FIRECalc and My Social Security Estimate

[nico08]

Hi. Until recently, $13440 was the number I used for estimated social security annual payment at 62 in FIRECalc. I think I used a Social Security Administration calculator to arrive at that number. I did that a few years ago.

So in March 2018 I reviewed a statement from the Social Security Administration that identifies my work years and salary. The statement shows that my salary has been 0 since 2015, and that is accurate. The Social Security statement says that I would receive $1659 monthly ($19908 annually) at 62. Does the Social Security statement estimate assume, in any way, that I will earn a salary for any year past 2015?

Also, assuming $1659 is the correct amount to use, for FIRECalc I use the $1659 amount times 12 to fill in the social security income box? I don’t have to do any kind of present day value or future value adjustment to the $1659 times 12 estimate?

Thank you for sharing your experience.

[exnavynuke]

" For 2018 and later (up to retirement age),
we assumed you'll continue to work and make about the same as
you did in 2016 or 2017. "

Your statement assumes you continue to work making what you were making the past couple years until retirement age. You can use this online calculator to put in $0 amounts moving forward and you actual earnings history to get an updated number reflecting your actual future earnings. Though it does assume you'll start taking benefits at 62 if you stop working before then and doesn't estimate how much you'll get if you continue to wait until a later age..

Yes, FireCalc wants the annual SS wage expected, so that's our monthly estimate times 12 in today's terms.

[nico08]

Thank you for your response exnavynuke. I am reading my Social Security Statement for 2018 and the wording confuses me. It says, in part, that

You have earned enough credits to qualify for benefits. At your current earnings rate, if you continue working until...

But it also says-

We based your benefit estimates on these facts:

Your date of birth (please verify your name on page 1 and this date of birth).................................... June XX, XXXX

Your estimated taxable earnings per year after 2018........................ NONE

Your Social Security number (only the last four digits are shown to help prevent identity theft)........... XXX-XX-XXXX

Don't the two areas that i put in bold kind of contradict each other? Thanks again.

Quote:

Originally Posted by exnavynuke " For 2018 and later (up to retirement age), we assumed you'll continue to work and make about the same as you did in 2016 or 2017. " Your statement assumes you continue to work making what you were making the past couple years until retirement age. You can use this online calculator to put in $0 amounts moving forward and you actual earnings history to get an updated number reflecting your actual future earnings. Though it does assume you'll start taking benefits at 62 if you stop working before then and doesn't estimate how much you'll get if you continue to wait until a later age.. Yes, FireCalc wants the annual SS wage expected, so that's our monthly estimate times 12 in today's terms.

[MissMolly]

Quote:

Originally Posted by nico08 Thank you for your response exnavynuke. I am reading my Social Security Statement for 2018 and the wording confuses me. It says, in part, that You have earned enough credits to qualify for benefits. At your current earnings rate, if you continue working until... But it also says- We based your benefit estimates on these facts: Your date of birth (please verify your name on page 1 and this date of birth).................................... June XX, XXXX Your estimated taxable earnings per year after 2018........................ NONE Your Social Security number (only the last four digits are shown to help prevent identity theft)........... XXX-XX-XXXX Don't the two areas that i put in bold kind of contradict each other? Thanks again.

It has the same verbiage on my husbands SS statement. He has zeros since 2014. He turned 66 last month (full retirement age) and his first check hit our account today and was exactly to the dollar what was on the statements we were pulling off the SS website.

[SecondCor521]

@nico08, Social Security has to make some sort of assumption about your wages between now and when you start collecting. They choose the simple method of assuming that you'll continue to earn at the same rate as your most recent annual earnings amount.

In your case, since your last annual earnings were zero, they now assume that you will earn zero between now and when you collect, and that is what your SS estimate is based on (well that plus your previous earnings history).

So your "current earnings rate" is zero dollars per year, and that is how you would reconcile the apparent contradiction you have highlighted.

To answer another question from your OP, I don't believe you have to do any present value or future value adjustment when putting your SS estimate into FIREcalc. SS has already done the present value adjustment for you - that is, the $19908 is in present day dollars), and FIREcalc assumes present day dollars and inflates things going forward. (Although I think FIREcalc inflates your SS by the general inflation rate and SS actually inflates by the wage inflation rate, so FIREcalc is probably a tad bit on the conservative side.)

[nico08]

Ok thank you MissMolly and SecCor521. I better understand now, and based on my circumstances, I will use the $1659 monthly ($19908 annually) amount provided to me by the SSA for my FIRECalc input.

[pb4uski]

Quote:

Originally Posted by nico08 Thank you for your response exnavynuke. I am reading my Social Security Statement for 2018 and the wording confuses me. It says, in part, that You have earned enough credits to qualify for benefits. At your current earnings rate, if you continue working until... But it also says- We based your benefit estimates on these facts: Your date of birth (please verify your name on page 1 and this date of birth).................................... June XX, XXXX Your estimated taxable earnings per year after 2018........................ NONE Your Social Security number (only the last four digits are shown to help prevent identity theft)........... XXX-XX-XXXX Don't the two areas that i put in bold kind of contradict each other? Thanks again.

Not at all... they are totally consistent... your current earnings rate is zero and the SS estimate is based on zero earnings per year after 2018.

[nico08]

Yes, I now understand how the wording of those two statements can be reconciled. I think I guess I thought the statement- "at your current earnings rate"- implied that I had an earning rate (a positive amount, more than zero). And then there was language about continuing to work, it just confused me. And the annual amount estimated by SSA was a decent amount more than I had estimated using a SSA calculator a few years ago. So I figured I should investigate a little further. But now I know to use the $19908 estimate amount provided by the SSA.