Top 35 SS Question

[CKw4itlb]

Hello, everyone. I have a question about the calculation of the top 35 years and its determination of one's social security payment.

I'll be applying for SS in less than three months, and I turn 62 in early 2023. I've read on the SS site that the top 35 earning years are what's counted, and any subsequent income earned after collecting SS and that exceeds one of your top 35 years then becomes reconfigured. Further, I've read that, for example, I earn $1,000 or $2,000 more in 2022, there will be some sort of calculation paid to me in a lump sum at the end of 2023, and beginning in 2024, there's a calculation to determine my 2024 payment. (That's my understanding of the rule, anyway, and if I'm wrong, I'll stand corrected.)

Assuming these facts, does anyone know exactly WHAT is the calculation? I expect my basic starting age 62 payment (not including cost of living increases and potential legislation for $200 more), I expect to start at around $1,200 per month. How will an extra $1,000 or $2,000 increase as my 35th highest year effect that $1,200 amount. Does anybody know?

I hope I presented my question clearly. Thank you for your time.

 

[Dash man]

“Can Your PIA Change After You Reach Age 62?
There are two things that affect your PIA after you reach age 62:

Higher earnings: Earnings in years between age 62 and 70 that are higher than one of the 35 highest earnings years previously used in the formula will change your AIME, which is used in the PIA formula.
Inflation: Your PIA will be adjusted by the same cost-of-living adjustments applied to people who are already receiving Social Security benefits. You can see historical cost-of-living adjustment rates on the Social Security Administration's website.”

https://www.thebalance.com/social-security-benefits-calculation-guide-2388927

 

[Gryphon]

If you're getting a SS benefit of $1200 then you're past the first inflection point so any increase in your AIME (Average Indexed Monthly Earnings) will increase your benefit by 32% of that amount. If you increase one year's inflation-adjusted earnings by $2000, your AIME will go up by $4.76 ($2000 divided by 35 years divided by 12 months) and 32% of that is $1.52.

So you'll get $1 or $2 per month more.

If you increase one year's earnings by only $1000 then you'll get half of that (76 cents); depending on how your benefit is currently being rounded off it might wind up having no effect on your payment at all.

 

[Dash man]

If you're getting a SS benefit of $1200 then you're past the first inflection point so any increase in your AIME (Average Indexed Monthly Earnings) will increase your benefit by 32% of that amount. If you increase one year's inflation-adjusted earnings by $2000, your AIME will go up by $4.76 ($2000 divided by 35 years divided by 12 months) and 32% of that is $1.52.

So you'll get $1 or $2 per month more.

If you increase one year's earnings by only $1000 then you'll get half of that (76 cents); depending on how your benefit is currently being rounded off it might wind up having no effect on your payment at all.

You can also get a lot more than that by simply delaying beginning your benefit.

 

[oldtimer]

Take a look at the Understanding Social Security site and run your own earnings through it. The results page provides an excellent explanation of how the tool got from your earnings to your calculated benefit.