How Accurate is the SS Calculator (in terms of Future Dollars)

[cyber888]

I had assumed that the SS Calculator would be a bit conservative in giving out Future Dollar numbers. I think this has now been adjusted based on the inflation trajectory. Has anyone ever notice how accurate the Future value is?

The difference between current value today (year 2022) and future value (year 2026) is around 22.5%. I looked at the difference between 'Current Dollar value" and "Future Dollar value" and the calculator is assuming a 5.2% average yearly increase (compounded) for the next 4 years. In the calculator, I indicated my income will stop middle of next year 2023.

A few months ago, the Present value has always been the same as it is today (no change), but the Future value has gone up by about $100+/month. And at that time, I thought the future value may have been a bit higher as there's 2.5 years that I'm not contributing to SS before reaching 62 years old.

For me, this translates to getting an extra $436/month from today 2022 to 2026, adjusted for future value. Should I not be expecting too much in my calculations ??

https://www.ssa.gov/benefits/retirement/planner/AnypiaApplet.html

 

[qwerty3656]

I think it is assuming your continuing to earn the next 4 years at your most recent earning, so maybe you're dropping some low earning years?

 

[G-Man]

You really don't need a calculator to calculate your future social security income.

Try watching this video.

You need to know your Top 35 earnings, indexing factor, and the first and second bend point. This information can be found on the social security website.

In addition, you need to know what the future bend points will be as well. You can use the calculator below to find that.
https://www.socialsecurityintelligence.com/calculators/bendpointcalculator/

Let me know if you have questions.

I used this method to calculate my wife and I future social security income.

 

[GenXguy]

I always do the calculations in "today's" dollars. It doesn't know what future wages will be, let alone future inflation. So, it's just an estimate, either way. But today's dollars is more likely to be accurate and meaningful. There are some other SS calculators. I downloaded a detailed offline one from ssa.gov:

https://www.ssa.gov/OACT/anypia/anypia.html

and there's

https://ssa.tools/

https://opensocialsecurity.com/

 

[G-Man]

I always do the calculations in "today's" dollars. It doesn't know what future wages will be, let alone future inflation. So, it's just an estimate, either way. But today's dollars is more likely to be accurate and meaningful. There are some other SS calculators. I downloaded a detailed offline one from ssa.gov:

https://www.ssa.gov/OACT/anypia/anypia.html

and there's

https://ssa.tools/
https://opensocialsecurity.com/

I love the https://ssa.tools/calculator.html calculator. However, I have found that this calculator does not take in consideration the future bend points.

Like, I said above, you can calculate your future social security income manually as well.

 

[cyber888]

I think it is assuming your continuing to earn the next 4 years at your most recent earning, so maybe you're dropping some low earning years?

It does seem to not assume that.
I tried to calculate, what if I retired at 59.5 years and 60.0 years old, there's a $15/month difference if I retired 6 months later. It will go up if you retire a year more.

 

[G-Man]

I think it is assuming your continuing to earn the next 4 years at your most recent earning, so maybe you're dropping some low earning years?

There could be a number of things.
1. The future indexing factor on the future income.
2. The future bend points.

All of these are used in calculating your social security income.

It's really not hard to manually calculate your future social security income.

 

[cyber888]

Thanks G-Man.

My wife has not worked and so I assume she will be getting 50% of my social security. When I turn 62, she will be above 70 years old, so you think she'll get 50% of my Full retirement age benefit at 67 years old, correct ? My full retirement benefit at 67 is above $3000, will she get at least $1,500 ?

You really don't need a calculator to calculate your future social security income.

Try watching this video.

You need to know your Top 35 earnings, indexing factor, and the first and second bend point. This information can be found on the social security website.

In addition, you need to know what the future bend points will be as well. You can use the calculator below to find that.
https://www.socialsecurityintelligence.com/calculators/bendpointcalculator/

Let me know if you have questions.

I used this method to calculate my wife and I future social security income.

 

[GenXguy]

I love the https://ssa.tools/calculator.html calculator. However, I have found that this calculator does not take in consideration the future bend points.

Like, I said above, you can calculate your future social security income manually as well.

The future is unknown. I prefer my results in "today's dollars" as explained earlier. I normally use the downloaded calculator that I linked to, but I've seen others recommending the ssa.tools one.

 

[N02L84ER]

Thanks G-Man.

My wife has not worked and so I assume she will be getting 50% of my social security. When I turn 62, she will be above 70 years old, so you think she'll get 50% of my Full retirement age benefit at 67 years old, correct ? My full retirement benefit at 67 is above $3000, will she get at least $1,500 ?

Yes, she will get above $1,500. Click on the OpenSocialSecurity link provided in earlier posts and be sure to check the box in the first line for spousal information and you should see her annual benefits in the table. Simply divide the first full year's benefit by 12 to get her monthly benefit.

 

[monte1022]

If one has contributed over the max for 35 years and decides to retire at exactly 35 years, will the future benefit remain the max benefit allowed the time? ie. if I am showing the max in today's dollars right now at age 56 and decide to quit now, will my amount at age 70 be the max available to anyone at age 70? Another way of asking, does it benefit anyone who has 35 years over the max earnings to work more than 35yrs from a SS standpoint?

 

[cyber888]

Yes, she will get above $1,500. Click on the OpenSocialSecurity link provided in earlier posts and be sure to check the box in the first line for spousal information and you should see her annual benefits in the table. Simply divide the first full year's benefit by 12 to get her monthly benefit.

Thanks Man !

 

[gauss]

If one has contributed over the max for 35 years and decides to retire at exactly 35 years, will the future benefit remain the max benefit allowed the time? ie. if I am showing the max in today's dollars right now at age 56 and decide to quit now, will my amount at age 70 be the max available to anyone at age 70? Another way of asking, does it benefit anyone who has 35 years over the max earnings to work more than 35yrs from a SS standpoint?

I don't have a source for this, but my gut feeling is that you are correct.

That is to say that if you don't draw SS until age 70
AND
You have 35 years of SS income
AND
Every one of those years the income level was above the maximum SS withholding threshold

then it seems that you would not have a chance to improve your benefit by working additional years (under current law).

Have you run any provisional scenarios through one of the SS calculators to test this out yet?

Let's see if anyone can find a counter example.
edit: Looks like Perryinva did below.

FWIW in my case, I was interested in retiring once my liftetime SS earnings had exceeded the 2nd PIA bend point. Under current law the return on the 3rd part of the PIA curve did not seem like enough incentive to continue working.

-gauss

 

[Perryinva]

If one has contributed over the max for 35 years and decides to retire at exactly 35 years, will the future benefit remain the max benefit allowed the time? ie. if I am showing the max in today's dollars right now at age 56 and decide to quit now, will my amount at age 70 be the max available to anyone at age 70? Another way of asking, does it benefit anyone who has 35 years over the max earnings to work more than 35yrs from a SS standpoint?

In hard dollars, it does, through age 62. Worth it? Heck no! I had 38 years above the Max and the last Max was 2020, thanks to a double dip pension & severance. That Max pushed off a lower earlier Max, which bumped me up another $14/month. I tracked the last few years of my over the Max increases, and they were all small once all the zeros are gone. Definitely adds, but no ROI at all. Pay in what?, almost $9k to FICA, for a $14 a month increase? And lose a year of freedom? The rise in the Max these next few inflation driven years will easily bump out lower ones, so the absolute Max will increase, but years retired beats a few exta bucks by a Loooooooooong shot. Based on this years expected COLA, my age 70 future dollar is around $4500/m. I expect I’ll file at 68 for around $4k, in 3 more years. Close enough.

 

[braumeister]

but years retired beats a few extra bucks by a Loooooooooong shot.

I completely agree. In my whole life I only hit the max in nine years (early on), and DW only hit it once. But by waiting until 70 to claim SS we have very nice benefits and don't feel we missed anything. Once you're past the second bend point I think additional years make a very small difference.

 

[Gumby]

If I may recommend one of my own posts, I showed here how to calculate the value of substituting an additional year of work for an earlier low income year.

Your primary insurance amount (PIA) is the benefit you will receive at your normal retirement age (67 for those born in 1960). It is calculated based on your inflation adjusted average monthly earnings over the highest paid 35 years of your career, and it consists of three separate amounts: to wit, 90% of the first $1024; 32% of the amount between $1024 and $6172; and 15% of the amount over $6172 (this last amount is sometimes called the second bend point).

Let's assume that you are just at the second bend point right now, so your inflation adjusted average monthly wage is $6172, and you have exactly 35 years of earnings. So your monthly SS benefit at 67 would be (0.9 x 1024) + (0.32 x (6172-1024)) + (0.15 x 0) = $2569 per month. Now let's assume that in 2022 you earn and pay SS taxes on the maximum social security covered wage of $147,000. That is $12,250 per month and it will increase your average monthly wage by (12,250 - 6172)/35 = $173. Your PIA will increase by $26 per month (173 x .15).

To summarize, if you are at the second bend point and you max out social security wages next year, you increase your benefit by $26 /month or $312 per year. Obviously, if your average monthly earnings were over 6172 ($74k per year), the benefit of that additional year would be 15 cents less for every dollar over the second bend point. And if you earned less than the max social security amount of $12,250/mo ($147k per year) in 2022, it would be 0.4 cents per dollar less per month.

You can tinker with the average monthly wage and the amount you expect to earn in 2022 and see how that changes at various points. But the bottom line is that once you get 35 years in, additional years do not really add much to your benefit.

 

[Perryinva]

Yup. In fact, I should mention that I incorrectly made it sound like the $14/m bump up was entirely due to the more recent Max bumping off the lowest Max, but that was the TOTAL non-COLA increase. All the bend points move up slightly each year, not strictly per inflation, but by the amount that the national average wage increases (which theoretically should mimic inflation some).

So every year, the present dollar amount increases as it gets closer to the present dollar date, even with no increased total average earnings (of the top 35). IIRC, the amount of the increase credited just to new year amount, was around $4/mo. And of course, the COLA increases swamp any of those increases, as to make them negligible. If we get 8.5% in 2023, that would bump my current age 65 SS from $3000 to $3250, were I to file. A $4000 SS would bump to $4340!