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Years of work to maximize SS?
Old 03-30-2014, 09:57 PM   #1
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Years of work to maximize SS?

I believe one needs 35 years of employment to maximize SS benefits. Some early retirees must have fallen short of this. Does it have much impact on your annual benefit?

My work scenario is deteriorating rapidly and it looks like I'll be retiring after 31 years. Salary for last few years has been in low 100k's. Before that I worked at low wage jobs for three years after college - total of 34 years. Is there a compelling reason to stick it out OMY to reach a career of 35 yrs?
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Old 03-30-2014, 10:13 PM   #2
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Everything you need to know to answer your question: How does stopping work early affect Social Security?
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Old 03-30-2014, 10:38 PM   #3
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Where is your 35 year average salary with respect to the second bendpoint (4917 for 2014) if its above this level then the additional years adding to the average add at 15% below it 33 %. If you get the anypia program from social security and enter the data, then look at the indexed monthly earnings this is the number to compare with.
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Old 03-30-2014, 11:29 PM   #4
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Where is your 35 year average salary with respect to the second bendpoint (4917 for 2014) if its above this level then the additional years adding to the average add at 15% below it 33 %. If you get the anypia program from social security and enter the data, then look at the indexed monthly earnings this is the number to compare with.
I guess to get best return for an ER dreamer, one should try to cross 32% bendpoint. SS is given by .9x791+.32x2029+.15 of rest. So for better return one should try to cross 791+2029 bend points. one can play with Anypia to find the minimum number of work years to go into 15% area, it will also depends on how much you make. I vaguely remember that it take around 15 years of earnings if earning more than SS limit, it may also depends when you earned the income.
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Old 03-31-2014, 08:52 AM   #5
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Personal tax situation can also affect your OMY decision re net SS benefit.

https://www.socialsecurity.gov/planners/taxes.htm
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Old 03-31-2014, 09:14 AM   #6
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It is some pretty nice gravy. I don't have enough credits but you can get half of your spouse's payment.

If we stop working at age 47 we can get a combined $2369 at age 62. Considering that before age 62 I have budgeted a 3% SWR of $3400 a month, the SS will add a pretty huge kick. Perhaps we will not file until 67 but it depends how the system looks by then. Reminded of the lyrics "take the money and run"
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Old 03-31-2014, 12:03 PM   #7
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I guess to get best return for an ER dreamer, one should try to cross 32% bendpoint. SS is given by .9x791+.32x2029+.15 of rest. So for better return one should try to cross 791+2029 bend points. one can play with Anypia to find the minimum number of work years to go into 15% area, it will also depends on how much you make. I vaguely remember that it take around 15 years of earnings if earning more than SS limit, it may also depends when you earned the income.
I noticed this when I was figuring out what my SS benefits would be once I included a bunch (around 12) zeroes to fill out the 35 years in the SS calculation. I was right near the top of the 32% bend point so if I worked more years I would quickly slip into the lowly 15% bend point and barely increase my SS. Not that this played any role in when I ERed, of course!
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Old 03-31-2014, 02:20 PM   #8
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Before I retired at 55, I went to the SS website and used their calculator, putting in max contribution for the next 11 years. I did the same with zeros. The difference was about $50 bucks.
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Old 03-31-2014, 03:27 PM   #9
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Great thread. I actually created my own spreadsheet for calculating social security when I was unable to download the SSA's tool. All I have to do is update the index factors and inflation adjusted numbers that the SSA provides each year. It feels good to "know" where you stand, even though it will probably be changed once I get ready to cross that bridge.
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Old 03-31-2014, 05:25 PM   #10
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Nice thread. I always wondered this also. I have five years of lower earnings , then the max earnings for the next 15 or so. Time to go use the calculator. Part of me tells me to ignore it because SS won't be there for people like me.
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Old 03-31-2014, 05:33 PM   #11
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Thanks very much for pointing me to the anypia calculator. Realizing that my expected SS benefits if I RE this year at 54 are 88% of what they'd be if I worked until I dropped removes yet another worry.
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Old 03-31-2014, 09:47 PM   #12
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Thanks all for the links and the advise. My mind is racing with all the "but" and "what ifs ?" I didn't get to do the detailed SS calculator yet, but it looks like working one more year just to reach 35 years of SS wages will not make a significant difference. The RE decision is getting easier!!!!
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Old 04-01-2014, 04:00 PM   #13
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My husband just discovered he has a zero. He hadn't really thought about it because he has always worked. But he did not work in college, and he worked in South Africa for a few years. He is 59 and may take a contract job to fill in that zero. No huge deal as we were both good wage earners.

I came from blue collar family and at 57, I have 42 years of work. I would have to earn 20K to replace my lowest year on that 35, so I feel all set.

I agree the SS calculator is great and easy to use.
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Old 04-01-2014, 05:19 PM   #14
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I think one reason you are seeing the numbers not increase much from, say, 30 years into the system instead of 35 years, is they use a skewed formula that gives a greater benefit per contribution to lower income earners than higher income earners. Higher income earners still get a higher SS payment but not directly proportional higher. If you have $30,000 in SS wages your whole career and someone else has $60,000 their whole career, they will not get double your SS payment.

When you have zeros I guess it makes you more like a lower income earner such that you don't experience the full negative effect of those zeros.
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Old 04-01-2014, 06:43 PM   #15
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Ok. I used the online calculator. I put in all my career earnings. I'm 48. If I stop working this year, it says I will get just over $1500 per month when I'm 62. Will that increase by 8% each year if I wait until I'm 70 to take it?

If that is the case it means I'll get $2775 if taken at 70 years old.

If I continued working until 70 years old, the total would only be a little over 2900.

Does that make sense?
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Old 04-01-2014, 06:50 PM   #16
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Originally Posted by aim-high View Post
Ok. I used the online calculator. I put in all my career earnings. I'm 48. If I stop working this year, it says I will get just over $1500 per month when I'm 62. Will that increase by 8% each year if I wait until I'm 70 to take it?

If that is the case it means I'll get $2775 if taken at 70 years old.

If I continued working until 70 years old, the total would only be a little over 2900.

Does that make sense?
So if you work for another 22 years and pay $400,000 more in the SS system you will get $125 more a month.

Sounds like a deal to me.
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Old 04-01-2014, 08:25 PM   #17
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Ok. I used the online calculator. I put in all my career earnings. I'm 48. If I stop working this year, it says I will get just over $1500 per month when I'm 62. Will that increase by 8% each year if I wait until I'm 70 to take it?

If that is the case it means I'll get $2775 if taken at 70 years old.

If I continued working until 70 years old, the total would only be a little over 2900.

Does that make sense?

It is my understanding that your benefit will rise by 8% per year for each year you defer benefits, until the age of 70. Out of curiosity: How many years have you been paying into the SS system?
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Old 04-01-2014, 08:30 PM   #18
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It is my understanding that your benefit will rise by 8% per year for each year you defer benefits, until the age of 70. Out of curiosity: How many years have you been paying into the SS system?
I have 20 years at the max, 8 years a bit below the max, and then 3 years of summer wages.
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Old 04-01-2014, 08:52 PM   #19
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My husband just discovered he has a zero. He hadn't really thought about it because he has always worked. But he did not work in college, and he worked in South Africa for a few years. He is 59 and may take a contract job to fill in that zero. No huge deal as we were both good wage earners.

I came from blue collar family and at 57, I have 42 years of work. I would have to earn 20K to replace my lowest year on that 35, so I feel all set.

I agree the SS calculator is great and easy to use.
You 20K income today is not as good as that of 10 years ago. The wage is adjusted.
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