Social Security

[Carol0720]

I have an interesting problem that I wonder if anyone else has. When I went back to work after raising kids for 12 years, my school district put me on the state teachers retirement, where they do not take out social security, but I was supposed to be on the city retirement system, where they do. Evidently when I was 22, I had opted for this, but I had no memory of it. Then, after 6 years, someone discovered the error and all the money from the state was transferred to the city. Now, when I get my ss statement, all those years are zero and so my ss is much lower than it would have been if the school had not made that error (and my error too, but who remembers what they did at age 22) And I had actually resigned my job when I stopped teaching, so why I could not be on the state teachers system is another question.

Be that as it may, I wonder about my lost social security years. Can I put the money in? Would it be worth it?

Does anyone have a similar problem

[MasterBlaster]

Whether or not you can retroactively fix your SS error is a question for the SS office. Note that SS generally contains an equal payment from the employer. So you'll have to get your employer to go along with any correction.

Per the question about the SS hit due to being out of the loop. I have run some ball park scenario's about the hit from retiring early. Based on that analysis you'll give up about 1 percent of your "full" SS pay per year out of the SS system. So based on that your hit would be on the order of 6 percent. That assumes that you'll have at least the 10 years (40 quarters) of SS working credits to qualify for a benefit.

You might want to go to the SS website (Social Security Online) and play around with their calculators Choose a Benefit Calculator

to get an idea what your benefit would be with and without your contributions over those 6 years.

[Carol0720]

Yes, I did go to Social Security and they said I had to go to my employer

I imagine it has happened to other people. My employer is the school district and it is highly unlikely talking to them will help, but I should try.

If I live another 30 years, those lost 6 years could make a big difference.

I wonder how much money I would have to buy back?

Any thoughts on this and any other with a similar issue would be greatly appreciated.

Thanks for this forum, Carol

[MasterBlaster]

Well to answer your question directly...

The current rate for SS is 6.2 % for incomes up to $97k or so. You will also probably have to pay the medicare tax (currently at 1.45 % for a total of 7.65 %.

For historical rates in years past check out this chart...

FICA & SECA Tax Rates

You'll have to pay back interest on the missed payroll tax amount.

So based on that and knowing your income in those years past you can estimate the total back taxes that would be due.

By the way, I don't agree with your assessment that those 6 lost years will make a big difference.

[Carol0720]

Hi, Well, I appreciate you saying the lost 6 years are okay. It makes me feel better. This idea of retirement is so scary. I want to retire, but I am worried I won't have enough money. I guess that is why I am at this forum, to get the facts. I am reading a book on the topic called "Retire Early? Make the Smart Choices" by Steven Silbiger. There is a plethora of books out there, and they have these catchy titles, but when you read them, you conclude that you should not retire at 62. I wonder if anyone has reviewed these retirement books. Does this forum have a place for book reviews? Carol

[MasterBlaster]

Carol:

retirement isn't rocket science.

Take your SS draw, add in a pension (if any) and what you can generate from your savings, and subtract out whatever your medical insurance will cost.

Now compare that to what you spend now. Are you in the ballpark ?

Perhaps you want to leave a little cushion - Just in case ?

If your projected cash flow meets your desired spending then you can consider retiring. If not then keep working.