Social Security estimate

[W2R]

I got my yearly social security statement, which is always fun since the estimate just keeps going up.

The estimate assumes that you will continue making the same amount of money as you did on the most recent year they include (2006, this year), and keep working until the day you are 62, if you claim benefits at 62.

Now for me, that's not too far off since I will quit 7 months short of my 62nd birthday.

Also, the "young dreamers" probably don't want to bother with an estimate, since many of them feel there will be massive changes before they get to 62.

But for others, who may be a couple of years short of retiring in their 50's, remember that the number on your statement depends on the above assumptions.

You can always use one of the calculators at Social Security Online . But how much fun is a stupid online calculator? Not a whole lot. If you are like me, and like to play with things in Excel, you can find out how it is computed, set it up for yourself in Excel, and try different scenarios just for fun. Here is the explanation of how they really compute these estimates for someone born in 1946: Your Retirement Benefit: How It Is Figured (2007)

You can keep playing with it until it seems to be correct, considering the numbers you are seeing on your statement. Maybe try "fudging" the indices a little if you are a long way from 62 - - but I just use the ones they list, since I was born in 1948. Close enough for me.

Then, you can try entering "0" income for years between your planned ER and age 62, to get some idea of how much you might actually get compared with a similar estimate assuming you worked until 62.

I have been doing this for a number of years, without fudging the indices, and my numbers bump up slightly each year as I enter the new indices, as does social security's estimate upon which mine is converging.

When it comes to planning, ask social security. But when it come to getting a feel for how this works, you might have some fun playing around with it in Excel.

[Rambler]

I've looked at the online tool a couple of times, but I don't even bother using social security as part of my retirement plans. I'm 46, and I question whether or not it will even be around by then, or if the minimum age will be 87 by the time my "normal" retirement age rolls around. True, it may be around, but with all the questions around SS in the future, I prefer to rely on my on FI. If SS comes at 67, great! That'll be ore play money for DW and me!

We do have to check back with T-Al though, to see if us millionaires will be eligible.

R

[rs0460a]

Quote:

Originally Posted by Want2retire But for others, who may be a couple of years short of retiring in their 50's, remember that the number on your statement depends on the above assumptions.

Just to give you an "exception" to the rule, I retired (e.g. stopped working for compensation) at age 59. I will/did not make any further contributions, but my "35 basis years" include most that I "maxed out". I don't think it may make a big difference in my final "actual monthly payment".

Also, being married, our plan is for my DW to take SS at 62. At age 66, her normal retirement (full) age, I will caim against her SS, and get 50% of would have been her age 66 payment. I'll delay filing/taking my SS till age 70, due to the assumption that I will indeed pass first, which will let my wife get 3x what her age 62 benefit is forecast to be.

As all things, forecasts are nice, but we'll see what reality actually is.

- Ron

[W2R]

Quote:

Originally Posted by Rambler I've looked at the online tool a couple of times, but I don't even bother using social security as part of my retirement plans. I'm 46, and I question whether or not it will even be around by then, or if the minimum age will be 87 by the time my "normal" retirement age rolls around. True, it may be around, but with all the questions around SS in the future, I prefer to rely on my on FI. If SS comes at 67, great! That'll be ore play money for DW and me! We do have to check back with T-Al though, to see if us millionaires will be eligible. R

Yes, though you may not feel young, to me you would fall into the category of "young dreamers" that I mentioned. Young dreamers might not be as interested as those in their early 50's, it seems to me. At least, if I was younger than 50, I think I'd just forgettaboutit.

I must admit that I am interested in figuring out how much it might be. I hope that not very many of us (or any of us?) would consider ER that was utterly dependent on SS.

[W2R]

Quote:

Originally Posted by rs0460a Just to give you an "exception" to the rule, I retired (e.g. stopped working for compensation) at age 59. I will/did not make any further contributions, but my "35 basis years" include most that I "maxed out". I don't think it may make a big difference in my final "actual monthly payment". Also, being married, our plan is for my DW to take SS at 62. At age 66, her normal retirement (full) age, I will caim against her SS, and get 50% of would have been her age 66 payment. I'll delay filing/taking my SS till age 70, due to the assumption that I will indeed pass first, which will let my wife get 3x what her age 62 benefit is forecast to be. As all things, forecasts are nice, but we'll see what reality actually is. - Ron

Whoa.... if you would have maxed out, those higher years that they assume you worked (when you didn't) will be replaced by the lowest earning of your 35 years. So, you might make less than your estimate.

I don't have much of a clue about the married couple configurations, since I haven't really looked into them. I'll take your word on that!

I agree - - the reality will be interesting. (As in the old Chinese curse, "May you live in interesting times!")

[rs0460a]

Quote:

Originally Posted by Want2retire Whoa.... if you would have maxed out, those higher years that they assume you worked (when you didn't) will be replaced by the lowest earning of your 35 years. So, you might make less than your estimate. I don't have much of a clue about the married couple configurations, since I haven't really looked into them. I'll take your word on that!

Maybe U should plan on getting married .....

Anyway, I have over 40 years of "credited service" so the few "low ones" (which were in my late 50's) will fall out of the calculation.

Remember that the prior years are adjusted (for inflation) and I do get a minor credit for being in the military "many moons ago".

Luckly, SS is just a bit of "extra" for us. Nice if we get it (as expected). However, it won't be the end of the world if we don't....

- Ron

[W2R]

Quote:

Originally Posted by rs0460a Maybe U should plan on getting married ..... Anyway, I have over 40 years of "credited service" so the few "low ones" (which were in my late 50's) will fall out of the calculation. Remember that the prior years are adjusted (for inflation) and I do get a minor credit for being in the military "many moons ago". Luckly, SS is just a bit of "extra" for us. Nice if we get it (as expected). However, it won't be the end of the world if we don't.... - Ron

That's interesting that your low years were late in your career. If they weren't increased by as much of an inflation adjustment (via the indices) as they would have been, had they been early, maybe that would make more of a difference. Oh well! Either way, easy come, easy go. Glad you don't care one way or another...

As for marrying, it's not currently in our plans! We have both BTDT. I would have a lot of reading to do (about SS and pension), if my single status ever changed. I doubt it will, though. We get along really well as is, and it's hard to want to change a relationship that works as well as this one does.

[packrat44]

Quote:

Originally Posted by Want2retire I got my yearly social security statement, which is always fun since the estimate just keeps going up. .

While the SS estimate keeps going up. The real question is - Which is going up faster - SS estimated payment or your cost of living?

Quote:

Originally Posted by Rambler I've looked at the online tool a couple of times, but I don't even bother using social security as part of my retirement plans. I'm 46, and I question whether or not it will even be around by then, or if the minimum age will be 87 by the time my "normal" retirement age rolls around. True, it may be around, but with all the questions around SS in the future, I prefer to rely on my on FI. If SS comes at 67, great! That'll be ore play money for DW and me! We do have to check back with T-Al though, to see if us millionaires will be eligible. R

I use to say the same bad things about SS 40+ years ago as people under 50 say about it now. It is better to be conservative and plan for having reduced benefits and be pleasantly surprised if it does not happen.

[W2R]

Quote:

Originally Posted by packrat44 While the SS estimate keeps going up. The real question is - Which is going up faster - SS estimated payment or your cost of living?

True! It is supposed to be in today's dollars so it should go up. I still like seeing it happen, though.

On a separate note - - not responding to packrat specifically - -

Gosh, I hope this thread wasn't inappropriate since I didn't mean to clutter the board. I had seen people ask about how the SS estimate was computed (was it here? or over at diehards), and others just referring them to online calculators. After re-doing my estimate with the new indices, I thought maybe someone else would be nerdy enough to be interested.

[lazygood4nothinbum]

Quote:

Originally Posted by Want2retire The estimate assumes that you will continue making the same amount of money as you did on the most recent year they include (2006, this year), and keep working until the day you are 62, if you claim benefits at 62.

figured that out earlier on. if i remember it came out to about 20% less social security down the line. didn't seem worth the exta 15 years of effort.

[Zoocat]

Quote:

Originally Posted by Want2retire True! It is supposed to be in today's dollars so it should go up. I still like seeing it happen, though. On a separate note - - not responding to packrat specifically - - Gosh, I hope this thread wasn't inappropriate since I didn't mean to clutter the board. I had seen people ask about how the SS estimate was computed (was it here? or over at diehards), and others just referring them to online calculators. After re-doing my estimate with the new indices, I thought maybe someone else would be nerdy enough to be interested.

Glad you're going to be receiving those SS checks, Want2Retire!
As for me, I won't be taking much out of the SS coffer. All the more for you!

[packrat44]

Quote:

Originally Posted by Want2retire Gosh, I hope this thread wasn't inappropriate since I didn't mean to clutter the board. I had seen people ask about how the SS estimate was computed (was it here? or over at diehards), and others just referring them to online calculators. After re-doing my estimate with the new indices, I thought maybe someone else would be nerdy enough to be interested.

Keep it up. I like clutter. One look in my shop or garages will confirm that.

[Shawn]

Quote:

Originally Posted by Want2retire But for others, who may be a couple of years short of retiring in their 50's, remember that the number on your statement depends on the above assumptions.

While this is true, it is also true that many people don't get much from social security in the way of extra return by working those extra years. For many workers, the first dollar contributed to social security is worth 6 times the last dollar contributed to social security.

For example, I'll reach the "15%" level in social security when I'm about 50. This means that each dollar contributed at 50 will be worth only 45% of each dollar contributed at 49 (and only 17% of each dollar contributed when I was 17 working at McDonald's). The reduction date is different for each individual as it depends on one's wage adjusted accumulated earnings up until that time.

So for me, the monthly payment estimate that I receive from SSA each year is not that different from what it would be if I retired today, even though I'm more than 18-19 years from my full retirement age. With respect to social security, it simply doesn't pay to work those extra years. The taxes are too great and the return is too small.

[W2R]

Quote:

Originally Posted by Shawn While this is true, it is also true that many people don't get much from social security in the way of extra return by working those extra years. For many workers, the first dollar contributed to social security is worth 6 times the last dollar contributed to social security. For example, I'll reach the "15%" level in social security when I'm about 50. This means that each dollar contributed at 50 will be worth only 45% of each dollar contributed at 49 (and only 17% of each dollar contributed when I was 17 working at McDonald's). The reduction date is different for each individual as it depends on one's wage adjusted accumulated earnings up until that time. So for me, the monthly payment estimate that I receive from SSA each year is not that different from what it would be if I retired today, even though I'm more than 18-19 years from my full retirement age. With respect to social security, it simply doesn't pay to work those extra years. The taxes are too great and the return is too small.

(Edited to be more positive): I see your point. It really doesn't pay to work longer if you have made that much by the time you are 50. To be honest, I would probably think twice about working any longer if I were in your position, as well.

[W2R]

Quote:

Originally Posted by packrat44 Keep it up. I like clutter. One look in my shop or garages will confirm that.

Hey, maybe you could print out this thread, frame it, and toss it in your garage. That would be a use for it

[W2R]

Quote:

Originally Posted by Oldbabe Glad you're going to be receiving those SS checks, Want2Retire! As for me, I won't be taking much out of the SS coffer. All the more for you!

Mine won't be big either! But hey, every dollar is welcome.

[W2R]

Quote:

Originally Posted by lazygood4nothinbum figured that out earlier on. if i remember it came out to about 20% less social security down the line. didn't seem worth the exta 15 years of effort.

I agree! Still, I never was fond of nasty surprises down the road.

[FANOFJESUS]

I am going to get about $500 a month in twenty years. I am trying to think of what that will buy in twenty years maybe it might cover the utilities?

[OAG]

Quote:

Originally Posted by packrat44 While the SS estimate keeps going up. The real question is - Which is going up faster - SS estimated payment or your cost of living? I use to say the same bad things about SS 40+ years ago as people under 50 say about it now. It is better to be conservative and plan for having reduced benefits and be pleasantly surprised if it does not happen.

I will second that statement! I was very surprised at the amount of SS DW and I receive (70/67 now). I never planned on SS and did not gear "retirement" in the 80's and 90's to receiving anything, although I knew "something" was going to be there. DW only had the minimum of quarters (she worked outside of the home for about 11 years) and I never earned a lot but did have about 42 years of work history for the SSA to work with. SS now makes up about 25% of our annual income, and most of it is "saved for later".

[Shawn]

Quote:

Originally Posted by Want2retire (Edited to be more positive): I see your point. It really doesn't pay to work longer if you have made that much by the time you are 50. To be honest, I would probably think twice about working any longer if I were in your position, as well.

I believe a lot of people are in this situation (probably without knowing it). I don't think it is all that rare to be at the "15%" social security level, where a person gets very little added benefit for each additional dollar contributed to social security. Not counting high school and college jobs (grad school RA/TA stipends being exempt from SS deductions), I've been in the workforce for only 16 1/2 years (with about 10 above the SS limit). However, in a couple of years I will be in this situation.

Have you gone through the numbers using the web site you referenced to compute where you are at? Basically, all you need to do is input your (wage adjusted) salary over your working career, and crunch a few numbers.

BTW, I laughed when you said you edited your post to be more positive. I don't how anyone can be more positive than you.