How does stopping work early affect Social Security?

[TOOLMAN]

I found this table: Early or delayed retirement ,

Thanks

It works out to about 7 1/2% increase per year, for each year I wait. So if I don't need the money, and we have a similar investment returns like today, it seems like one should take the 7 1/2% "safe" money. Will keep one eye open for "NW means testing", and one finger on the "pull the SS trigger".

 

[bUU]

The calculator is working for me today. Looks like the difference between worst-case worst-case (I get a phone call tonight saying don't come to work tomorrow, and I never get another job, and I take benefits at age 62) and reasonable worst-case (they ditch me six years from now and I never get another job, and I take benefits at age 62) is less than $2k/year. Best case scenarios, at the far end of the scale (i.e., taking benefits at age 70) look like a $5k/year difference, though I'm far less worried about the best case matter than the worst case matter.

 

[aida2003]

A quick question: if you earn above the SS taxable amount, do you put your earnings or the max SS amount ($110K or something like that for 2012)?

Thanks

 

[Gatordoc50]

I am a pseudo ER in that I didn't retire until I was 58. When I ran the calculator with my last salary and then again with a $0 for salary, there was no change at all! Probably because I was at the top of the range for 25 of the 35 years they use.

I ran the calculator assuming retirement at 52 and then again for retirement at 62. There was only a few dollars difference. Since I was self employed, I would have contributed roughly 130 thousand dollars in those ten years with virtually no return. Ouch! This Internet thing may just bring our government to its knees as more people discover the rules.

 

[JoeWras]

If you haven't set up your account yet and have a block on your credit, it will fail because they use your credit report to verify who you are. You have to call them or unblock your credit to set up your account.

You learn something every day! I could not get an account for my dad set up. I could not figure out why.

We froze his credit. That must be the problem. I must have missed the warnings on the site, if there are any.

 

[ziggy29]

A quick question: if you earn above the SS taxable amount, do you put your earnings or the max SS amount ($110K or something like that for 2012)?

Most likely it doesn't matter -- pretty much all the calculators will use the SS taxable cap as your income internally even if you enter a larger income.

 

[Andre1969]

I ran the calculator assuming retirement at 52 and then again for retirement at 62. There was only a few dollars difference. Since I was self employed, I would have contributed roughly 130 thousand dollars in those ten years with virtually no return. Ouch! This Internet thing may just bring our government to its knees as more people discover the rules.

Yeah, there's definitely a diminishing return on SS with regards to working longer, at least if you plan to retire early and take benefits at 62.

If I were to retire right now, just a few weeks short of my 43rd birthday, my SS benefit at age 62 would be $958 per month (today's dollars).

Working just one more year bumps that up to $995 per month, a ~3.9% boost. But, the percentage goes down just a bit each year.

If I work until 50, my benefit will be $1219 per month, but working until 51 only bumps it to $1256, a ~3% increase.

The big cutoff for me seems to be age 55/56. If I work until 55, it's $1393 per month, but at 56 it's only $1409, a 1.15% increase. And at that point, there's really no incentive to work simply to boost SS, because going out at 62 only bumps it to $1441 per month.

After age 62 though, I guess the "one more year" syndrome can start to kick in if you're focusing on jacking up your SS payment. However, most of that benefit is most likely a reward for delaying taking SS, rather than working another year (or more).

I agree with you too, that when more people realize just how little incentive there is to keep working for SS, there could be trouble! I'm sure most of the masses will have to keep on working, simply because they won't be able to afford to retire anyway. But, for those who can afford to, seeing just how little benefit there is from working a few more years, it may be just the push they need to pull the plug!

BTW, I just ran my SS numbers for working until age 63 and 64. $1550 and $1660 per month, respectively. So, a 7.5% boost in 2033, and an additional 7.1% the following. Or, 15.2% total, over the $1441 figure for age 62.

Sounds like a pretty good return on the surface. But, in reality, we're only talking about $109 or $219 per month difference. I hope my financial situation isn't so on-the-edge at that point that $109-209/mo will make or break me!

 

[HFWR]

Looks like the difference between [-]worst-case worst-case[/-] best-case best-case (I get a phone call tonight saying don't come to work tomorrow, and I never get another job, and I take benefits at age 62)...

FIFY...

 

[LoneAspen]

SS doesn't even factor into any retirement calculations I do. I've always worked and planned under the assumption it's not going to be there by the time I'm in mid-60's or early 70's (I'm 46 right now).

I just consider it money lost, and if I happen to get it back, that's like icing on the cake. But I'm certainly not going to expect it, or do retirement planning around it.

 

[Lakewood90712]

A little bit off topic, but related. If you stop working , and become disabled , you may be inelegable for Medicare prior to age 65. Someone under 65, working , paying into S.S. and Medicare tax , and becomes disabled , would get S.S. disability and Medicare (after a waiting period) at any age. Plan accordingly.

 

[jclarksnakes]

A little bit off topic, but related. If you stop working , and become disabled , you may be inelegable for Medicare prior to age 65. Someone under 65, working , paying into S.S. and Medicare tax , and becomes disabled , would get S.S. disability and Medicare (after a waiting period) at any age. Plan accordingly.

You are right. SS uses two tests. One called the recent work test and the other the duration of work test. The specific info below is from the SS website.

To get Social Security Disability benefits, you must also meet two different earnings tests. One is called a "recent work test" that looks at your age when you first became disabled. The other is a "duration of work test" that confirms you worked long enough under Social Security to be eligible for benefits.
Recent Work Test

The recent work test considers when you became disabled and how that fell out in terms of calendar quarters. The calendar quarters are:

• First quarter - January, February, March
• Second quarter - April, May, June
• Third quarter - July, August, September
• Fourth quarter - October, November, December

If you become disabled in or before the quarter you turn age 24, you generally need 1.5 years of work during the three-year period that ends with the quarter your disability began. Confused yet? There's more.
If you become disabled in the quarter after you turn age 24 but before the quarter you turn age 31, you need work during half the time for the period beginning with the quarter after you turned 21 and ending with the quarter you became disabled.
If you become disabled in the quarter you turn age 31 or later, you generally need work during 5 years out of the 10-year period ending with the quarter your disability began.
Duration of Work Test

This test determines how long you worked by the age you were when disability began. For example, if you become disabled before age 28, you need to have worked for 1.5 years. If you became disabled at age 42, you need 5 years of work. Disabled at age 60? You need 9.5 years of work. In any of these cases, for the duration of work test, your work does not have to fall within a certain period of time.
Points to Remember

To receive Social Security Disability benefits, you must be disabled according to the definition of disability used by Social Security. You must also have worked long enough and a specified amount of your work experience must be recent.
If you cannot meet the requirements for disability, recent work, and duration of work -- you will not be eligible for benefits. If you do, you're ready to begin the application process.

 

[aida2003]

You are right. SS uses two tests. One called the recent work test and the other the duration of work test. The specific info below is from the SS website.

To get Social Security Disability benefits, you must also meet two different earnings tests. One is called a "recent work test" that looks at your age when you first became disabled. The other is a "duration of work test" that confirms you worked long enough under Social Security to be eligible for benefits.
Recent Work Test

The recent work test considers when you became disabled and how that fell out in terms of calendar quarters. The calendar quarters are:

• First quarter - January, February, March
• Second quarter - April, May, June
• Third quarter - July, August, September
• Fourth quarter - October, November, December

If you become disabled in or before the quarter you turn age 24, you generally need 1.5 years of work during the three-year period that ends with the quarter your disability began. Confused yet? There's more.
If you become disabled in the quarter after you turn age 24 but before the quarter you turn age 31, you need work during half the time for the period beginning with the quarter after you turned 21 and ending with the quarter you became disabled.
If you become disabled in the quarter you turn age 31 or later, you generally need work during 5 years out of the 10-year period ending with the quarter your disability began.
Duration of Work Test

This test determines how long you worked by the age you were when disability began. For example, if you become disabled before age 28, you need to have worked for 1.5 years. If you became disabled at age 42, you need 5 years of work. Disabled at age 60? You need 9.5 years of work. In any of these cases, for the duration of work test, your work does not have to fall within a certain period of time.
Points to Remember

To receive Social Security Disability benefits, you must be disabled according to the definition of disability used by Social Security. You must also have worked long enough and a specified amount of your work experience must be recent.
If you cannot meet the requirements for disability, recent work, and duration of work -- you will not be eligible for benefits. If you do, you're ready to begin the application process.

That's a very good information to remember, even though I don't know how good those disability benefits are and if it's worth working for.

 

[jclarksnakes]

SS disability payments are usually within a couple hundred dollars either side of your full retirement age benefits. The number is on page two in the estimated benefits section of you social security statement (which used to come in the mail every year but stopped for awhile but has recently restarted...sort of. But that is another story).

 

[aida2003]

SS disability payments are usually within a couple hundred dollars either side of your full retirement age benefits. The number is on page two in the estimated benefits section of you social security statement (which used to come in the mail every year but stopped for awhile but has recently restarted...sort of. But that is another story).

Aaaaahhh, SS statement. This reminds me to find it somewhere on the SS webpage. I now that they're not mailed anymore due to savings, so everyone is supposed to check them electronically.

 

[Ronnieboy]

SS doesn't even factor into any retirement calculations I do. I've always worked and planned under the assumption it's not going to be there by the time I'm in mid-60's or early 70's (I'm 46 right now).

I just consider it money lost, and if I happen to get it back, that's like icing on the cake. But I'm certainly not going to expect it, or do retirement planning around it.

That was my assumption a number of years ago, now that I am getting closer, I am thinking something will be around. Mid-60's are only 20 years away.....

 

[timo2]

I previously was using this answer on a different retirement site to calculate my PIA

Stop working at 62 but don't collect until 66 | In NewRetirement's Questions & Answers Forum

 

[lark_L]

Only $50 difference (2.8%) for mine stopping work at 57 vs. 60. Good news for me!