SS Benefits - Top 35 Actual Wages or Max Earnings?

[Steelart99]

I'm delving into how SS benefits are calculated and have a couple of questions.

When SS benefits are calculated, does the model:
1.) Use your top 35 years of actual wages (after indexing)
2.) Top 35 actual wages (indexed) unless you exceed the 'Max earnings' for that year at which time you use the 'Max earning' value
3.) Top 35 actual wages (non-indexed) unless you exceed the 'Max earnings' for that year at which time you use the 'Max earning' value
4.) Something else?

 

[FIREchief]

I believe it is the top 35 indexed "Social Security Wages". SS wages = max for years that you hit max. SS wages = actual wages for years you don't hit max.

 

[Big_Hitter]

I believe it is the top 35 indexed "Social Security Wages". SS wages = max for years that you hit max. SS wages = actual wages for years you don't hit max.

i.e. 2

https://www.ssa.gov/oact/progdata/retirebenefit1.html

 

[Steelart99]

I believe it is the top 35 indexed "Social Security Wages". SS wages = max for years that you hit max. SS wages = actual wages for years you don't hit max.

So for those year you hit the 'max wage', do you then apply the index factor to the max number ... or just use the max wage only.

Hmmm... you must apply the index to it

 

[gauss]

You apply the index to the actual or the max for that year -- whichever is less. The max rises with time.

 

[Steelart99]

Thanks all. That answers my question. 'Twas the path I was going down.

 

[racy]

If you like spreadsheet work, calculate your own social security. Dana Anspach gives step-by-step details here: https://www.thebalance.com/social-security-benefits-calculation-guide-2388927

 

[Steelart99]

If you like spreadsheet work, calculate your own social security. Dana Anspach gives step-by-step details here: https://www.thebalance.com/social-security-benefits-calculation-guide-2388927

I actually have already used his steps to create my spreadsheet, but he did not directly address the issue I was having. At this point (with this modification), my estimates from my spreadsheet are within a 1/2 percent

 

[scrabbler1]

Of course, for us really early retirees, we don't have 35 years of nonzero wages, so we just fill them up with zeroes. We do index our nonzero wage earnings then cap them at the appropriate max, if necessary (it wasn't, for me). The indexing factors from the SSA do change a little from year to year, but not by much.


P.S. Sorry, Steelart99