Yet another taking SS early question- sanity check on my math

[supernova72]

Hi, I tried to calculate what my SS would be given I'm about to ER from Megacorp. I'm not certain I'm factoring the ER "age" part correctly. May or may not go to PT work arrangement in doing something else.

I'm 55.5 yrs old. Plan to take SS at 62 (reason: accelerated pension until 62).

Here is my math:

$2,154,795 sum of highest 35 years
$5,130 AIME (highest 35 yrs/420)
calculation
.90 X $856.0 = $770
.32 above 856 below AIME =$1,368
.15 X $5157 = 0
Subtotal (770+1368 = 2138)

$1,497 (2138 X 70% age 62 factor)
$17,961 annual


So $1497 at 62? My AIME does not appear to be large enough to cross the next "bend point" of $5157. The ss.gov site says $1820 a month at 62 (assumes working until 62 however). Thanks in advance!

My first yr of earnings is a whopping $1800 (washing dishes in college). However if if I was working another year at my current rate to replace that my math said it would add $37 a month.

 

[Big_Hitter]

what is your assumption regarding future TWB increases?

 

[travelover]

Can't you get an exact answer by creating an account at SS and inputting zero income after your planned retirement?

 

[Big_Hitter]

Can't you get an exact answer by creating an account at SS and inputting zero income after your planned retirement?

I'm not sure it lets you do that any longer - could be wrong...

 

[ProspectiveBum]

I have a spreadsheet I use to project SS income, and your math looks spot-on to me.

 

[jim584672]

I think the OP has it right.

 

[supernova72]

what is your assumption regarding future TWB increases?

Hmm....TWB? Didn't see it on the acronym page...

 

[supernova72]

I'm not sure it lets you do that any longer - could be wrong...

Oh yea, I tried trying to find that again since I thought I had seen it before and can't see to located it on the ssa.gov site.

 

[supernova72]

I think the OP has it right.

Thanks---if I'm close I'll let it rest!

 

[COcheesehead]

Oh yea, I tried trying to find that again since I thought I had seen it before and can't see to located it on the ssa.gov site.

There is a whole page of calculators if you follow the link to their retirement guide. That might be what you are thinking of.

 

[jim584672]

Thanks---if I'm close I'll let it rest!

Every year the multiplier factors / bend point amounts change so check again in a year.

 

[MissMolly]

Oh yea, I tried trying to find that again since I thought I had seen it before and can't see to located it on the ssa.gov site.

Here is the sign in or create an account page

https://secure.ssa.gov/RIL/SiView.do

 

[swguy]

Or, use the detailed calculator, which you must install on your computer, here:

https://www.ssa.gov/oact/anypia/anypia.html

It will let you create whatever scenario you need to. It does, however, require you to enter your income data from the SSA site.

Sent from my VS986 using Early Retirement Forum mobile app

 

[ProspectiveBum]

Hmm....TWB? Didn't see it on the acronym page...

I believe it stands for Taxable Wage Base.

 

[gauss]

Did OP use the inflation factors to adjust each years earnings? If not then this would make a big difference

Sent from my LGLS751 using Early Retirement Forum mobile app

 

[supernova72]

Did OP use the inflation factors to adjust each years earnings? If not then this would make a big difference

Sent from my LGLS751 using Early Retirement Forum mobile app

OP, I did not use inflation factors. I used the history as is so thanks for adding that.

 

[Running_Man]

Here is the page with the factors to use:
https://www.ssa.gov/pubs/EN-05-10070.pdf

 

[Boss2014]

Here is the link to the ss.gov estimator. The estimates are based on your actual records and you can make different scenarios.

https://www.ssa.gov/retire/estimator.html

 

[stepford]

Supernova,

You and I are in similar circumstances as I've noted before. I considered both the accelerated income pension option from our former employer and taking social security before my FRA. I calculated that both of these options were significant money losers (particularly the latter) once I got into my mid-late 70's. Some I'm opting for the fixed single lifetime annuity for the pension and taking SS at 70.

Everyone has different retirement needs and expectations, but unless you expect Social Security and/or Big B to become insolvent during your lifetime or have reduced expected lifespan I'd suggest reconsidering.

One final point: Our pension is not inflation indexed so the impact of the accelerated income option strongly depends on the inflation we experience over the next few decades. I calculated the breakeven year between the accelerated income and single life annuity options (starting at age 55) for different inflation rates and obtained:

0% 16 yrs (i.e. the Single Life Annuity provides a greater total after age 71)
2% 18 yrs
4% 21 yrs
6% 27 yrs
8% Infinity (i.e. the SLA never catches up)

So if you expect inflation to increase significantly then the accelerated income option may actually be superior. Since SS payments are inflation indexed, however, this isn't a factor there and delaying is always better (assuming one lives long enough to receive the payments).

Finally, I agree with others here. The AnyPIA calculator you can download from the SSA is the best way to calculate SS payments for different scenarios - particularly when, as early retirees, we have those pesky zeros in our 35 year employment history).

 

[Big_Hitter]

Did OP use the inflation factors to adjust each years earnings? If not then this would make a big difference

Sent from my LGLS751 using Early Retirement Forum mobile app

that was my original question regarding the TWB inflation assumption

 

[supernova72]

Supernova,

You and I are in similar circumstances as I've noted before. I considered both the accelerated income pension option from our former employer and taking social security before my FRA. I calculated that both of these options were significant money losers (particularly the latter) once I got into my mid-late 70's. Some I'm opting for the fixed single lifetime annuity for the pension and taking SS at 70.

Everyone has different retirement needs and expectations, but unless you expect Social Security and/or Big B to become insolvent during your lifetime or have reduced expected lifespan I'd suggest reconsidering.

One final point: Our pension is not inflation indexed so the impact of the accelerated income option strongly depends on the inflation we experience over the next few decades. I calculated the breakeven year between the accelerated income and single life annuity options (starting at age 55) for different inflation rates and obtained:

0% 16 yrs (i.e. the Single Life Annuity provides a greater total after age 71)
2% 18 yrs
4% 21 yrs
6% 27 yrs
8% Infinity (i.e. the SLA never catches up)

So if you expect inflation to increase significantly then the accelerated income option may actually be superior. Since SS payments are inflation indexed, however, this isn't a factor there and delaying is always better (assuming one lives long enough to receive the payments).

Finally, I agree with others here. The AnyPIA calculator you can download from the SSA is the best way to calculate SS payments for different scenarios - particulate when, as early retirees, we have those pesky zeros in our 35 year employment history).

Thanks Stepford and appreciate the feedback (and analysis).

I might have over-simplified my accelerated vs. lifetime calculation it appears.

Here's the back of the envelope math I did:

Lifetime annuity (assume 30 yrs of pension/lifespan)
$37500 x 30 = $1,125,000

Accelerated
$42,912 X 6 = $257,472 (first 6 yrs---I would be almost 56 when I start drawing)
$34512 X 24 = $828,288
Total--------- $1,085,760

Realizing there is a $40K variance on the negative but thought it was pretty close. I did not take into account interest rates or inflation. Oops.

 

[supernova72]

Here is the link to the ss.gov estimator. The estimates are based on your actual records and you can make different scenarios.

https://www.ssa.gov/retire/estimator.html

That worked great! I could not get it to work yesterday. Thanks.

I like this math better than my calculation.

$1688 if "retiring" now at 55.5
$1819 if working until 62

Like others have mentioned it doesn't add much for working much longer to get to that next bend point.

 

[mamadogmamacat]

that is right. having 35 yrs of income (no zero yrs in the calculation), and to the extent possible if one is fortunate enough, having as few yrs as possible that are significantly below the max, are what is most important. I stopped working shortly after age 55. My age 62 SS will be $1682. If I had worked until 62, it would have been $1781. However, if I had stopped working at 52, which would have given me one zero yr and also one yr at close to zero income, I would only get $1400. Stopping at age 48, only $1150.

 

[stepford]

that is right. having 35 yrs of income (no zero yrs in the calculation), and to the extent possible if one is fortunate enough, having as few yrs as possible that are significantly below the max, are what is most important.

Maxing out all 35 years isn't THAT critical. It does roll off somewhat toward the max. In my case I'll have 27 years of maximum earnings, 2 additional years at 80-90% of max and 3 inconsequential (college summer jobs) years of <10% of the max. Roughly 29 full years and 6 zeroes or 83% of the 35 year max, and I'm still projected to get about 88% of the max benefit. Each additional working year at max income would only increase my benefit by less than 2%. While every little bit helps, this incremental increase was small enough in the last few years that it barely factored into the calculation of when I could retire.

 

[MBSC]

Maxing out all 35 years isn't THAT critical. It does roll off somewhat toward the max. In my case I'll have 27 years of maximum earnings, 2 additional years at 80-90% of max and 3 inconsequential (college summer jobs) years of <10% of the max. Roughly 29 full years and 6 zeroes or 83% of the 35 year max, and I'm still projected to get about 88% of the max benefit. Each additional working year at max income would only increase my benefit by less than 2%. While every little bit helps, this incremental increase was small enough in the last few years that it barely factored into the calculation of when I could retire.

+1

8 years of zeros for me. Filling in some of those zeros barely moves the needle on my benefit amount and isn't worth my time and freedom.