Social Security estimates

[2017ish]

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.)

 

[user5027]

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.

 

[NW-Bound]

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.

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.

 

[gauss]

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

 

[Al in Ohio]

That is when we all grab our pitchforks and head to Washington DC.

Don't forget the torches and pine tar. Oh and chicken feathers.


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[Independent]

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.

... 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).

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.

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.

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

 

[bingybear]

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.

 

[Another Reader]

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.

 

[braumeister]

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.

 

[bingybear]

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.

 

[braumeister]

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,

 

[gauss]

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

 

[bingybear]

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

 

[braumeister]

If your lifetime earnings are beyond the second bendpoint, then you have passed the sweet spot.s

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.

 

[Senator]

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.

 

[NW-Bound]

I have not used the online calculator mainly because they say that the program anypia would be more accurate, and I thought I might as well get good numbers.

But why couldn't the two give the same result, I wonder now. Takes too much work to code up a better online calculator?

 

[Independent]

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.

I've never read anything about the date that you file impacting your benefit.

But, I don't know how to prove that statement other than to ask someone at the SS administration.

 

[Another Reader]

Yeah, and I would trust their answer about as much as I would trust an income tax answer from one of the folks at the customer service windows at the IRS office. Zero liability if they give you the wrong answer.


The best idea I have come up with so far is to apply to "retire" at 62 years and one month in early January.

 

[Clone]

The calculations are complicated, until you have run through them a couple times.

All of the previous years of SS taxed earnings get multiplied by an index factor. Then you take the highest 35 and calculate the Average Indexed Monthly earnings. The first $816 you get 90%, the next $4101 you get 32%. Anything above $4917 you get 15%.

In my case, I had 35 good years of earnings before I walked out the door. My lowest annual indexed earning was approx $80K. I maxed out 2014. My full retirement benefit will go up about $15 per month. If I were to max it out in 2015, my benefit would only go up about $10.

Basically, once you make it into the 15% zone, you can knock out your lowest year of indexed earnings. Your benefit will increase by the difference in yearly earnings, divided by 35, times 15%, divided by 12. You replace your lowest indexed year with a new one that is $10000 higher, you increase your monthly SS payment $3.50.

Your indexed earnings will continue to get indexed, assuming that we have a bit of inflation.

 

[nate2953]

Indexing ends two years before your eligibility year. (ELY-62, usually/index year-60)


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[nate2953]

COLAs are applied in December of every year to be paid in January of the following year. The 2015 COLA of 1.7% is applied in December 2014, payable from January on. If you receive a benefit from SSA in any month of 2015 it will include the COLA.


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[NW-Bound]

Many thanks to Clone and nate2953 for your explanations.

I went back and looked at the output from the program anypia32. It prints out some intermediate steps, and I can correlate some tabular outputs to Clone's descriptions.

PS. They provide the source code of the program, but I am getting too lazy to look at people's code anymore. I'd rather be spoonfed the info.

PPS. Ah, I was too lazy to look for info myself. Here's a spreadsheet for manual calculation that explains the formula: http://www.ssa.gov/pubs/EN-05-10070.pdf.

 

[Clone]

Would anyone like the procedure? It is about 3 pages of instructions for how to find the data, cut and paste it into excel, and then manipulate the data.

The linked 'spreadsheet' walks you through the process as well. I wrote the instructions for using excel to crunch the data rather than doing it by hand. One advantage is that you can update the factors and recalculate every couple years.

 

[NW-Bound]

Or I can download the latest anypia program every so often, and just to run it on the data files that I already entered and saved.

I still liked to understand the gist of the benefit formula, and thanks to your explanations, I get it now.

 

[gauss]

My trick is that I use a spreadsheet that I constructed from scratch based upon the steps that I linked to in another thread fairly recently. I then compare the output of my spreadsheet to the online modeler at SSA where they have your wage history already loaded. If I match then I am good.

I can use the spreadsheet for transparency much easier than anypia. Anypia was my first attempt at this but abandoned fairly quickly.

-gauss