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Social Security Statement Values, PV or FV?
Old 02-23-2008, 08:35 PM   #1
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Social Security Statement Values, PV or FV?

Each year around September I get a statement showing the amount of SS I'm entitled to receive at age 62, 66, and 70. Are those amounts present values or future values? My statements says, "If you stop working now, at age 62 your payment would be about $1632". Does that mean the check I will receive at age 62 will have $1632 written on it? Or will it be more than that?

The reason I'm confused is because of an online financial calculator I was playing with recently. The calculator had me type my financial information. It then displayed my expected income each year for the rest of my life. At age 62 it says my SS will start at $2055/mo, not $1632/mo. (I'm 55 now).

I calculate that $2055 seven years from now is about equal in value to $1632 today (3% inflation). This makes me think that the values on the SS statement are present values of future amounts. But the statement doesn't say that anywhere. The way the statement is worded it sounds like $1632 will be the amount written on my check at age 62. Apparently that's not right. Am I correct in thinking that the amount of my check at age 62 will be more like $2055 instead of the $1632? If that's the case then the SS statement is a bit misleading.

FYI, here's the calculator I was using.

Retirement Calculator: How much will I need to save for retirement? Yahoo! Personal Finance
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Old 02-23-2008, 08:46 PM   #2
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My last statement is from 2007. It says on pg 2 under the section titled "How Your Benefits Are Estimated" that "These estimates are in today's dollars."

You could also go to the ssa web site and I believe thay have an estimator tool there that you can select results in either current or inflated dollars
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Old 02-23-2008, 09:21 PM   #3
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Originally Posted by jazz4cash View Post
My last statement is from 2007. It says on pg 2 under the section titled "How Your Benefits Are Estimated" that "These estimates are in today's dollars."

You could also go to the ssa web site and I believe thay have an estimator tool there that you can select results in either current or inflated dollars

Jazz4cash,

You are absolutely right! I thought I read every word in the document but I missed that sentence. Thanks for pointing that out.
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Old 02-24-2008, 06:02 AM   #4
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They are "todays dollars" in all cases. You can index the number to what you think the CPI will be each year, compounded, to your retirement date (to the month). That is if the rules do not change between today (or when you get the statement) and your own projected date of taking the benefits.
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Old 02-24-2008, 12:37 PM   #5
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What if you don't work until age 62? How does that change the estimated benefit? I have accrued the credits required, but DON'T plan on working until I'm 62 (more like 52).
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Old 02-24-2008, 12:44 PM   #6
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What if you don't work until age 62? How does that change the estimated benefit? I have accrued the credits required, but DON'T plan on working until I'm 62 (more like 52).
SS will supply this number on request or (I think) you can input your earning history on line and get an estimate. The good news is that quitting before 62 does not decrease your SS benefit as much as you would think.


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Old 02-24-2008, 01:02 PM   #7
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Perfect - thank you!
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Old 02-24-2008, 01:51 PM   #8
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What if you don't work until age 62? How does that change the estimated benefit? I have accrued the credits required, but DON'T plan on working until I'm 62 (more like 52).
I've downloaded the benefit calculator and manually inputted the earnings from my SS form I receive each year. I think that if you have a few zero's in there for recent years that you will get an accurate number in today's dollars for your SS benefits. The assumptions stated in the answer were "no increase beyond 2006 wage statement" so with near zero's in 2006 and 2007 the final answer appears to be correct. Also when I changed the 2006, 2007 numbers to 70000 the benefit only went up by $42/month. The full retirement calculation agreed exactly with my recent SS statement!
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