand you are 62 years and one month so you get 75.4 percent of your PIA. I just want to make sure that if you turn 62 in December, there is no wrinkle that you need to consider in filing to make sure you benefit from the COLA. IOW, do you get the same check if you file in November as you would if you filed in early January?


I have two government pensions. To get the COLA for the year, you have to retire no later than the last weekday in March. If you retire April 1, you do not get the COLA for the year. My experience with that leads me to ask the question about Social Security. I want to make sure that money is not left on the table by filing on the wrong day.
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Old 01-04-2015, 04:49 PM   #34
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Interesting thread.
One little wrinkle I've always been struck by is this:

DW has paid far more into SS than I have, regardless of whether you count the total or just the highest 35 years.

Yet my benefit will be slightly higher than hers, because my pay was higher in the early years (when dollars were worth more).

It's a strange thing, but it makes a kind of sense. DW chalks it up to the glass ceiling, of course, because she w*rked at an old fashioned company that did things that way, and I believe she has a valid point.
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Old 01-04-2015, 05:02 PM   #35
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Interesting thread.
One little wrinkle I've always been struck by is this:

DW has paid far more into SS than I have, regardless of whether you count the total or just the highest 35 years.

Yet my benefit will be slightly higher than hers, because my pay was higher in the early years (when dollars were worth more).

It's a strange thing, but it makes a kind of sense. DW chalks it up to the glass ceiling, of course, because she w*rked at an old fashioned company that did things that way, and I believe she has a valid point.
It is not "how much one paid in" using actual dollars, but how much in inflation adjusted dollars. I don't think how early really makes a difference to the method. They look at you average monthly inflation adjusted income over 35 years... using annual earnings amounts to figure out the benefit.

If you made the same amount a long time ago as your wife makes today, your inflation adjusted amount would be much larger.
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Old 01-04-2015, 05:11 PM   #36
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It is not "how much one paid in" using actual dollars, but how much in inflation adjusted dollars.
Yes, I understand. But DW is only two years younger than I am, and w*rked much longer than I did. The pay differential was in the early years.
Still, when I look at the totals, she paid about 50% more into it than I did, and will get just slightly less out of it (as a monthly payment). Understandable, but striking nevertheless,
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Old 01-04-2015, 05:24 PM   #37
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Yes, I understand. But DW is only two years younger than I am, and w*rked much longer than I did. The pay differential was in the early years.
Still, when I look at the totals, she paid about 50% more into it than I did, and will get just slightly less out of it (as a monthly payment). Understandable, but striking nevertheless,
There is definitely a sweet spot on lifetime earnings as far as Social Security goes. If your lifetime earnings are beyond the second bendpoint, then you have passed the sweet spot.

This actually works to the advantage of most ERs.

-gauss
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Old 01-04-2015, 05:33 PM   #38
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braumeister,
then the likely thing is that both of you have inflation adjusted monthly incomes where each is above the point where the monthly payout is incrementally 10%. Thus not much difference for added money.

I've looked at this several times. To work at my current income from now to 70 and take SS @ 70 will buy me about 10% more in SS benefit as stopping work now and taking SS @ 70. I'm 53. Not so sure the added SS benefit is worth 17 more years.

again... just the system
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Old 01-04-2015, 06:20 PM   #39
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If your lifetime earnings are beyond the second bendpoint, then you have passed the sweet spot.s
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then the likely thing is that both of you have inflation adjusted monthly incomes where each is above the point where the monthly payout is incrementally 10%. Thus not much difference for added money.
Cool! Thanks for the nice clarifications.
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Old 01-04-2015, 06:43 PM   #40
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For what it's worth... When I keyed my earnings on the online calculator, I get these results.

Earnings in 2015=0 (retired now), $2121
Earnings in 2015 $125K (max), $2,395

So, if I work longer, I get an extra $274 a month according to the online estimator. Of course, the anyPIA.exe shows different. It's $2,305 vs $2,233. Only $72 difference.

I a'int working that long.
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