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How does ER affect SS?
Old 11-21-2005, 06:47 PM   #1
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How does ER affect SS?

Not that it will happen to me anytime soon, but how does ER affect your future SS? Doesn't SS take into account you last X number of years income, so if you retire at 45 would your SS amounts be figured on $0 yearly income for the years leading up to 62 or whatever age you begin collecting SS? If you get a chance, please explain.

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Re: How does ER affect SS?
Old 11-21-2005, 07:04 PM   #2
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Re: How does ER affect SS?

deafcat, you can find out all sorts of information about SS benefits here:

But to your immediate question, the SS website says this:

Retirement benefit calculations are based on your average earnings during a lifetime of work under the Social Security system. For most current and future retirees, we will average your 35 highest years of earnings. Years in which you have low earnings or no earnings may be counted to bring the total years of earnings up to 35.

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Re: How does ER affect SS?
Old 11-21-2005, 07:49 PM   #3
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Re: How does ER affect SS?

I was wondering about this awhile back too. I spent 9 years in college (from age 18-27) working part time and getting my 4-year undergrad and 3 year master's degrees. So my earnings during that time were pretty low.

After that I had decent earnings for 18 years.

I'm now 45 and hoping to ESR by 47. so I will only have 20 years of serious earnings, the other 15 being used to get the average will either be my part-time college years, or my part time ESR years when I intend to earn a few bucks on freelance stuff.

I would have been much better off working a couple good years to save up for college instead of having 9 years of part time work.

I guess this is another reason I don't count on SS in my planning.
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Re: How does ER affect SS?
Old 11-21-2005, 10:20 PM   #4
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Re: How does ER affect SS?

I used the SS calculator on the SSA website a few months ago to get an estimate of the impact of early retirement under the current benefit structure.* I calculated the benefits as if I were retiring in each year from 36 to 62 (I'm now 34).*

What I found was that for every given year I worked beyond 35 to age 45, my benefits increased by about $48 per month.* Working at 46 resulted in a benefit increase of $30 a month.* Then from 47 to 62, every additional year of work added only about $20-23 per month in benefits.*

While the benefits increased each year, the marginal increase dropped significantly as I hit my mid-forties and beyond. My return was slashed by more than half as I worked beyond age age 46.* Not much incentive to keep working I guess.

I'd be interested to see if others have encountered similar results.
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Re: How does ER affect SS?
Old 11-21-2005, 11:56 PM   #5
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Re: How does ER affect SS?

SaveSome...same deal with me (I'm 46)

My wife is 45, but was a stay at home mom for a number of years, so her SSI projections still show a ~10% increase for each additional year worked.

Diminishing returns, for sure.

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