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Calculating SS benefit when ER-ing
Old 01-30-2012, 05:08 AM   #1
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Calculating SS benefit when ER-ing

Yesterday, I wasted quite a bit of time at SSA.gov trying to figure out how to estimate my SS benefit. I am 59 and according to thier calculators I am eligible for $2,473.00/mo it I start taking my benefits at 66, this assumes constant income and associated SS taxes for the next 7 years.

I am trying to get an estimate of my benefit at age 66, but stopping work at ages 61 or 62. Whenever I input the information it seems to automatically assume I will start taking SS at age 62. Can anyone direct me to the calculator where you have the flexibility to input an early retirement age, but with plans to delay SS benefit to age 66?

My interest is to see how much less than the $2,473.00 estimate I should expect to receive if you SS tax contribution stops at 4 or 5 years early.

Thanks

Tom
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Old 01-30-2012, 05:27 AM   #2
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Choose A Benefit Calculator is a link to the three calculators. The detailed one will do what you want to do, I believe.
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Old 01-30-2012, 07:50 AM   #3
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Yes, I think it is the detailed one too. But, it's not intuitive, and you have to enter in all of your previous earnings from an SSA statement, so it's quite tedious. But I'm still working/struggling with it because I really want to know that accurate amount too. In my case, stop work at 56 and plan to collect SS at 70.
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Old 01-30-2012, 03:35 PM   #4
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My interest is to see how much less than the $2,473.00 estimate I should expect to receive if you SS tax contribution stops at 4 or 5 years early.

Thanks

Tom
The easy, no work answer is...not much.
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Old 01-30-2012, 03:48 PM   #5
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I think it would be roughly your benefit at age 62 multiplied by 1.36. You can check the reasonableness by looking at the relationship of your current draw at 62 vs 66. The draw at 66 should be about 136% of the draw at 62.

As Bikerdude suggests, in my case it was not much. Certainly not enough to delay freedom.
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Old 01-30-2012, 03:51 PM   #6
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The easy, no work answer is...not much.
+1

I was amazed at how little difference stopping work early made.
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Old 01-30-2012, 04:15 PM   #7
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+1

I was amazed at how little difference stopping work early made.
I was, too, but then I saw how my reduced AIME will be just below the second bend point (15% wage replacement) so the reduction of income was only $15 per $100.
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Old 01-31-2012, 05:19 AM   #8
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Thanks to you all for your comments. I was able to get the estimated reduced benefit. If I had stopped contributing at the beginning of 2012, with 7 years remaining to reach full retirement,the calculator shows only a $110.00 hit per month. Since I plan to work at least a couple more years I would assume it would be even less.

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Old 01-31-2012, 08:42 AM   #9
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Keep in mind that the calculators provide results in today's dollars without future changes in Average Wages or COLA adjustments to PIA. The future changes in the Average Wages will affect the weighting of your past earnings history in the calculation of future PIA. Factor these into your projections of escalated expenses and income, assuming you escalate in your model.
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Old 01-31-2012, 01:01 PM   #10
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Originally Posted by gsparks2
Keep in mind that the calculators provide results in today's dollars without future changes in Average Wages or COLA adjustments to PIA. The future changes in the Average Wages will affect the weighting of your past earnings history in the calculation of future PIA. Factor these into your projections of escalated expenses and income, assuming you escalate in your model.
But are the Bend Points not also adjusted by the same factor?

My assumption is that my current lifetime earnings which puts me past the second bend point will stay on this bracket over the next 15 until I hit 62 as everything adjusts up each year due to wage inflation.
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Old 01-31-2012, 02:20 PM   #11
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The bend points are the key. If you are in the "15% bracket", quitting work early will have very little effect on your monthly benefit (AIME over about $3857).

If you are in the "32% bracket", quitting work early will have a big impact on your benefit.

If you are in the "90% bracket" (AIME less than about $767) - well you had better plan to work until you are 70.
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