SS benefits estimator

[cardude]

I was playing around with the following government calculator and got a little bummed out.

https://secure.ssa.gov/apps8z/ARPI/main.jsp

I had some big w2 salaries the last few years and my max monthly benefit was always in the $3100 range on that benefits estimate they send every once and a while. Now I have quit working at 44, and when I put in $0 as my last wage earned my benefits at max age drop to only $2100.

Is there any way to game the system to make up for the lack of w2 income the next 30 years that is killing my 35 year average? Convert rental income to w2 maybe? I guess I could go out and get a big high paying job at around 68 or so .

 

[W2R]

The estimates that they send you in the mail assume that you are going to continue to work clear up to SS.

I don't know of any way to get more from SS other than to continue to work. Well, either that or delay getting SS until 70.

Can you get an equal amount from somewhere else? Maybe the rental units you were talking about could provide you with some income.

Make sure you have enough quarters worked to even be eligible for any SS at all when you get older (you are so young! you lucky dog)

 

[rescueme]

I have well over the 35 years history for SS to pull, but in my case I maxed out contributions many years ago, at the beginning of my working years rather then toward the end (a lot of O.T. in those days).

Even though I have less credited in the later years, my monthly total (at age 70) is projected to be just over $3k/month.

In some cases it's not the amount of earnings/contributions, but continuous employment that makes the difference. You need to eliminate those $0 contribution years (or just get a working wife like I do, in retirement )...

 

[samclem]

I second W2R's comment. The estimate you get in the mail assumes that you keep working at your present wage until retirement age. So, I guess that's the way to game the system--keep working for 23 more years.

On the other hand, if you want to feel a little better, keep playing with the calculator and see how much one additional year of work at your previous pay would increase your SS check. It's tiny.

 

[teejayevans]

I went through the explanation of how they calculate it
with the bend points, indexes, etc and put it in a
spreadsheet with my actual earnings, since their calculators
always assume you won't retire until 62 and your earnings
will continue until then, this gives me a better understanding
of how it works and much better estimates on what an
early retirement will do to my SS.
TJ

 

[freebird5825]

I have 33 years of w*rking, including PT HS j*bs. That gives me only 2 zero earned income years for the 35 year averaging function.
I finally saw the change in monthly benefit on my hardcopy statement, after 2.6 years of FIRE.
Statement tells me if I stop w*rking at age 51 (I FIREd at age 48) and take my benefit at
age 62 (the plan ), my reduction would be approx $600 per month (33% reduction) from what I would get if I w*rked continuously at my previous earnings rate until age 66 and 8 months.

Hmmm... $600 /month or retaining my health and sanity and having people tell me I look 10 years younger?

Still not regretting a thing...

 

[Bikerdude]

Not many ways around it. If you don't contribute you can't take much out. You are going to have a lot of zero's on your record. But that's not all bad... right?

 

[youbet]

Is there any way to game the system to make up for the lack of w2 income the next 30 years that is killing my 35 year average? Convert rental income to w2 maybe?

I've looked into this. DW is in a position, due to GPO, where it would be beneficial for her to have more non-zero SS years. I couldn't find a loophole where she could "buy in" more years like most other public pension plans allow. They simply won't let you pay the tax unless you have the W2 income to be taxed.

OTOH, in your case where you are only 44, you could generate a small amount of SS taxable income annually through self-employment, pay the SS tax, and acheive more years of credit. Or find some part time work. The way the formula is biased, small amounts of SS tax can generate significant increases in payout. You can use the calculator to see if it would be worth it to work part time and make, say, $8k/yr paying SS tax on that.

 

[cardude]

Hey, I forgot my wife was still working! Oh crud, she's a Texas teacher so she has never paid into SS.

I was never very good at gaming the system, but I'm really starting to think more about it now that I'm unemployed............

 

[youbet]

Hey, I forgot my wife was still working! Oh crud, she's a Texas teacher so she has never paid into SS.

I was never very good at gaming the system, but I'm really starting to think more about it now that I'm unemployed............

See....... there is a purpose to your low SS benefit. Since your wife cannot collect 50% of your SS due to GPO, at least she's not collecting 50% of a small number!!

 

[Independent]

I was playing around with the following government calculator and got a little bummed out.

https://secure.ssa.gov/apps8z/ARPI/main.jsp

I had some big w2 salaries the last few years and my max monthly benefit was always in the $3100 range on that benefits estimate they send every once and a while. Now I have quit working at 44, and when I put in $0 as my last wage earned my benefits at max age drop to only $2100.

Is there any way to game the system to make up for the lack of w2 income the next 30 years that is killing my 35 year average? Convert rental income to w2 maybe? I guess I could go out and get a big high paying job at around 68 or so .

I think it's worthwhile to build the spreadsheet like teejayevans. When you do, you can see how the 35 years and bend points work together. My guess is that you are already above the 15% bend point, so you'll discover that the additional taxes you'd pay if you converted that rental income to W2 income would be greater than the additional benefit.

 

[cardude]

Oh, yall are real funny.

The really sad part is I think her TRS retirement will be about $500 per month, and I think that's in today's dollars. She can get that in about 25 years or so.

Do you think she can rescind her TRS pension? She is not vested yet.

 

[W2R]

I think it's worthwhile to build the spreadsheet like teejayevans. When you do, you can see how the 35 years and bend points work together. My guess is that you are already above the 15% bend point, so you'll discover that the additional taxes you'd pay if you converted that rental income to W2 income would be greater than the additional benefit.

I did that as well, many years ago (and then updated as SS made changes in the indices and other variables). The information to do this is available at Your Retirement Benefit: How It Is Figured (2009) or at links from that page. Be sure to check against your official SS yearly statement to make sure your methods are right - - you should get the same results using their assumptions.

 

[cardude]

I think it's worthwhile to build the spreadsheet like teejayevans. When you do, you can see how the 35 years and bend points work together. My guess is that you are already above the 15% bend point, so you'll discover that the additional taxes you'd pay if you converted that rental income to W2 income would be greater than the additional benefit

Yeah, just piddling with the estimator, plugging in some possible small incomes ($5000-12000) over the next 66 years, it only makes about $400 per month difference. Is all this in today's dollars btw?

 

[teejayevans]

Yeah, just piddling with the estimator, plugging in some possible small incomes ($5000-12000) over the next 66 years, it only makes about $400 per month difference. Is all this in today's dollars btw?

Yes, but since the SS increases = inflation, that works fine.
TJ

 

[teejayevans]

so you'll discover that the additional taxes you'd pay if you converted that rental income to W2 income would be greater than the additional benefit.

No doubt, you pay 15+% (remember your employer pays half), for self
employed, you pay the full amount. That amount would be divided by
35 and multiplied by maybe 15% or 32%, so you would only see a fraction.
Either work the full 35 years, or wait till age 70 to start taking SS.
You get 8%/yr increases for postponing past full retirement age.

This brings up a question, for self-employed, do you get credit for the full
15+% you pay in? For the rest of us, we only get credit for our portion of
the taxes.
TJ

 

[jdw_fire]

This brings up a question, for self-employed, do you get credit for the full
15+% you pay in? For the rest of us, we only get credit for our portion of
the taxes.
TJ

SS is computed based on earnings (not the taxes paid, though they are related) per year subject to the SS tax, so not sure what you are asking. everone who is paying into SS "gets credit for the full 15+%" paid in, some just have half of that paid by their employer (actually all have half paid by their employer but when you are self-employed, you are your employer)

 

[youbet]

Oh, yall are real funny.

The really sad part is I think her TRS retirement will be about $500 per month, and I think that's in today's dollars. She can get that in about 25 years or so.

Do you think she can rescind her TRS pension? She is not vested yet.

\


No, she doesn't want to rescind it..... at only $500/mo, she will still get some of your SS. GPO says that the amount of your SS she can collect will be reduced by 50% of her TRS pension. Your SS will be greater than $250/mo, so she'll collect the difference. There ya go!

 

[walkinwood]

Here's a link to estimate your payments. It ends in 2008, but it will at least give you a feel for what you would get in SS if you stop working now.

Your Retirement Benefit: How It Is Figured (2009)

 

[Animorph]

SS had a calculator that allowed you to input wages for each year, including all those zero years. I think it was a PC app download. That's what I've been using.

 

[Tadpole]

I downloaded and use the AnyPIA calculator (detailed calculator) from SSA. It will run most to all scenarios for you.
Compute Your Benefit with our Detailed Calculator

 

[Robert the Red]

I have a friend who volunteered for medical studies (MRI scans) to get the payments, which count as earned income, to go on his SS record. He managed to eke out a few extra years on his SS record this way. However, he was being scanned here at the NIH, which pays pretty well for MRI scan volunteers ($100 for 2 hours), unlike most university research centers ($20 for 2 hours, typically). He chose MRI because it is harmless (but loud) and over quick. Besides, who doesn't want to get a picture of their brain?

 

[Finance Dave]

The estimates that they send you in the mail assume that you are going to continue to work clear up to SS.

I don't know of any way to get more from SS other than to continue to work. Well, either that or delay getting SS until 70.

Can you get an equal amount from somewhere else? Maybe the rental units you were talking about could provide you with some income.

Make sure you have enough quarters worked to even be eligible for any SS at all when you get older (you are so young! you lucky dog)

Want2...the point I've bolded above is an EXCELLENT point and one very few people notice. I hope to FIRE at age 53, and as a result my benefit will likely be significantly less.

 

[REWahoo]

Want2...the point I've bolded above is an EXCELLENT point and one very few people notice. I hope to FIRE at age 53, and as a result my benefit will likely be significantly less.

Dave, I don't think this is the case - at least not under the current SS rules. Provided you meet the 'earnings quarter' requirement and have a reasonably good income for the years you pay in, having little or even zero income for the last 10-15 years prior to collecting SS has only a small impact on your benefit payments. This is due to the system design - to provide a safety net to the low income worker.

In my own situation I stopped working at 58. The hit to my SS benefit at age 66 as a result of zero earnings for those eight years was less than $30 per month.

 

[cardude]

Dave, I don't think this is the case - at least not under the current SS rules. Provided you meet the 'earnings quarter' requirement and have a reasonably good income for the years you pay in, having little or even zero income for the last 10-15 years prior to collecting SS has only a small impact on your benefit payments. This is due to the system design - to provide a safety net to the low income worker.

In my own situation I stopped working at 58. The hit to my SS benefit at age 66 as a result of zero earnings for those eight years was less than $30 per month.

When I put zero in the online calculator as my last year of earnings, at the age of 44, it reduced my possible benifits by about 30%, from $3100 to $2100.