Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
SS benefits and calculating them
Old 04-03-2006, 05:42 PM   #1
Confused about dryer sheets
 
Join Date: Dec 2005
Posts: 6
SS benefits and calculating them

I got my annual statement from the SS administration describing how much money I've contributed, and their forecast of my retirement benefits. There are words snuck in there* that say your estimated benefits assume you will continue to contribute up to retirement age at the same rate you have been contributing.

I've always maxed out my contributions to SS (not by choice) every year for the last 30. Now, if I retire at age 55, and don't contribute for the last 10 years to age 65, then I assume this means my forecasted benefit will start to decline.

Is there any way to find out or calculate what my future benefit will be if I stop contributing at the rate I have been contributing...or stop altogether for a number of years?

Knowing my SS benefit has a big impact on how much I need to retire early, as when SS kicks in it likely will be a substantial percentage of my minimum living expenses (like 75%), and therefore affects how much I need to save, and how much I can withdraw in the pre-SS years.
__________________

__________________
Lazy Jack is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: SS benefits and calculating them
Old 04-03-2006, 05:52 PM   #2
Thinks s/he gets paid by the post
lazygood4nothinbum's Avatar
 
Join Date: Feb 2006
Posts: 3,895
Re: SS benefits and calculating them

www.socialsecurity.gov/planners/calculators.htm
__________________

__________________
"off with their heads"~~dr. joseph-ignace guillotin

"life should begin with age and its privileges and accumulations, and end with youth and its capacity to splendidly enjoy such advantages."~~mark twain - letter to edward kimmitt 1901
lazygood4nothinbum is offline   Reply With Quote
Re: SS benefits and calculating them
Old 04-03-2006, 06:00 PM   #3
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,094
Re: SS benefits and calculating them

Lazy Jack, lazygood4nothinbum is steering you in the right direction. You can do it but it's gonna take a little w*rk.

Go to the SS website calculator page here: http://www.ssa.gov/retire2/AnypiaApplet.html Input your numbers from your form and then when it asks what to assume for future annual earnings, put in the appropriate "0".

Enjoy!
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Re: SS benefits and calculating them
Old 04-03-2006, 06:05 PM   #4
Thinks s/he gets paid by the post
lazygood4nothinbum's Avatar
 
Join Date: Feb 2006
Posts: 3,895
Re: SS benefits and calculating them

oops. sorry. i was being lazy.
__________________
"off with their heads"~~dr. joseph-ignace guillotin

"life should begin with age and its privileges and accumulations, and end with youth and its capacity to splendidly enjoy such advantages."~~mark twain - letter to edward kimmitt 1901
lazygood4nothinbum is offline   Reply With Quote
Re: SS benefits and calculating them
Old 04-03-2006, 06:05 PM   #5
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
Re: SS benefits and calculating them

Based on my calculations the penalty, If you can call it that, is about 1 percent per year of early retirement.

So if you retire early at 55 years old then you'll get around 12 percent less than you would if you worked to full retirement age.

The calculator listed is clearly more accurate however my ball park numbers are more informative for a casual calculation.

Keep in mind that SS laws and rules will likely change. So keep your fingers crossed
__________________
MasterBlaster is offline   Reply With Quote
Re: SS benefits and calculating them
Old 04-03-2006, 06:21 PM   #6
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,094
Re: SS benefits and calculating them

MaterBlaster, your tooth needs brushing... (MasterBlaster, yours two too!)

__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Re: SS benefits and calculating them
Old 04-03-2006, 06:59 PM   #7
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
Re: SS benefits and calculating them

It does need Brushing. I brush it at least once a year whether I need to or not.

But the great thing is that I can whistle really good.
__________________
MasterBlaster is offline   Reply With Quote
Re: SS benefits and calculating them
Old 04-03-2006, 07:43 PM   #8
Confused about dryer sheets
 
Join Date: Dec 2005
Posts: 6
Re: SS benefits and calculating them

Done...that sure was easy...and yes, about 1% for each year of early retirement works in my case too.
__________________
Lazy Jack is offline   Reply With Quote
Re: SS benefits and calculating them
Old 04-03-2006, 08:47 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Re: SS benefits and calculating them

I ran some projected numbers through the calculator--it was depressing. I'm self-employed part-time, so I pay both sides of the SS payroll tax. It came out to a lot of money last year. According to the calculator, for every additional year I contribute those many thousands of dollars I'll increase my monthly SS check by less than 30 bucks. In later years the increase is less than 10 bucks per month in benefits for each additional year of contributions.

Yes, privatization (or partial privatization) would be better for me. Heck, lottery tickets would be better. Of course, the good of the collective is what we are pursuing. I don't think we'll be hearing any more about privatization or individual ownership again from Washington for a long time.

__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Re: SS benefits and calculating them
Old 04-03-2006, 09:24 PM   #10
Recycles dryer sheets
Beststash's Avatar
 
Join Date: Nov 2003
Posts: 145
Re: SS benefits and calculating them

I thought that your SS calc was based on your best 35 years and if you didn't have 35 years, the years less would be calculated with 0 dollars. Is this not correct
__________________
Beststash is offline   Reply With Quote
Re: SS benefits and calculating them
Old 04-03-2006, 09:36 PM   #11
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
Re: SS benefits and calculating them

Quote:
Originally Posted by Beststash
I thought that your SS calc was based on your best 35 years and if you didn't have 35 years,* the years less would be calculated with 0 dollars. Is this not correct
Yup. I have 25 years of earnings and the rest are zeroes.

I have a spreadsheet (of course I do) tracking the money we've put into our SS. Since 1977 I've contributed $45,585 and a conservative 7% tax-deferred return would grow that to $110K today. If it kept compounding at 7% until I'm 62, in 2022, it'd have $328K. At that point I'll presumably be permitted by SS to withdraw up to $9K per year, which would work out to a 2.7% withdrawal rate for this hypothetical privatized SS account.

Of course SS is a risk-free investment, so to withdraw $9K at 4% per year it'd only have to grow to $225K, which implies a 5.7% annual return over 45 years (from 1977-2022). I'd take that risk. I'll be happy if we take out more than we put in.

But I'd rather take 4% of $328K.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: SS benefits and calculating them
Old 04-04-2006, 08:55 AM   #12
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
Re: SS benefits and calculating them

Nords...

Your common assumption about SS being related to an investment is misguided.

When I make the same calculations and project my draw based on what I paid in (and will pay in) using historical market returns I just want to shoot somebody. My draw out of SS will be a pitance compared to the Nords-method SS as investment calculation.

I feel better about the whole thing thinking about SS as welfare rather than as an actual investment.

__________________
MasterBlaster is offline   Reply With Quote
Re: SS benefits and calculating them
Old 04-04-2006, 09:16 AM   #13
 
Posts: n/a
Re: SS benefits and calculating them

And don't forget that you may lose 1% per year by retiring early, but you're also not paying in during those years.
__________________
  Reply With Quote
Re: SS benefits and calculating them
Old 04-04-2006, 12:13 PM   #14
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
Re: SS benefits and calculating them

Quote:
Originally Posted by TromboneAl
And don't forget that you may lose 1% per year by retiring early, but you're also not paying in during those years.
I'd rather ER than fully fund SS! It'll add another 25% to my pension, nothing to sneeze at, but not worth trying to raise the percentage.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: SS benefits and calculating them
Old 04-04-2006, 01:47 PM   #15
Recycles dryer sheets
 
Join Date: May 2005
Location: In the fog of San Francisco
Posts: 241
Re: SS benefits and calculating them

T2 benefits are skewed to give a greater "return" to those on the lower end of the scale. It is by no means a "put in a dollar, get back 1.x dollars" straight line comp.

cheers,
Michael
__________________
Michael Moore is offline   Reply With Quote
Re: SS benefits and calculating them
Old 04-04-2006, 05:12 PM   #16
Thinks s/he gets paid by the post
 
Join Date: Aug 2005
Posts: 1,375
Re: SS benefits and calculating them

SS does a lot more than just give you back what you paid in. It also pays your stay-at-home or low-earning spouse an additional 50% of your benefit when you retire (or when s/he turns 62) and 100% after you die, it provides disability payments if you can't work, and it pays all widows & orphans (to age 18) of workers who die. I can't find the data just now (not the best googler), but I think the things I listed account for close to 50% of SS payouts.
__________________
You can't always get what you want, but if you try sometimes, you might find you get what you need.
astromeria is offline   Reply With Quote
Re: SS benefits and calculating them
Old 04-04-2006, 07:39 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Re: SS benefits and calculating them

MasterBalster,
Yep, it is best to consider SS as intergenerational welfare. It's only a matter of time before it is means-tested, IMO. Still, I can't help but think how much better off many would be with at least some type of partial privatization, while stil preserving the "safety net" aspects of the present system.

While I don't agree with his position entirely, I think Wm Bernstein did an excellent good job of puting the whole SS wealth transfer issue into perspective back. He wrote this in 2000, but everything still applies today.
http://www.efficientfrontier.com/ef/900/ss.htm
__________________

__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Calculating your net worth justin FIRE and Money 59 07-02-2005 10:18 PM

 

 
All times are GMT -6. The time now is 10:58 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.