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Calculating SS When FIRE'ing Under 40?
Old 07-06-2015, 12:03 PM   #1
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Calculating SS When FIRE'ing Under 40?

Hey Guys,

Signed up on the SS.gov site to find out my benefit information. I have amassed my 40 credit I guess you would call them?

I'm currently 30 yrs old, planning to retire by 40 (fingers crossed ofcourse)

I'm not necessarily holding my breath that we will still have SS available to us when we become of age, but, I figured, I'd go ahead and account for it just in case.

With that said ~ How do you account for benefits when you retire early?

This is what I currently see when I log in:


Assuming I do retire at 40 ~ I will not be making the $117k/year required for those benefits. How would I calculate what I might actually receive?

Thanks y'all!
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Old 07-06-2015, 02:06 PM   #2
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Go back to the section that estimates SS benefits and enter zero for future income years and it'll make the estimate calculation with that in mind. You may find that retiring at 40 won't make much difference in your benefits.
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Old 07-06-2015, 03:26 PM   #3
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Under your benefits, you'll need a copy of your "Earnings Record", then go to Calculators and you can download the Detailed Calculator. The format of the calculator is not intuitive, but you go into Forms, keep filling out the info and then estimate. For example for me, it impacted my earnings by $600/month. I have the same estimate as you, I'm 43, its going to calculate off your best 35 years.. which you won't have 35 years so each of those will be zero.


Looking at the calculations, it appears they calculate based on these PIA bend points so I'm getting full credit on the first two tiers, but the top tier is where my income is diminished as I didn't work long enough so my average earnings over 35 years isn't enough to get the max, which is what would happen in your scenario too. but the PIA bend points are 826 and 4980 and you get 90% of 826 + 32% of the next 4154 + 15% of anything over that.. ie so you have to make a lot more to get a lot more but it also means quitting early doesn't hurt you as much (well giving up $600/month or $7.2K a year inflation adjusted...so still something to consider


As for SS running out, the experts say even if we run short in 2035, we would still be able to product 70% so if you want to be safe in your calculations, you could cut it by another 30% and see how that works for your plans.
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Old 07-06-2015, 04:33 PM   #4
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Thanks for the help guys & gals!

Walt ~ I was unable to edit anything via that page I was originally on. Had to go to a separate calculator and input everything.

Karen ~ Thanks! I assume we should use the inflation adjusted option on the calculator?

When Using the online calculator ~ and inputing everything I can ... This is what I get.

$1,117 (Non Inflation Adjusted)
$3,674 (Inflation Adjusted) <-- I assume I should go with this number?

Thanks y'all!
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Old 07-06-2015, 04:35 PM   #5
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Quote:
Originally Posted by DROPOUT View Post
$1,117 (Non Inflation Adjusted)
$3,674 (Inflation Adjusted) <-- I assume I should go with this number?

Thanks y'all!


why not, it's only 40 years out
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Old 07-06-2015, 04:46 PM   #6
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Originally Posted by Big_Hitter View Post
why not, it's only 40 years out


So true ... So true ...

By then, the world reserve currency will be the Yuan, and we'll be 99% foreign large cap
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Old 07-06-2015, 06:08 PM   #7
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Quote:
Originally Posted by DROPOUT View Post
Thanks for the help guys & gals!

Walt ~ I was unable to edit anything via that page I was originally on. Had to go to a separate calculator and input everything.

Karen ~ Thanks! I assume we should use the inflation adjusted option on the calculator?

When Using the online calculator ~ and inputing everything I can ... This is what I get.

$1,117 (Non Inflation Adjusted)
$3,674 (Inflation Adjusted) <-- I assume I should go with this number?

Thanks y'all!
Depends on the calculator but FireCalc talks about todays dollars so only $1117. as it has inflation adjustment built in to it. But other calculators don't on the inputs so you will likely need both depending on the calculator you will use.
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Old 07-08-2015, 04:04 PM   #8
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So, dumb question of the day.

For the SS calculator the first step/box asks for me to enter Last Year's Earnings

Is this gross, Wages & Tips, Social Security Wages, Medicare Wages & Tips?

What value from my W2 should I enter?

Thanks!
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Old 07-08-2015, 04:06 PM   #9
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Social Security Wages
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Old 07-08-2015, 04:45 PM   #10
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Quote:
Originally Posted by karen1972 View Post
Under your benefits, you'll need a copy of your "Earnings Record", then go to Calculators and you can download the Detailed Calculator. The format of the calculator is not intuitive, but you go into Forms, keep filling out the info and then estimate. For example for me, it impacted my earnings by $600/month. I have the same estimate as you, I'm 43, its going to calculate off your best 35 years.. which you won't have 35 years so each of those will be zero.


Looking at the calculations, it appears they calculate based on these PIA bend points so I'm getting full credit on the first two tiers, but the top tier is where my income is diminished as I didn't work long enough so my average earnings over 35 years isn't enough to get the max, which is what would happen in your scenario too. but the PIA bend points are 826 and 4980 and you get 90% of 826 + 32% of the next 4154 + 15% of anything over that.. ie so you have to make a lot more to get a lot more but it also means quitting early doesn't hurt you as much (well giving up $600/month or $7.2K a year inflation adjusted...so still something to consider


As for SS running out, the experts say even if we run short in 2035, we would still be able to product 70% so if you want to be safe in your calculations, you could cut it by another 30% and see how that works for your plans.
Downloaded the detailed calculator...no kidding it isn't intuitive.

Are there any Dummy Guides for how to use this program?
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Old 07-08-2015, 05:34 PM   #11
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The 2 paragraphs that come up when you open it and then the help button

Step 1. Form-> Basic Worker Information
Step 2 Form -> Supplemental Worker Information
Note (Earning years you should get from the Earnings record you see from your online account) You would then enter those in the next section.

Forward earnings projections is where you can project till a certain year and then put in zeros after.

Step 3. Form -> Earnings information - enter your earnings record year by year.

NOTE: You may have more forms to fill out given what you input.

Then just hit File-> Calculate.

Then you have to read down to find the new numbers.
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Old 07-09-2015, 12:22 PM   #12
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For me, playing around with these calculators for a bit has made me feel much better about ER: According to these calculators, my SS income will not change substantially (personal call) whether I take a lowing income position from now to full retirement age or sit and twiddle my thumbs for the next 20+ years.

I did start contributing quite young at a very minimal rate; then, I started exceeding the maximum SS taxed earnings in the late 90's.

As long as the formulas aren't monkeyed with too much over the next 2 or three decades, additional years of SS tax will not buy me much.
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Old 07-09-2015, 03:10 PM   #13
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I use this one.
http://www.ssa.gov/pubs/EN-05-10070.pdf
Benefit Formula Bend Points
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