I was wondering if the calculations for SS are in today's dollars?
Will the estimates go up as inflation goes up over time?
We still have 12+ years before we could start collecting.
Thanks.
I was wondering if the calculations for SS are in today's dollars?
OK, just to be sure I understand this.
If my current estimate sent to me in the mail says that I will get $2000 at 66 years of age. In 2010, at 66 yo, do I get $2,000 checks or do I get the equivalent of $2,000 + 10 years of CPI increases?
Hey thanks very much, that makes sense but it's been about 3 years of those mailed estimate forms and the number has not changed. Must be because there was no NWI increases.It would be $2000 + 10 years of the National Wage Index increases.
For subsequent years, that amount would then go up every year by the CPI amount.
Hey thanks very much, that makes sense but it's been about 3 years of those mailed estimate forms and the number has not changed. Must be because there was no NWI increases.
Appreciate the help.
It would be $2000 + 10 years of the National Wage Index increases.
For subsequent years, that amount would then go up every year by the CPI amount.
It is also useful to go to a non-Social Security page. I suggest Understanding the Social Security Benefit Calculation
There may be better ones I didn't look too carefully. Point is, you do the calculations on the "automatic calculators" and get the correct answer for your retirement benefits.
What you may not understand is that SS takes your earnings for the past 35 years, and comes up with an average, number (adjusted for inflation). Let's say it is $4000/ month. What you don't know is that approx. 70% of your benefits are calculated using a wage of $675 per month. About 20% of your benefits are calculated on $3,800 per month and 10% are calculated using the $4000 you actually averaged over 35 years.
Be you rich man, poor man, beggar man, or thief, you all are going to pretty much get the same benefits. If you average more than $4000 per month, you get nothing extra.
My point is, there is a great advantage for you over the next 12 years to avoiding paying Social Security. Max out all the retirement schemes you can find (ie, 401k, etc). Defer the income, work out an arrangement with your employer to buy a company car - whatever, but avoid direct salary because it is throwing money into Social Security that you will never see EVEN UNDER THE EXISTING RULES.
That's not quite the way I read it. The article in your link says (see Step 5, Example 2) that your benefit in 2005 would be 15% of the amount above the second bend point ($3779) up to the SS wage base. Today's wage base is $106,800 ($8900 per month). Only income above this amount would not count toward your benefit (but, of course you don't pay SS taxes on income above this amount).
I know a bunch of people that will rely on SS only, they don't save! So, for them SS is far superior.... other investments and retirement programs are far superior to Social Security (assuming you are a modesty high wage earner).
If a SS check is $2,000 at age 66 (full retirement age) then it would be $1500 at age 62, because there is a penalty of 25% less, if you take it at 62. Now, according to my calculations, which may not be right,......If you start taking it at 62, at $1,500.....you will have been paid $72,000 between the years from 62 to 66. (1500 x 48 months)
If you wait until 66 and opt to get the $2,000 a month SS, that is an extra $500 a month, but there are 144 months you would have to wait to make up that $72,000, which is 12 years. Then after 12 years, you are getting $500 more every month than the person who chose to start SS at 62. BUT, if you don't need the SS money at 62, wouldn't it be better to take it anyway and put it in a guaranteed interest or something very safe, where you Could get to it if you wanted?
And 12 years is a long time to wait.......
If you wait until 66 and opt to get the $2,000 a month SS, that is an extra $500 a month, but there are 144 months you would have to wait to make up that $72,000, which is 12 years. Then after 12 years, you are getting $500 more every month than the person who chose to start SS at 62. BUT, if you don't need the SS money at 62, wouldn't it be better to take it anyway and put it in a guaranteed interest or something very safe, where you Could get to it if you wanted?
And 12 years is a long time to wait.......
Ah yes - the when to take SS discussion. You didn't tell us how old you will be when you plan on dying. So, if you tell us that then we'll tell you when exactly to take SS.
We have had the SS discussion here many times:
here's one such discussion: http://www.early-retirement.org/forums/f28/when-to-take-social-security-27924.html
in short though, you could take the money earlier and invest it. remember that if your income is above poverty levels then you'll pay extortionary tax rates on your early SS though.
But where will you "safely" put it that's going to give you the no-risk returns of delaying SS ? That needs to be answered. Think about risk-normalized returns when you think this though.
And then throw in all the issues with spouses and survivorship benefits and it gets harder.
My personal take is that yes - maybe you can game this and come out ever so slightly ahead. In the big scheme of things though your life shouldn't be too much different either way. You won't get rich doing this.