social security question

[rathgar]

If I retire at age 57- I am at minimum 5 years from taking early SS and 9 or 10 from taking SS on time. Either way - a long time.

I hope to work part time over some of those years. However, I will not be making the salary I did when I retire.

Will I receive significantly less SS because of those years?

 

[Sunset]

Depends on how long you will have actually worked, and the reported income for those years.
You should be getting the SS report about your projected benefit. You can go to the SS website and get a recent report of your earnings. They also have a calculator (a few) that you can use to put in earnings and future earnings, and see what it says.

 

[HillCountry]

Never will affect negatively. The benefit depends on the highest 35 years of earnings.

 

[sakowitzm]

HillCountry is technically correct, but there's more to the story. SS takes into account the 35 years of your highest earnings. If you started working at 22 and stop at 57, that's exactly 35 years, so every year counts. If you CONTINUE working full time, then your income at 57 will REPLACE your income at 22 for the calculation, and presumably that's a big difference (your age 57 income presumably being much greater than your age 22 income). And that continues for each year that you keep working - this most recent, high(er) income year will replace that (presumably) low income that you earned at 22, 23, 24....

 

[wmc1000]

A caveat is that wages are indexed to inflation so dollars earned in your early 20's while lower can be more than part time earnings in your last years of work.

 

[racy]

It's possible to calculate your benefit yourself, especially if you like Excel: https://socialsecurityintelligence.com/how-to-calculate-your-social-security-benefits/

 

[Red Badger]

Also, SS has "bend points" that dilute higher wages so that more funds are allocated to lower wage earners. So, your lower wage years are juiced slightly.

From Motley Fool:

On average, Social Security replaces about 40% of the average workers pre-retirement income. However, the program is designed to replace more of the income of a low earner than a high earner, and that's where bend points come into play.

 

[athena53]

Also, SS has "bend points" that dilute higher wages so that more funds are allocated to lower wage earners. So, your lower wage years are juiced slightly.

This. Once all your wages are indexed to current level and the average of the 35 highest years is taken, the benefit formula starts at 90% of the first $926 but goes down to only 15% of any excess over $5,583.

I retired at 61 after many years of earning at the SS max and calculated that if I'd worked another 5 years my benefit would have been $50/month higher.

Glad I quit when I did.

 

[karen1972]

Keep in mind the # provided is based on you having the same salary going forward as the last year reported, so that number is not accurate so putting it into the calculator is the only real way to tell.

My co-op at 22 is worth like $35k today and my part time work would not be greater than that...so working more would provide zero extra benefit if I had all 35 years in (which I dont' but close enough) as I'm past the 2nd bend point vs. my honey is not and his $70k/yr job adds about $50/month to his final SS total.

You can work out your own numbers and thus see if it motivates you to work another year.

 

[Dtail]

This. Once all your wages are indexed to current level and the average of the 35 highest years is taken, the benefit formula starts at 90% of the first $926 but goes down to only 15% of any excess over $5,583.

I retired at 61 after many years of earning at the SS max and calculated that if I'd worked another 5 years my benefit would have been $50/month higher.

Glad I quit when I did.

Same here but from 57 y.o.
$50 per month higher for working longer. No way.

 

[timbo]

It's possible to calculate your benefit yourself, especially if you like Excel: https://socialsecurityintelligence.com/how-to-calculate-your-social-security-benefits/

Thanks for this info. It's good to see what I might be getting some day and to see where I stand regarding the bend points. I'm getting to the point after 23 years of working (some of them just summer jobs) that the impact on SS is slowing down significantly because I'm reaching the 2nd bend point. The difference between retiring at 44 & 50 would only be $500 a month of SS. After that, it would slow down even more drastically because any new income would not be replacing a year of "0" income, it would replace a year of lower income with a high index factor.

In my case, by the time I'm actually ready to FIRE, the impact of missing a few years of SS contributions won't matter.

 

[Mdlerth]

SS rules were crafted to make quantum physics look easy by comparison

If I retire at age 57- I am at minimum 5 years from taking early SS and 9 or 10 from taking SS on time. Either way - a long time.

I hope to work part time over some of those years. However, I will not be making the salary I did when I retire.

Will I receive significantly less SS because of those years?

Please clarify. Are you talking about the years during which you'll work part-time?

If you start collecting your SS and earn more than $17,640 from your part-time gig, they will penalize your SS benefit by $1 for each $2 you earn above that threshold.

If instead you are referring to the effect on your projected SS benefit from reducing your earnings between now and SS start age, that's a different issue which earlier posters have done a good job of explaining.