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SS Estimate Reduced?????
Old 03-18-2011, 01:42 PM   #1
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SS Estimate Reduced?????

I am wondering if anyone can explain this, I have a June birthday and just received my SS estimate in the mail today. While I realize the COLA has been halted for another year, my estimate for retiring at 62 actually went down by $24/month from last years estimate (despite fact that my earnings went up quite a bit from prior year). Doesn't make any sense at all, unless there is some new legislation that now allows for negative COLA. Can anyone explain that?
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Old 03-18-2011, 01:53 PM   #2
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Good question. I received mine in January. Just double checked it against last years and mine is down $20/mth for age 62 and $14/mth at 66+...
Don't know why either. If you find out...please let us know.
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Old 03-18-2011, 02:06 PM   #3
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This may be because of what the system thinks has been paid in. Look at last and this year's employer/employee contributions. My wife's was not updated this year. Another explanation could be the 2% reduction in employee contribution for 2011.
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Old 03-18-2011, 02:18 PM   #4
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This may be because of what the system thinks has been paid in. Look at last and this year's employer/employee contributions. My wife's was not updated this year. Another explanation could be the 2% reduction in employee contribution for 2011.
Its not the above, I did some reading of their benefits explanation, and it appears these estimates become more accurate the closer you get to retirement age, however, they also indicate that you will not know your exact estimate until you apply for benefits, LOL. I really do not see why there should be this fuzzy math going on provided they captured your earnings correctly. Suppose I wouldn't be questioning this, if the $ had increased which I really was not contemplating.
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Old 03-18-2011, 02:22 PM   #5
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How much does it cost to mail those out every year? I think they should have it accessible on line so the cost savings can be put into SS. Worst case, only send them out to 55+ or 60+ year olds?
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Old 03-18-2011, 02:33 PM   #6
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I may be way too suspicious of the governent, but it makes me wonder if this is a ploy to have people push out their retirement dates and not take early 62 retirement.
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Old 03-18-2011, 02:36 PM   #7
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How much does it cost to mail those out every year? I think they should have it accessible on line so the cost savings can be put into SS. Worst case, only send them out to 55+ or 60+ year olds?
I humble opinion the reason why they dont is because your suggestion makes too much sense! Probably a mandatory law predating internet, and no follow up has occurred. I had to get my 1099-G online from state of Missouri, Though get this, they sent out a mailed letter saying you had to get it on line. Might as well just sent the 1099-g in the mail. Gotta love it!
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Old 03-18-2011, 02:49 PM   #8
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How much does it cost to mail those out every year? I think they should have it accessible on line so the cost savings can be put into SS. Worst case, only send them out to 55+ or 60+ year olds?
They won't because it might save both postage $s and actually reduce the number of gov't workers needed.
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Old 03-18-2011, 02:50 PM   #9
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I really do not see why there should be this fuzzy math going on provided they captured your earnings correctly.
I think the main cause of the estimate's fuzziness for most people is the assumptions concerning future year's earnings (and payments into SS). For some youngsters, the estimate might have 30+ years of estimated earnings, which are just the same as the last year's reported earnings (IIRC). Who earns the same amount for 30 years? So, for younger workers with typical earnings growth, the estimates probably understate what the person's checks would be under the current calculation formula.

Again, that's under the current calculation formula. It might well overstate the size of the checks they'll actually get when their time arrives.

Regarding mailing of statements: Probably a good thing. It gives needed visibility to the individual estimate of the check size ("they never told me how little this check would be!" Nope--they mailed you a letter every year). Also, I like to keep track, on paper, of the little disclaimers that SS is working into their wording about future payments. It's a cheap form of entertainment. And, if the letters get returned, SS knows that a person has moved/died, which might be useful info. I doubt it costs the government much to mail them out, and it's not like they'd actually return the money to taxpayers or do something more useful with any money saved by not mailing them out.
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Old 03-18-2011, 02:52 PM   #10
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How much does it cost to mail those out every year? I think they should have it accessible on line so the cost savings can be put into SS. Worst case, only send them out to 55+ or 60+ year olds?
Social Security did a survey of people paying in to the system. They found that young people had no faith that the system would be there for them when they needed it.

The mailings are a direct result of that survey and are an attempt to shore up support for the SS system in general.
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Old 03-18-2011, 02:57 PM   #11
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I noticed a few months ago my current online estimate went down about $20 from the previous year. The estimate has been the same for several years so I was surprised there was suddenly a drop. I haven't had any earnings in five years so that can't be a factor.
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Old 03-18-2011, 03:07 PM   #12
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An estimate is just that, so don't get too hung up on the absolute value of the number.

By the way, I couldn't help but notice that the presidents bi-partison commission on debt reduction (Alan Simpson et al) among other things proposed phasing in a ~30% reduction for SS for the top quintile of earners. Other quintiles (except for the lowest) were also cut but not as severely.

Something like that is inevitably coming, making those estimates you have not all that interesting. Just what good is an estimate under current law when the rules will almost certainly change ?
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Old 03-18-2011, 03:18 PM   #13
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I think the main cause of the estimate's fuzziness for most people is the assumptions concerning future year's earnings (and payments into SS). For some youngsters, the estimate might have 30+ years of estimated earnings, which are just the same as the last year's reported earnings (IIRC). Who earns the same amount for 30 years? So, for younger workers with typical earnings growth, the estimates probably understate what the person's checks would be under the current calculation formula.
Your probably correct about the above and the future earnings of younger folks, but that explanation does not address why my amount (and others) dropped from last year's estimate, given that my earnings have increased year over year and I'm turning 62 this year.

Also, I think MasterBlaster is correct about the mailings primary focus being to shore up the perception over the viability of the program. Of course if they hadn't raided this self funding program's coffers over many years to pay for other government programs there would be no credibility gap.
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Old 03-18-2011, 04:02 PM   #14
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This was spoken about in a recent thread but I can't remember which one. There is a formula and it dropped for some reason which brought everyone down. I'll be turning 62 next month and my recent quote went down to $1732 from $1767 which was last years quote.

REW explained the reason it went down in the recent thread.
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Old 03-18-2011, 04:16 PM   #15
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Another factor may be the COLA adjustment.
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Old 03-18-2011, 04:19 PM   #16
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Another factor may be the COLA adjustment.
You lost me on this one.... how would it be a factor in the lower estimated benefits?
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Old 03-18-2011, 04:29 PM   #17
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Another factor may be the COLA adjustment.
I do not believe there has been a COLA for the past two years so do not think this is a factor, however, my understanding of the current law is that your benefits should not go down from one year to the next, even if there was deflation year over year.
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Old 03-18-2011, 04:52 PM   #18
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Just speculating here. Although COLA is bounded at zero, the CPI index dropped below the COLA=0 bound. The decreased CPI made it into the most recent estimate.
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Old 03-18-2011, 04:55 PM   #19
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My estimate, received last week, went up. So it's not COLA related or we would all be going in the same direction. And I have not worked in 5 years.
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Old 03-18-2011, 05:20 PM   #20
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Originally Posted by DFW_M5 View Post
I am wondering if anyone can explain this, I have a June birthday and just received my SS estimate in the mail today. While I realize the COLA has been halted for another year, my estimate for retiring at 62 actually went down by $24/month from last years estimate (despite fact that my earnings went up quite a bit from prior year). Doesn't make any sense at all, unless there is some new legislation that now allows for negative COLA. Can anyone explain that?
your SS benefit is calculated using indexed wages. that index is not the CPI but a wage index, which is different. that index went down recently so some estimates went down too.
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