Social security?

[cute fuzzy bunny]

Are the social security numbers plugged into firecalc adjusted so that when they're plugged in somewhere off in the future years, the amounts are adjusted to what they will actually be?

In other words, my statement says I'll receive $1100 a month at 62 in 2006 dollars. When I plug in 1100 and 2023...is it incorrectly using 1100 starting in 2023 or is it adjusting that into the range (isnt it some 'wage adjustment' factor that gets applied annually?) that I'd actually get?

If its the former, the # is probably way too small for people a ways away from receiving social security.

 

[dory36]

The SS statement that I get (which is pretty meager, as overseas income doesn't count towards SS) uses current dollars, so if they say $1100 then they mean whatever $1100 would buy today, you can buy with whatever they give you when you get to that point.

(At least on my statement, where I have indicated that my future income is zilch, it seems right. If you're still working, I think it shows what you'll get assuming future contributions. You'll need to get the SSA to give you a number for no future income if they still show you bringing in the big bucks.)

For lack of a better approach, FC uses whichever inflation selection you have made (default CPI) and adjusts that $1100 up until it starts coming in, then back down when everything is reported in current dollars.

This is the same adjustment that is made for other withdrawal changes with the "Inflation Adjusted" box checked.

 

[cute fuzzy bunny]

Ah hah. I think the CPI adjustment is somewhat lower than the wage adjustment that people see made to their numbers before they start taking it. But I cant see how you'd figure out what the future wage adjustments would be. At least its adjusted by something in the same city as the ballpark...if it wasnt adjusted at all for someone like me with 17 years before I get it...$1100 bucks will probably buy me a coffee at starbucks. Not a fancy coffee drink...just that plain cup of coffee. The one where when you order it, everyone else in the place looks at you and whispers "so...THATS what a poor person looks like!".

 

[modlair]

I have some doubt about this, guys. SS for an ER . . . does it not freeze the day you retire (meaning stop paying into SS)? I have never been able to figure it out from their online calculator.

Meaning if you are 55 and it says you receive XXX dollars in 2006 dollars when you turn 62, I'm not sure they are doing that "right." I don't think the inflationary adjustments to the benefit start occuring until you start receiving the checks if you are not continuing to pay in dollars that inflate each year from 55 to 62. So if you ER at age 55 and it says you get XXX 2006 dollars, I'm concerned that it means you get XXX (where XXX in 2013 = XXX in 2006) 2013 dollars in 2013, and inflationary adjustments start only then.

Anyone know?

 

[dory36]

I forget how I did it, but years ago I told SSA to stop assuming future income, and they did. Now my statement says things like "Assuming you make 0 in 2007 and 0 in 2008..."

Without that, you are using their assumption of your future income.

 

[modlair]

Well, their online calculator does have a thing that asks "how much do you expect to make in 2006" and then the next item asks about 2007 -- and that can be zeroed. It says that it presumes the 2007 number is maintained to the age 62 year.

I'm just not sure they're doing it right and handling inflation correctly for an ER situation of 0 in 2007 and thereafter to age 62.

 

[Telly]

I have some doubt about this, guys.  SS for an ER . . . does it not freeze the day you retire (meaning stop paying into SS)?  I have never been able to figure it out from their online calculator.

Meaning if you are 55 and it says you receive XXX dollars in 2006 dollars when you turn 62, I'm not sure they are doing that "right."  I don't think the inflationary adjustments to the benefit start occuring until you start receiving the checks if you are not continuing to pay in dollars that inflate each year from 55 to 62.  So if you ER at age 55 and it says you get XXX 2006 dollars, I'm concerned that it means you get XXX (where XXX in 2013 = XXX in 2006)  2013 dollars in 2013, and inflationary adjustments start only then.

Anyone know?

Yup, I know for sure.  Some years ago (when I ER'd), I thought the same as you. I thought once you stopped paying into SS, that your benefit was locked. But I was wrong.
Each year, your PAST earnings are "Wage Adjusted" to the present. And this happens year after year.

The SS downloadable calculator, and requesting a special statement with future years earnings set to zero, match exactly for me.  Each year, you have to run the latest SS calculator, since it has the new wage adjustment, or request a new statement.

Just as an example, let's say you earned x dollars in 1970, and that was 50% of the Average Wage (SSA defined) then.  So in the future, your 50% of 1970 average is set to, for example, 50% of the Average 2010 wage.  Each year that you paid into SS (1971, 1972, etc.) gets adjusted upward in an iterative approach using the applicable fraction of Average Wage for each of those years.

From what I've figured out on the SS website, the last year of Wage Adjustment happens at age 60. No wage adjustment for age 61.

If you take early SS at 62, then when you are 63-on, you will get the yearly CPI-linked COLA adjustment each year.

 

[Telly]

Back to the FireCalc issue, using CPI as the adjuster for future benefits sounds ok to me for a swag.

For many years, the SS wage adjustments were greater than inflation (remember all the commotion a year ago about the proposal to have future benefits cranked down to the CPI, rather than the wage inflation rate?).

But starting ~2002, the wage inflation has been LESS than the CPI!

But since the actual SS history is loaded with wage adjustments greater than CPI, FireCalc will be a bit stingy on your actual SS amount that it calculates up. But its all a simulation anyway.

 

[cute fuzzy bunny]

FireCalc will be a bit stingy on your actual SS amount that it calculates up. But its all a simulation anyway.

Ok with me. If I had the option to overestimate or underestimate, I'd like the latter. As long as its not a huge diff.

 

[modlair]

Yup, I know for sure. Some years ago (when I ER'd), I thought the same as you. I thought once you stopped paying into SS, that your benefit was locked. But I was wrong.
Each year, your PAST earnings are "Wage Adjusted" to the present. And this happens year after year.

Excellent reassurance, and entirely persuasive. It says SS does it "right". Corporate pensions, in general, freeze.

Sorry to digress the thread on this.

Possible firecalc SS suggestion: Is not the Medicare premium at age 65 an autopilot sort of deduction from the SS monthly check? Meaning, doesn't it happen without any action by the recipient in a mandatory way? If so, worth modeling?

 

[cute fuzzy bunny]

Piece of data from my dad: his cpi adjustments on his social security have almost exactly been offset by the increases in medicare costs.

He's still getting the same net pay as he did when he retired.

 

[JohnEyles]

In the "How Much Will You Spend ?" page of "advanced FIRECALC",
is the amount to be entered the monthly or annual benefit

Thanks, John

 

[REWahoo]

It is an annual amount.