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Social Security Estimator - PV or FV?
Old 11-26-2011, 10:26 AM   #1
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Social Security Estimator - PV or FV?

I have searched all over and can not determine whether the Social Security estimator at the .gov site produces the estimate in present value or future value. I'm 50, the SSN web site estimates my benefit at 67 to be $2,530/month. Is this amount future value (FV) or present value (PV)? Assuming it is FV, discounting back to today yields $1,795 using a 3.5% discount rate. Also, does anyone use the Excel PV equation for discounting (e.g. =ABS(PV($A$4,$A$5,,A17,0))? Thanks!
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Old 11-26-2011, 10:39 AM   #2
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Present value.

Your future estimated benefit is shown in today's dollars.
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Old 11-26-2011, 10:42 AM   #3
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Present value.

Your future estimated benefit is shown in today's dollars.
+1

I looked all over the retirement estimator and couldn't find where it says this, but the last paper estimate I received in the mail clearly says that it is present value.
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Old 11-26-2011, 10:44 AM   #4
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I can see all sorts of pitfalls if SS tried to use future value.
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Old 11-26-2011, 12:19 PM   #5
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Originally Posted by REWahoo View Post
Present value.

Your future estimated benefit is shown in today's dollars.
+2
It is a simple matter to calculate the SS FV using your best guess of future CPI adjustments. I do this in my projections along with FV projections of expected expenses. GIGO, YMMV
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Old 11-26-2011, 04:33 PM   #6
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Originally Posted by Rowdy View Post
I have searched all over and can not determine whether the Social Security estimator at the .gov site produces the estimate in present value or future value. I'm 50, the SSN web site estimates my benefit at 67 to be $2,530/month. Is this amount future value (FV) or present value (PV)? Assuming it is FV, discounting back to today yields $1,795 using a 3.5% discount rate. Also, does anyone use the Excel PV equation for discounting (e.g. =ABS(PV($A$4,$A$5,,A17,0))? Thanks!
If there were no further COLA adjustments and you were to receive $2,530 beginning 17 years from now; discounted at 3.5%, it has a PV of $1,409.73 using the following Excel arguments =PV(.035,17,0,2530,0).
I.E. 2530/(1.035**17)=1409.72556
Two ways of looking at the above numbers-
A• $1409.73 invested at 3.5% APY will be worth $2,530 in 17 years
B• $2530.00 seventeen years from now, adjusted for 3.5%/annum inflation, will have the current purchasing power of $1409.73
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Old 11-26-2011, 06:33 PM   #7
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Thanks for the replies. Perhaps I can actually FIRE earlier than I thought.

Also, looks like I was using 10 years vs. 17 years for the PV calculation; thanks for the clarification.
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Old 11-26-2011, 09:11 PM   #8
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If there were no further COLA adjustments and you were to receive $2,530 beginning 17 years from now; discounted at 3.5%, it has a PV of $1,409.73 using the following Excel arguments =PV(.035,17,0,2530,0).
I.E. 2530/(1.035**17)=1409.72556
Two ways of looking at the above numbers-
A $1409.73 invested at 3.5% APY will be worth $2,530 in 17 years
B $2530.00 seventeen years from now, adjusted for 3.5%/annum inflation, will have the current purchasing power of $1409.73
Or 2,530/(1+3.5%)^17 = 1,409.73
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