SS reduction impact from ER

[Rothman]

I'm 50 looking at a SS statement and it says at 67 I'd get $2550/month, $1750 at age 62 but these estimates assume working till those dates, what's the impact of retiring earlier? Also wife, same age, didn't work much do I understand she claims 1/2 of my value at same age?

 

[heeyy_joe]

Go to The United States Social Security Administration and use the tools they have there.

 

[urn2bfree]

Go to The United States Social Security Administration and use the tools they have there.

The problem is they assume that if you retire early you have to take your benefits at age 62. There does not seem to be a tool telling what your benefit would be if you stop,working before 62 but only collect when you are 65 or 67 or 70. I have heard 8% a year increase for every year you wait is a possible estimate so,maybe that would be a work around...?

 

[Shanky]

Put a hundred dollars a year as income until age 67, that will get you close enough.

 

[rbmrtn]

The problem is they assume that if you retire early you have to take your benefits at age 62. There does not seem to be a tool telling what your benefit would be if you stop,working before 62 but only collect when you are 65 or 67 or 70.

Download their detailed calculator. It allows for stooping work early.

Social Security Detailed Calculator

It doesn't really impact as much as you would think

 

[meierlde]

If you have less than 35 years of work. Then the question is works like this, is your average over 35 years adjusted above 4768 a month? (that is taking just the years you have worked) If it is and you are earning the maximum amount for SS of 113,000 a year it adds about 270 per month to the average for each additional year. Since you are above the 15 % bend point that works out to be $40/month. If you are below 4768 a month, and above $791 then the amount would be $86/month. If earnings are lower just divide the annual amount by 12 and then by 35 (for the average of years SS uses) and multiply by the appropriate amount and you will be close.

 

[urn2bfree]

If you have less than 35 years of work. Then the question is works like this, is your average over 35 years adjusted above 4768 a month? (that is taking just the years you have worked) If it is and you are earning the maximum amount for SS of 113,000 a year it adds about 270 per month to the average for each additional year. Since you are above the 15 % bend point that works out to be $40/month. If you are below 4768 a month, and above $791 then the amount would be $86/month. If earnings are lower just divide the annual amount by 12 and then by 35 (for the average of years SS uses) and multiply by the appropriate amount and you will be close.

No offense, to anyone except maybe myself...for being too clueless...but I cannot follow what this is saying...is it $270 a month more or $40. What is the "bend point?" Which earnings am I dividing by 12 before dividing by 35? My lifetime? My lifetime average?
Since I am retiring after this year it is easier for me to figure with the fake earning suggestion of simply putting in a low number like $100 (i wonder if $0 or $1 would work) for yearly earnings from now to 62 and lying and saying I am retiring at 62. That fools the calculator into figuring out all the numbers I need taking it at 62, 67 and 70.... It does not tell me how much I will get taxed or means tested as I suspect I will when the time comes, but I estimate a 25% reduction as a reasonable estimate of worst case for those of us over 50. For you youngsters, the haircut may end up phasing in higher and higher.

 

[Brett_Cameron]

No offense, to anyone except maybe myself...for being too clueless...but I cannot follow what this is saying...is it $270 a month more or $40. What is the "bend point?" Which earnings am I dividing by 12 before dividing by 35? My lifetime? My lifetime average?
Since I am retiring after this year it is easier for me to figure with the fake earning suggestion of simply putting in a low number like $100 (i wonder if $0 or $1 would work) for yearly earnings from now to 62 and lying and saying I am retiring at 62. That fools the calculator into figuring out all the numbers I need taking it at 62, 67 and 70.... It does not tell me how much I will get taxed or means tested as I suspect I will when the time comes, but I estimate a 25% reduction as a reasonable estimate of worst case for those of us over 50. For you youngsters, the haircut may end up phasing in higher and higher.

Social Security Handbook is the handbook.

It will lead you through all of the (not straightforward) calculations.

 

[meierlde]

No offense, to anyone except maybe myself...for being too clueless...but I cannot follow what this is saying...is it $270 a month more or $40. What is the "bend point?" Which earnings am I dividing by 12 before dividing by 35? My lifetime? My lifetime average?
Since I am retiring after this year it is easier for me to figure with the fake earning suggestion of simply putting in a low number like $100 (i wonder if $0 or $1 would work) for yearly earnings from now to 62 and lying and saying I am retiring at 62. That fools the calculator into figuring out all the numbers I need taking it at 62, 67 and 70.... It does not tell me how much I will get taxed or means tested as I suspect I will when the time comes, but I estimate a 25% reduction as a reasonable estimate of worst case for those of us over 50. For you youngsters, the haircut may end up phasing in higher and higher.

Ok take the average of up to 35 years you have today: Then for each additional year take your earnings per year divide by 12 to get your monthly earnings and then divide by 35 since SS averages over 35 years. This is the effect on the life time average wage of an additional year of work.
Social security is computed based upon the above average with the replacement formula being 90% up to $791 per month average, then 32 % between 792 and 4768 and 15% between 4769 and the limit about 9416 this year.
So given your average earnings up to this point, find out which replacement percentage applies.
So to make my example more clear. Assume your average earnings up to this year are 4769 (or more). Then assume you are making the limit this year which is 9416/month. Divide that by 35 to find the effect of an additional years work on the average, which works out to be 269 and change. Then since you are in the 15% replacement range, multiply the 269 by 15% and you get about $40 and change per month additional ss benefit. The first 12 was to get annual earnings expressed monthly. Then the 35 was to get the addition to the average of the additional year.

 

[Chuckanut]

Put a hundred dollars a year as income until age 67, that will get you close enough.

Use the button that says "add a new estimate:. It will provide a place for you to enter an estimate of your average yearly earnings until you retire. Just put in Zero.

My decision to retire early and not earn anything from my retirement to age 66 cost me about $40 a month in future SS benefits at age 70.

Had I kept up my current job and salary until I was 70, I would have earned about $200 more a month in future benefits. So that cost is $200 a month by retiring early and choosing to earn nothing.

However, I think it unlikely I could have continued to work until 70, and been in good health, and enjoyed life. More likely, the additional $200 a month would have gone to the doctors, and eight years of my life would have gone to Helsinki.

 

[scrabbler1]

I had some trouble getting the "anypia" calculator (the one rbmrtn posted a link to) to work after I downloaded it a few years ago. But I had created a spreadsheet which mimicked the calculation so all I was missing was a means to check it. (I later took another shot at the downloaded program and got it to work; my spreadsheet was correct. )

Had I kept working, even at my low 12 hours per week at my old job for 12 more years (to replace the 12 zero earnings years in my calculation), my monthly benefit would have risen by only 10%, hardly worth the effort. My AIME (Average Indexed Monthly Earnings) are near the top of the 32% replacement rate ("bend point") now so working all those extra years would barely pierce the 15% bend point.

 

[mickeyd]

At age 50 OP is a long way away from collecting SS, even at age 62. In 12 years there will probably be a much different SS than we see today.

Save as much as possible today and LBYM. It's that simple.

 

[Rothman]

Thanks to all for input, I used the detail calculator

I worked in HS and college but after graduation in June 1985 started real earnings
The results are benefit at 62 (2025) if my last work year is:

2013 $1657
2014 $1684
2015 $1711
2016 $1738
2017 $1763
2018 $1788
2019 $1811
2020 $1829
2021 $1835
2022 $1840
2023 $1844
2024 $1848

So the conclusion like many estimated on this thread is about a $30 per month reduction until I reach 35 years of after college earnings then its worth $5 a month

Therefore no reason to work for SS retirement impact

 

[Rustward]

The problem is they assume that if you retire early you have to take your benefits at age 62. There does not seem to be a tool telling what your benefit would be if you stop,working before 62 but only collect when you are 65 or 67 or 70. I have heard 8% a year increase for every year you wait is a possible estimate so,maybe that would be a work around...?

The detailed calculator will handle just about any situation that you can think of -- other than the different ways to claim spousal benefits. It takes a little effort to understand and input the data, but the answer is there -- for precisely the situation you outlined, and others.