basic SS confusion

[albireo13]

I was wondering about what happens to your SS benefit if you defer it until 70? I understand that the benefit grows after you reach 62 until 70.
At the same time, SS benefit is based on your past average income.


If I retire now (62yo) and defer pulling SS, my average income will be dropping since I will be earning 0 SS income during those years. Won't this factor in and decrease my SS benefit?
I'm confused over that.


I tried using SS online estimator but am having trouble logging in for some reason.

 

[Red Badger]

SS is based on your highest 35 years of income, and not "average" income.

Congrats!

 

[Dtail]

I was wondering about what happens to your SS benefit if you defer it until 70? I understand that the benefit grows after you reach 62 until 70.
At the same time, SS benefit is based on your past average income.


If I retire now (62yo) and defer pulling SS, my average income will be dropping since I will be earning 0 SS income during those years. Won't this factor in and decrease my SS benefit?
I'm confused over that.


I tried using SS online estimator but am having trouble logging in for some reason.

Are you using the link below? You need to input your place of birth and mother's maiden name.
This link is perfect for estimating estimated SS benefits at various years while earning 0 dollars each year.
https://www.ssa.gov/benefits/retirement/estimator.html

 

[albireo13]

[/B]
Are you using the link below? You need to input your place of birth and mother's maiden name.
This link is perfect for estimating estimated SS benefits at various years while earning 0 dollars each year.
https://www.ssa.gov/benefits/retirement/estimator.html

Yes, I used that and it would not recognize me. Now, I'm locked out after multiple attempts. I'll have to call and get that cleared up.


Weird. I have a mySocialSecurity login and have never had a problem with that.

 

[albireo13]

SS is based on your highest 35 years of income, and not "average" income.

Congrats!

Aaaahhhh. OK, my misunderstanding. Thank you.

 

[Dtail]

Yes, I used that and it would not recognize me. Now, I'm locked out after multiple attempts. I'll have to call and get that cleared up.


Weird. I have a mySocialSecurity login and have never had a problem with that.

That is strange, but that site will supply your answers in a zero earnings scenario. Let us know.

 

[pb4uski]

If you have more than 35 years of earnings, then stopping working is unlikely to significantly impact your SS benefit... but you can validate that once you gain access. Or if you have your earnings history from a prior report and like math, you can calculate your benefit if you continue working or if you retire using this https://www.ssa.gov/pubs/EN-05-10070.pdf

Broadly speaking your age 62 benefit is ~75% of your age 66 benefit and your age 70 benefit is ~132% of your age 66 benefit. So your age 70 benefit would be 176% of your age 62 benefit. In other words, your benefit grows ~6 1/4% a year from age 62 to 66 and 8% a year from age 66 to 70.... on top of that growth you get cost of living adjustments.

The benefit discounts and premiums are designed to be actuarial equivalent... so in theory if you claim at 62 the present value of your lifelong benefits are the same as if you claim at any other age. However, mortality has improved significantly since those discounts and premiums were set so I suspect with current mortality tables that may have changed somewhat to benefit those delaying.