Social Security

[imoldernu]

Wherever you are on the ER continuum, you should be aware of Social Security. Highly recommended to sign on with your own information, as in the future, there may be changes or questions that will apply to you.

You can use the site for any number or needs... to get a replacement SS card, to see your SS record, for 1099's at tax time, and to get records of the intereactions and history of your own record.

Here's the site: https://www.ssa.gov/
.................................................................................

Example... I just looked up my own SS record, and found that between the me and my employers, we had put about $53,000 into SS over the years. Since beginning to collect @ age 62, we have already received between $$400K and $450K (DW & I) We're hoping that it will be around for our kids and their kids.

Here's a copy of the record of my payments in to SS since 1992, a few years after we retired.

Just thought to put this important subject into some perspective.

 

[LakeRat1]

Very Nice

 

[NYEXPAT]

I seem to recall posting here that I paid in a little over 100k (on my record). I started taking at 62 (along with my children) and by 80 my payout will be $626K. Dad is 99 and still collecting (MMMV), but the beauty is that my current Wife (no social security earnings) will collect at least that much and likely much more.

 

[unno2002]

[FONT=&quot]When I took early retirement (2012 – age 57), I went thru my records (packrat that I am) re Social Security (SS). During my total working years the amount that went into SS “on my behalf” was $193,818.88. I did a spreadsheet using the historical interest rates for plain old savings bonds. If, year by year, the money that went to the SS had instead gone into savings bonds and I held those bonds, at my ("early") retirement in 2012 there would have been $406,234.15[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Per the SS statement, supposedly five years later at age 62 I could start to receive $1,692 per month. Of course, if the wife & I die before I turn 62, everything in SS goes “poof”. [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]When I look at the amount flushed into the SS slush fund toilet, I see what could have been the 2012 CASH purchase of four decent small rental units… That would have immediately been paying significantly more than $1,692/month, essentially indefinitely, and leaving a valuable inheritance for the kid…[/FONT]

 

[Rianne]

If you have zero's before you're 62 and have 35 years of SS withdrawals from paychecks, does your SS amount change from what it says now? The message I get on my SS says you get $1824/month provided you continue earning the last amount on the paycheck. So there are zeros between 59 and 62 or 65.5, whenever I decided to take SS.

 

[REWahoo]

If you have 35 years of SS withholding, having zero earnings those last few years will change the estimated amount very little. I retired at age 58 and when I started SS at 62 the four years of no earnings resulted in a benefit reduction of approximately $30 per month less than had I continued to work until 62.

 

[Rianne]

If you have 35 years of SS withholding, having zero earnings those last few years will change the estimated amount very little. I retired at age 58 and when I started SS at 62 the four years of no earnings resulted in a benefit reduction of approximately $30 per month less than had I continued to work until 62.

Thank you, and if you don't have 35 years, like my husband, will it change drastically? Oh wait, they just take the zero years and add them in, right?

 

[pb4uski]

Yes, just add in the zero years at zero, but if your husband's FRA benefit is more than 50% of your FRA benefit then you get a spousal adjustment for the difference... so you end up with 50% of his benefit. All above assumes FRA... will be less if you claim early.

 

[Rianne]

If FRA is in 6.5 years, when we're 66.5 yrs. old, he gets his FRB and I get my FRB plus 1/2 of his? Really?

 

[imoldernu]

If FRA is in 6.5 years, when we're 66.5 yrs. old, he gets his FRB and I get my FRB plus 1/2 of his? Really?

Nice try, but I don't think so... I think you get your own, if it's higher than 1/2 of his, or, like my bride, just half of mine, 'cuz hers was less than half of mine.

Ummm... unless maybe FRA is the Federal Railway Administration, in which case ignore my opinion. The FRB part is over my head.

as always subject to my limited knowledge and subject to those who are smarter than me.

 

[pb4uski]

If FRA is in 6.5 years, when we're 66.5 yrs. old, he gets his FRB and I get my FRB plus 1/2 of his? Really?

I assume that by FRB you mean full retirement benefit.

No, he gets his FRB you get the higher of your FRB or 1/2 of his FRB.

Technically, you get your FRB plus a spousal supplement for the excess of 50% of his FRB over your FRB.

So say his is FRB is $2,000 and your FRB is $750.

He gets $2,000. You get $1,000... your $750 + a spousal adjustment of $250 [($2,000*50%)-$750]. Together you get $3,000.

If you pass, he continues to get his $2,000. If he passes, you get his $2,000 and no longer get your $1,000.

YMMV

 

[Blue Collar Guy]

When i retired at age 46 i had a soc sec estimate. working another 20 years would have raised my soc sec by 150 a month. so 6 years of zeros is pennies(ok not pennies but a few bucks a month)

 

[Rianne]

I assume that by FRB you mean full retirement benefit.

No, he gets his FRB you get the higher of your FRB or 1/2 of his FRB.

Technically, you get your FRB plus a spousal supplement for the excess of 50% of his FRB over your FRB.

So say his is FRB is $2,000 and your FRB is $750.

He gets $2,000. You get $1,000... your $750 + a spousal adjustment of $250 [($2,000*50%)-$750]. Together you get $3,000.

If you pass, he continues to get his $2,000. If he passes, you get his $2,000 and no longer get your $1,000.

YMMV

So, according to your calculations, regardless of zeros before or after actual RE, provided we don't file until FRA at 66.5 we should get a combination of $3790. Even though DH does not have 35 years of SS contributions. This is confusing, but it sounds like there isn't that much of a discrepancy about the zeros.

 

[pb4uski]

No, you are reading what you want to hear into it. DH will get whatever he is due considering his zero years. You will get the higher of what you are due based on your earnings record considering your zero years or 50% of his benefit.

Go to ssa.gov to calculate your respective benefits by putting in the zero years. Then go to SSAAnalyze to see your best claiming strategy.

 

[Spock]

If you have zero's before you're 62 and have 35 years of SS withdrawals from paychecks, does your SS amount change from what it says now? The message I get on my SS says you get $1824/month provided you continue earning the last amount on the paycheck. So there are zeros between 59 and 62 or 65.5, whenever I decided to take SS.

There is a calculator on the SSA website that allows you to assume no income between now and collecting SS. Run the simulator to get the $ figure without continued pay checks.

Also... the 50% spouse benefit assumes full retirement age. If one of you starts collecting before FRA (ex 62) the % is lower.

 

[Rianne]

Going to SSA calculator, I think I have to jump through some security hoops to get access to that. I'm just viewing the first few pages. It appears they updated security in SS, which is good. I feel more comfortable going there.

We were one of the people who got our tax returns hacked 2 years ago. Someone filed with DH SS # and other personal information. Now, no one can even look at our credit without a phone call to us and we have to answer 5 personal questions to prove we are who we are. Thanks for advice!

 

[athena53]

Like unno2002, this is a depressing calculation for me. If I had taken all the contributions of my employer and me, with 6% annual return, I could purchase an annuity paying $9000/month at age 70. SS will pay me $3400 starting at 70. The only good news is that all I lost by not working till 65 was a paltry $50/month.

I don't think most people realize how much is redistributed.

 

[beowulf]

That's the name of the game, redistribution, and why SS was created over 80 years ago. It was NEVER meant to be a full retirement income. It was designed to be a safety net. The bend points in SS make sure that the more you earn over your career, the less you will receive as a percentage of those earnings. In 2017, SS taxes stopped at $127,200. Simply put, if you earned more than that this year, your SS deductions will end for 2017. If we assume that you earned the max for deductions for 35 years (that number is adjusted up in most years), your SS benefit would be $32,244 annually - that's the current maximum benefit at FRA. That comes to about 24.4% of your $127,200 income. If you earned more than that, the percentage would drop.

Let's say your 35 year adjusted annual income is $60,000 (it's not that simple, you need to use the SS website calculator and have all your info available for a more accurate estimate), your annual SS would be about $21,113 or 35.2% of that final salary. And, as your 35 year adjusted average income drops, the percentage of SS compared to your income increases. This is a gross simplification, but the less you earn, the higher that rate of SS income replacement.

And that was the goal of SS. Help those who have the least income. According to SS, the average annul benefit in 2016 was $1,341. If you claim at 62, whatever benefit you would have been due at 66 (or your FRA) is reduced by about 30% - for life, If you wait until 70 to claim, you get about 125% of your FRA (all depends of the year you were born).

And remember about all those folks who die before receiving SS and have no spouse or minor children. They never see a dime of that money. It also gets redistributed. That's why it's call Social SECURITY.

 

[zinger1457]

If you have zero's before you're 62 and have 35 years of SS withdrawals from paychecks, does your SS amount change from what it says now? The message I get on my SS says you get $1824/month provided you continue earning the last amount on the paycheck. So there are zeros between 59 and 62 or 65.5, whenever I decided to take SS.

SS uses your last two years earnings to project your earnings in future years so if you had $0 earnings it will use that for future years. I am in that situation and have ~6 years before I start collecting at FRA. The following statements are included with my estimated benefits.

For 2017 and later (up to retirement age), we assumed you'll continue to work and make about the same as you did in 2015 or 2016.

Your estimates are based on the assumption that you will earn $0 a year from now until retirement.

 

[beowulf]

If you work after 62, you will get credit for those years. The projection assumes you will not work anymore, if you don't, you will not see any increase other than inflation if you claim at 62. If you claim at 62, you will be penalized in the form of a reduction to your SS for any work you perform prior to FRA. I think the penalty starts if you earn more than $14,000 or so. Your best way to max out your benefit is to wait until FRA and work until then. Otherwise you will not receive the amount that was projected. Sorry, but that's the way it works.

 

[athena53]

That's the name of the game, redistribution, and why SS was created over 80 years ago. It was NEVER meant to be a full retirement income. It was designed to be a safety net. The bend points in SS make sure that the more you earn over your career, the less you will receive as a percentage of those earnings.

I know, I know- I studied a 500-page text on Social Security for an actuarial exam (and then they took an exam question form a footnote). It just annoys me when my contemporaries post on FB, convinced that all their SS payments are from theirs and their employers' contributions. In the text, the re-distributed amount was called "the welfare element". I also get annoyed at (and feel sorry for) people complaining about how hard it is to live on their meager SS. As you noted, it wasn't supposed to fully provide for retirement.

 

[Spock]

I know, I know- I studied a 500-page text on Social Security for an actuarial exam (and then they took an exam question form a footnote). It just annoys me when my contemporaries post on FB, convinced that all their SS payments are from theirs and their employers' contributions. In the text, the re-distributed amount was called "the welfare element". I also get annoyed at (and feel sorry for) people complaining about how hard it is to live on their meager SS. As you noted, it wasn't supposed to fully provide for retirement.

The "all their SS payments are from theirs and their employers' contributions." statements are worth another review as the "math" is similar to those who buy a lump sum annuity... it takes 15 years or more just to get your principal back... factor in interest I would have gotten on the SS contributions, my projected life span, and yes... all of my SS payments will be from my and my employers contributions.

 

[alaska55]

[FONT=&quot]When I took early retirement (2012 – age 57), I went thru my records (packrat that I am) re Social Security (SS). During my total working years the amount that went into SS “on my behalf” was $193,818.88. I did a spreadsheet using the historical interest rates for plain old savings bonds. If, year by year, the money that went to the SS had instead gone into savings bonds and I held those bonds, at my ("early") retirement in 2012 there would have been $406,234.15[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Per the SS statement, supposedly five years later at age 62 I could start to receive $1,692 per month. Of course, if the wife & I die before I turn 62, everything in SS goes “poof”. [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]When I look at the amount flushed into the SS slush fund toilet, I see what could have been the 2012 CASH purchase of four decent small rental units… That would have immediately been paying significantly more than $1,692/month, essentially indefinitely, and leaving a valuable inheritance for the kid…[/FONT]

This story remind me of a friend of mind who used to complain of paying in to SS, guess what he became disabled in his late 30's. It also insurance. He sure changed his tune quickly.

 

[beowulf]

This is an ER forum where we have many folks who are good savers, frugal spenders and probably more intelligent than the average person. Could "we" do better by saving our own retirement fund instead of contributing to SS. There would be undoubtedly be no employer match, so we would be saving our 6.1% contribution. The real question is whether the 95% or more of Americans not like "us" could do better? Actually, the real question is whether they would just consider the extra money as spendable cash and blow it the same week they get it. I think "we" all know the answer. SS was established as a safety net for,older Americans, not a guaranteed lifetime income that would cover all expenses. The really sad thing is that for over 40% of our fellow citizens who receive SS, it's their only income.

It's like any other tax. It's used to help redistribute wealth from those who have a lot to those who have very little. It's the same as people who send their kids to private school and still have to pay property taxes to support the local school system. Or any other service that they, personally, don't make use of.

And how would any of us react to an injury or illness early in our career that ended our earnings?

 

[haha]

And how would any of us react to an injury or illness early in our career that ended our earnings?

Typically people like redistribution of others income toward them, including employment in publicly financed schemes. Not so keen on it flowing away from them. So this answers your question. Diminished or missing income due to disability, bring on the SS.

Ha