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What happens to my soc sec if I stop working at 45?
Old 12-26-2010, 10:05 AM   #1
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What happens to my soc sec if I stop working at 45?

Continual income from 27 to 45... Max soc sec payments from 29 to 45.

What would I draw?

Tia
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Old 12-26-2010, 10:23 AM   #2
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green night, you can get an estimate using this benefit calculator.

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Old 12-26-2010, 10:41 AM   #3
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Originally Posted by green night View Post
Continual income from 27 to 45... Max soc sec payments from 29 to 45.

What would I draw?

Tia
We can't give you that answer, you should go to ss.gov and enter your data for that. But in general, as I understand it...

Your SS benefit is based on your 35 highest income years. It appears you have 18 years of income so far. If you stop working, your benefit would be based on 18 years of income and 17 years of ZERO income. If you've seen the standard estimate of your benefit at 62, 66 & 70 from SSA before, it assumes your next 17 years income will be the same as your last year's income. That's a significantly higher benefit than 17 years of zero income.

But again, you should go to ss.gov and get their projection. I make no guarantee whatsoever...
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Old 12-26-2010, 11:16 AM   #4
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I can't tell you what you would draw, either. But I stopped working at age 45 after 23 years of working, some close to the max but others lower. I created a quick-and-dirty spreadsheet based on the SS benefit formula in their website to do some sensitivity analysis.

What I saw was that all those zeroes added into the benefit calculation did not greatly reduce my projected benefit because the AIME (Adjusted Indexed Monthly Earnings) was still barely in the lowest income replacement bracket (15%). Any increase in my AIME had I kept working more years would have been replaced at only a 15% rate.
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Old 12-27-2010, 06:58 PM   #5
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Wait until you get the annual SS statement, that includes the first year of zero earnings. The projection will assume zero earnings in all future years. If you have no further credits, the figure will only change according to the annual wage index published each October. It usually goes up a few percentages, but as with this year, it can also go down.
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Old 12-27-2010, 08:17 PM   #6
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Wait until you get the annual SS statement, that includes the first year of zero earnings. The projection will assume zero earnings in all future years. If you have no further credits, the figure will only change according to the annual wage index published each October. It usually goes up a few percentages, but as with this year, it can also go down.
Thanks for the tip. I'll be on the lookout for this when I receive my first SS statement with a current zero wage earnings year (2009, it was not yet recorded in the 2010 statement) in 2011. I wonder how close to my spreadsheet estimate it will end up being?
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Old 12-27-2010, 08:29 PM   #7
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Thanks guys!
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Old 12-28-2010, 04:29 AM   #8
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Originally Posted by scrabbler1 View Post
Thanks for the tip. I'll be on the lookout for this when I receive my first SS statement with a current zero wage earnings year (2009, it was not yet recorded in the 2010 statement) in 2011. I wonder how close to my spreadsheet estimate it will end up being?
This table might help you with AWI projections:

Average Wage Index (AWI)

This is the first time it has been a negative number. If somehow we get a decade or so of declining wages, the benefit could go down significantly for someone who has 10-15 years to go until they're 62, who has ER'ed.

This is something I discovered with my annual statement this year. I always thought if AWI went down, it would just keep the benefit at the current level, like a negative CPI does for current beneficiaries. But that's not the case.
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Old 12-28-2010, 06:44 AM   #9
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Originally Posted by BLS53 View Post
Wait until you get the annual SS statement, that includes the first year of zero earnings. The projection will assume zero earnings in all future years. If you have no further credits, the figure will only change according to the annual wage index published each October. It usually goes up a few percentages, but as with this year, it can also go down.
I believe this is incorrect (note my post earlier), the standard SS statement assumes your future earnings will be the same as the most current. From ss.gov Calculating retirement benefit estimates on your Social Security Statement. It will make a significant difference to the OP, again you need to go online and enter all ZEROs to see the impact.

Quote:
Statements automatically issued: We assume that you will continue to work up to each of the potential retirement ages shown and that your earnings will continue at your current level. To determine your future earnings, we look at the last two years on your record. If you have earnings posted for last year, we use that amount for your current and future years' earnings. If your Statement is prepared during the first six to nine months of the calendar year, your earnings for last year may not be on record yet. In that case, we will use the amount of earnings you had in the year before as your earnings for last year, this year and future years.
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Old 12-28-2010, 07:38 AM   #10
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Quote:
Originally Posted by BLS53 View Post
This table might help you with AWI projections:

Average Wage Index (AWI)

This is the first time it has been a negative number. If somehow we get a decade or so of declining wages, the benefit could go down significantly for someone who has 10-15 years to go until they're 62, who has ER'ed.

This is something I discovered with my annual statement this year. I always thought if AWI went down, it would just keep the benefit at the current level, like a negative CPI does for current beneficiaries. But that's not the case.
Not just for those who ERed, your indexed wages will be lower too, so if you already have 35 years of good earnings, you could end up not replacing lower earning years because with inflation factor you salary of 25K in 1980 is worth more than todays deflated 2010 earnings.
Although I would think this would be a rare occurrence.
TJ
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Old 12-28-2010, 04:12 PM   #11
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Originally Posted by Midpack View Post
I believe this is incorrect (note my post earlier), the standard SS statement assumes your future earnings will be the same as the most current. From ss.gov Calculating retirement benefit estimates on your Social Security Statement. It will make a significant difference to the OP, again you need to go online and enter all ZEROs to see the impact.
You are wrong. I have figured this number every year for the last 15 years. And my calculations always match up with my annual statement. With the online calculator becoming available in recent years, it has matched up as well.

Mathematical coincidence? I don't think so.
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Old 12-28-2010, 04:23 PM   #12
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Originally Posted by BLS53 View Post
You are wrong. I have figured this number every year for the last 15 years. And my calculations always match up with my annual statement. With the online calculator becoming available in recent years, it has matched up as well.

Mathematical coincidence? I don't think so.
Relax, I'm not looking for a fight. I took my info directly from the Soc Sec site. How do you reconcile these?

BLS53 Wait until you get the annual SS statement, that includes the first year of zero earnings. The projection will assume zero earnings in all future years.

Social Security Admin ssa.gov Statements automatically issued: We assume that you will continue to work up to each of the potential retirement ages shown and that your earnings will continue at your current level.

Certainly doesn't appear Soc Sec assumes zero earnings for future years.
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Old 12-28-2010, 10:33 PM   #13
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Quote:
Originally Posted by Midpack View Post
Relax, I'm not looking for a fight. I took my info directly from the Soc Sec site. How do you reconcile these?

BLS53 Wait until you get the annual SS statement, that includes the first year of zero earnings. The projection will assume zero earnings in all future years.

Social Security Admin ssa.gov Statements automatically issued: We assume that you will continue to work up to each of the potential retirement ages shown and that your earnings will continue at your current level.

Certainly doesn't appear Soc Sec assumes zero earnings for future years.
If the current level is zero, that is what it assumes. It assumes you will have zero annual earnings until 62.

I've been figuring this amount annually for 15 years, on my own account. Once you stop working, you're dealing with a fixed amount, that is only changed by the AWI each year. This is easily determined once the AWI is announced. Simple multiplication, and it's always spot on. All the money you've earned, or didn't earn, is already figured in.

SS has 15 years of zero's plugged in on my account. I don't need to plug them into the detailed calculator manually. But if I did, the numbers would match up. I know, because until recent years, the detailed calculator was the only way to compare figures with the annual statement you get in the mail.
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Old 12-29-2010, 12:01 AM   #14
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Relax, I'm not looking for a fight. I took my info directly from the Soc Sec site. How do you reconcile these?

BLS53 Wait until you get the annual SS statement, that includes the first year of zero earnings. The projection will assume zero earnings in all future years.

Social Security Admin ssa.gov Statements automatically issued: We assume that you will continue to work up to each of the potential retirement ages shown and that your earnings will continue at your current level.

Certainly doesn't appear Soc Sec assumes zero earnings for future years.
Well, I've been playing around with the SSA estimator, just to confirm I've been doing this correctly. You raised enough doubt, that I lost some confidence. My results still confirm what I stated.

One statement you might look at, is on the last page of the online estimator where you get your results. I can't link it, because obviously it's secured.

It states:

Assumptions: We estimate your benefits using your average earnings over your working lifetime. If you worked last year, we will also assume that you will continue to work and make about the same amount as you entered for last year's earnings.


The last year's earnings is the key. If it's zero, that's what the estimator assumes. I think the confusion comes in for younger people. Because as you quoted earlier, it assumes you will continue working at the current level until age 62. That's why there's a large degree of inaccuracy in estimating benefits for younger people.

I haven't any earnings since 1998. The estimator doesn't use the 1998 figure, and plug it in every year until 2015 when I'm 62. Because it knows I have no earnings over that timeframe. It can't assume I'm going to work until age 62, because that would be changing the past, not a future projection.

The only way my benefit level can be changed, outside of the AWI adjustments, is if I went back to work for the next 4 years.

The old spreadsheet style estimator seems to be gone from the site. You can't manually input past earnings anymore. The calculator does everything for you based on your actual record.
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Old 12-29-2010, 09:19 AM   #15
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Where did the OP state he/she already stopped working? It reads as if he/she is still working to me.

Quote:
Originally Posted by green night
What happens to my soc sec if I stop working at 45?
Continual income from 27 to 45... Max soc sec payments from 29 to 45.
What would I draw?
If the OP's last year was already ZERO income I agree with you, just didn't appear to be the case.
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Old 12-29-2010, 10:35 AM   #16
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Where did the OP state he/she already stopped working? It reads as if he/she is still working to me.



If the OP's last year was already ZERO income I agree with you, just didn't appear to be the case.
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Originally Posted by BLS53 View Post
Wait until you get the annual SS statement, that includes the first year of zero earnings. The projection will assume zero earnings in all future years. If you have no further credits, the figure will only change according to the annual wage index published each October. It usually goes up a few percentages, but as with this year, it can also go down.
This was my original response to the OP. Notice the "wait" part. I don't care whether they're working or not. But they do need a year of zero income to make the estimate. And the manual calculator has gone away, so this method is the best they can do.
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Old 12-29-2010, 10:39 AM   #17
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This was my original response to the OP. Notice the "wait" part. I don't care whether they're working or not. But they do need a year of zero income to make the estimate. And the manual calculator has gone away, so this method is the best they can do.
I took it the OP wanted to know what the effect would be before quitting work. Asking him/her to quit and wait a full year (or more) to find out the impact wouldn't be much help to someone still working.

Guess we just made different assumptions about the OP's intention. Seems odd someone would quit and then ask, what will the impact be, but it's certainly possible.

It seems we've pretty much beat this to death, so you're welcome to the last word, I'm done...
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Old 01-20-2011, 09:46 PM   #18
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Thanks for the tip. I'll be on the lookout for this when I receive my first SS statement with a current zero wage earnings year (2009, it was not yet recorded in the 2010 statement) in 2011. I wonder how close to my spreadsheet estimate it will end up being?
I just received my latest SS statement. But for some strange reason, it did not include my zero earnings for 2009, my first full calendar year of ER. All it had there was "not yet recorded" which is what was there in last year's statement. Why wasn't there a zero with all the projected benefit calculations based upon that zero in the latest year? Could they think I actually worked in 2009 but did not "find" my wage earnings yet?

I should probably call them up and tell them I did not work in 2009 and to please recalculate my projected benefits with a zero for the wage earnings included therein.
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Old 01-20-2011, 10:41 PM   #19
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The definitive way to calculate this amount is to set up a spreadsheet and enter every year's earned income (i.e., income for which Social Security taxes were paid, which should be the same, except for high earners - and tax cheats!) with a corresponding NAWI values for each year going back, which is a factor to boost up earlier year's income into today's dollars to get the inflation indexed income. Then you take the sum of the highest 35 years of the inflation indexed income and get the average indexed monthly income (AIME), which is the basis for the benefit calculation.

Then the primary benefit (as well as other benefits that I am trying to get information on - see my thread) is calculated as a function of the AIME, such that there is some marginal rate of benefit per a set of brackets (i.e., the lower brackets have a high rate, with the upper brackets having a low rate.)

You can PM me and I can give you an OpenOffice spreadsheet that contains all the NAWI values going back to 1979, in which case all you would need to do is to enter your earnings per your Social Security Statement, and you can calculate your benefit.
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Old 01-21-2011, 07:45 AM   #20
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Originally Posted by scrabbler1 View Post
I just received my latest SS statement. But for some strange reason, it did not include my zero earnings for 2009, my first full calendar year of ER. All it had there was "not yet recorded" which is what was there in last year's statement. Why wasn't there a zero with all the projected benefit calculations based upon that zero in the latest year? Could they think I actually worked in 2009 but did not "find" my wage earnings yet?

I should probably call them up and tell them I did not work in 2009 and to please recalculate my projected benefits with a zero for the wage earnings included therein.
It takes a few years for SS to come to the conclusion that you aren't going to have income in future years. In the meantime, their projected benefits will continue to assume that you will have future income. Eventually, SS will conclude you won't have future income and they will change your projected benefits to reflect what you really will receive. At least that's the way it was for me.

I ER'd in '96 at 49 with barely enough quarters in SS to qualify for benefits. I called SS to see what my future benefits would be. They said it would be the maximum amount based on my income (my last 11 years were my highest earning years and they were in the SS system). I explained that I would have no future income. He said eventually SS would start including future earnings as zero but he couldn't do anything to update the system. If I remember correctly, it took 2 or 3 cycles for my SS benefit projection to start entering zero projected income. The original projected SS benefit decreased more than 50%. Although my circumstances are different, I suspect that it will take about the same amount of time for SS to "fix" OP's records and adjust projected benefits.
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