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-   -   social sec question (http://www.early-retirement.org/forums/f28/social-sec-question-24366.html)

albundyz 12-04-2006 07:21 PM

social sec question
 
I've emailed SS three times. The first time, they said to use one of their three calculators. They ingored my second and third e-mails that were reworded.

The problem is that all of their calculators assume that I will work until I'm 62. That's my question. How much will I suffer for not working 6 years?

Next year I'll retire at 56. I will have worked 35 consecutive years for MegaCorp. My last SS document says I should get $1550 at 62 ASSUMING I continue to work until I'm 62. I'm not looking for anything specific, but can anyone with experience guess what percentage of that 1550 I'll lose by not working for 6 years? 1%? 5%? 10%? 30%?

samclem 12-04-2006 07:30 PM

Re: social sec question
 
Just use the online calculator and put in "0" for next year. The calculator will automatically put in the same figure for all following years. It isn't exact, but it is supposed to be prety close.

http://www.ssa.gov/retire2/AnypiaApplet.html

Good luck

REWahoo 12-04-2006 07:31 PM

Re: social sec question
 
The SS people gave you the right answer. The only way to get an accurate answer is to go to their site, use their calculator, and plug in your annual earnings, including 0 for the years you will have no income. (You can't retire before 62 for purposes of SS, but you can have 0 income before age 62.) Here is a thread where the impact to SS from ER was discussed and you may find a rule of thumb that helps answer your question:

http://early-retirement.org/forums/i...p?topic=4921.0


Leonidas 12-04-2006 07:43 PM

Re: social sec question
 
Yet again this board proves how much depth and breadth there is in the experience and knowledge to be found here. The OP spends who know how much time trying to get the SSA to explain how to do something, and within ten minutes there are two replies with links and how to's provided.


JohnEyles 12-04-2006 10:32 PM

Re: social sec question
 
Quote:

Originally Posted by Leonidas
Yet again this board proves how much depth and breadth there is in the experience and knowledge to be found here.

Amen.

But I had no problem getting SS to send me a new estimate with the ER
assumptions. And was gratified to see it agreed with what the calculators
gave (both the one I downloaded, and the online one). I believe I filled
in some sort of online request form at their website.




kramer 12-05-2006 12:12 AM

Re: social sec question
 
Al,

You will lose very little by quitting early. I think you will be surprised.

There seem to be three linear segments in the SS earning curve that represent the benefit of working additional years at different points in the earning cycle.

If someone is making maximum SS earnings (the max wage which is around $94K now), they almost immediately reach the end of the first steep segment when benefits rise very rapidly. After about 17 full earnings years you reach the end of the second segment, where benefits are rising much less rapidly than the first curve. After those first 17 years or so, the rate of annual increase is halved in the third segment. So the marginal benefit of working additional years decreases dramatically over time.

Also, once you have the maximum number of years in, 40, new earnings years start replacing lesser earnings years, so you get even less benefit for additional years.

Also, you should think twice about taking benefits at 62, although this depends on a number of factors. There are several threads about it here. But just know that it is a non-trivial decision.

Kramer

REWahoo 12-05-2006 06:36 AM

Re: social sec question
 
Quote:

Originally Posted by kramer

Also, once you have the maximum number of years in, 40, new earnings years start replacing lesser earnings years, so you get even less benefit for additional years.

Not that it makes a huge difference in anything, but I believe the number is 35 years, not 40.


hogwild 12-05-2006 06:52 AM

Re: social sec question
 
The version of the SS calculator that you download allows you to put in the age you want to retire. You do have to input your earnings for each year, but that info is available on the statement you get in the mail. The calculator allows you to save your data which makes it easy to play "what-if".

HFWR 12-05-2006 06:53 AM

Re: social sec question
 
Quote:

Yet again this board proves how much depth and breadth there is in the experience and knowledge to be found here.
Yeah, it is pretty deep here... :cell:

And wide, too... :P :P :laugh:

Elderdude 12-05-2006 01:47 PM

Re: social sec question
 
My wife will be retiring at 56 in July. We used the SSA supplied calculator that had us put in all the information from her last yearly estimate from Social Security then estimate the remaining years of income, at 0 in her case. The result was less than $170 per month of what it would have been if she worked six more years to 62. She has been grossing 60 k a year.

landover 12-06-2006 08:19 AM

Re: social sec question
 
I have a related question about the SS amount you get from the calculater. Is it in today's $, also if one stops working today, will one's SS be indexed with wage growth or with inflation till normal retirement date? Thanks.

albundyz 12-06-2006 10:07 AM

Re: social sec question
 
I would like to thank everyone that responded.

This is what I learned. As stated by a previous responder....From the downloaded calculator, I ran the report the first time with zero income for 2008 and a retirement age of 56. My monthly benefit at 62 was 1561. Then, I changed my retirement age to 62 and put a 2008 estimated income of $80K. I ran the report again. The benefit rose to 1607. That means that I only lose $46 by not working for those 6 years. or slightly less than 3%......basically, it is insignificant.

Every situation is different, remember, I worked 35 continuous years for the same company.

MasterBlaster 12-06-2006 10:14 AM

Re: social sec question
 
When I played around with the SS calculator I estimated that my SS payout was reduced by around 1 percent for every year early that I retired early. Those estimates are for someone retiring at "full" retirement age.

Your 3 percent difference for retiring 6 years earlier doesn't jive very well with my calculations. So either you are older than myself or we are at big differnces in income level. Either that or the early retirement at 62 throws off my ballpark numbers.

REWahoo 12-06-2006 10:18 AM

Re: social sec question
 
Quote:

Originally Posted by landover
I have a related question about the SS amount you get from the calculater. Is it in today's $, also if one stops working today, will one's SS be indexed with wage growth or with inflation till normal retirement date? Thanks.

Yes, the amounts shown in the SS calculators are in today's dollars. [EDIT: The calculators default to 'today's dollars' but allow you the option to select 'future (inflated) dollars'.]

Whether you stop working today or continue working until retirement, SS payments are indexed to wage growth. Stand by for future changes to that... ;)


MasterBlaster 12-06-2006 10:30 AM

Re: social sec question
 
Quote:

Originally Posted by REWahoo!
Yes, the amounts shown in the SS calculators are in today's dollars.

- Just one minor point...

The calculator(s) has(have) the option to either give you the benefit in todays dollars or in future inflated dollars.

REWahoo 12-06-2006 10:43 AM

Re: social sec question
 
Quote:

Originally Posted by MasterBlaster
- Just one minor point...

The calculator(s) has(have) the option to either give you the benefit in todays dollars or in future inflated dollars.

True. The online calculator defaults to todays dollars but gives you the option of selecting future (inflated) dollars. I edited my post accordingly.


FIRE'd@51 12-06-2006 10:43 AM

Re: social sec question
 
Quote:

Originally Posted by REWahoo!
Whether you stop working today or continue working until retirement, SS payments are indexed to wage growth. Stand by for future changes to that... ;)

When does the changeover from wage growth to CPI occur? Is it

(1) when you start to draw benefits

(2) full retirement age

(3) age 62

In other words, if you are retired and take SS at 62, do you lose the index to wage growth?

FIRE'd@51 12-06-2006 10:54 AM

Re: social sec question
 
Quote:

Originally Posted by REWahoo!
(4) None of the above.

SS payments are indexed to wage growth only. My comment about standing by for changes reflects much discussed plans to "save" SS, which often includes changing the index away from wages to the CPI. At this point it is only discussion.

Note: Amplifications and corrections to the above statements are encouraged and welcomed. ;)

Now I'm confused. I thought that once you were drawing SS, it was indexed to the CPI, not wage growth.

REWahoo 12-06-2006 11:03 AM

Re: social sec question
 
Quote:

Originally Posted by FIRE'd@51
Now I'm confused. I thought that once you were drawing SS, it was indexed to the CPI, not wage growth.

I appears my assumed understanding of SS indexing is seriously flawed :-[. According to this and this from the SS website, you are correct.

I will delete my incorrect post and quietly bow out of this discussion..


FIRE'd@51 12-06-2006 11:18 AM

Re: social sec question
 
I may have stated my question poorly. What I am trying to get at is:

Assume you are already retired.

Can you preserve the indexing to wage growth by delaying SS until full retirement age (or even until age 70), or does the changeover to CPI indexing occur at age 62 regardless of whether or not you are drawing benefits?


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