ER before 62 and SS

[DanP]

This is so basic I am embarrassed to ask please redirect me to the right areas.

1) Was reading the "ER" webpage in SSA.GOV, heavy emphasis on the 9/12, etc. formulas but they are all based at 62. So yes it is abundantly clear that drawing at 62 or so is a lesser amount than full retirement age, BUT does that discounting scale applies to someone ER'ing in their 50's?

I'm guessing no and that the SSA.GOV universe starts at 62.

2) For a 50 year old, how should one interpret the estimate, IF one were to not work beyond that? Is there some scale on how it declines if there were no additional contributions?

Thanks and again sorry for the basics.

 

[Senator]

You cannot collect SS before 62. It is discounted if you do not have 35 years of service. You can use the program anypia.exe to determine what your amount will actually be.

Of you can log on the SS website and put in $0 for a salary. That should get you close. As long as you have 35 years in, at a decent salary, it really isn't too much of a 'penalty' to leave work for RE.

 

[DanP]

Thanks for the reply. Probably only have 30 years of income showing, and at least 15 at their max rate. Is there a 35 year magic number?

Yes, understand that there would be no claims until at least 62.

So maybe a better way to ask: If SSA says estimate is 30k / year @ 67, but I am 50 and ER and therefore stop contributing to SSA, how would that estimated 30k @ age 67 degrade?

 

[travelover]

...........
So maybe a better way to ask: If SSA says estimate is 30k / year @ 67, but I am 50 and ER and therefore stop contributing to SSA, how would that estimated 30k @ age 67 degrade?

A couple of methods to determine the exact number have been given above, but in general terms, retiring before 62 does not decrease your benefit that much.

 

[cyber888]

If you retire at 50 instead of 62, and you were suppose to get say $1500 at 62 ... you could get something like $1200 - $1300 instead by missing out on 12 years of SS contribution. And if you were suppose to get $2,500 at 67, you could get only $2,200. I'm just guessing. These are in today's dollar of course. Future dollars will be higher.

 

[bingybear]

you can do a benefit estimate on line where you change the on going in come to zero. This should give you a more accurate estimate. You can assume your starting distributions anywhere from 62 to 70. You will need to provided some identifying info to pull your data to calculate this online. Otherwise use the anypia tool.

 

[2017ish]

Thanks for the reply. Probably only have 30 years of income showing, and at least 15 at their max rate. Is there a 35 year magic number?

Yes, understand that there would be no claims until at least 62.

So maybe a better way to ask: If SSA says estimate is 30k / year @ 67, but I am 50 and ER and therefore stop contributing to SSA, how would that estimated 30k @ age 67 degrade?

As suggested by Senator and others, use anypia.exe (available at social security site); that will give you your projected numbers under the current scheme. Otherwise, the general answer to your question is "it all depends."

Neither DW nor I will have 35 "real years" of social (summer jobs in HS/college/grad take us over), but working extra years would give me like $10 or $20 extra a month on current scheme of the SS system and her even less. But, she maxed social every year but one in her real working years, as did I (with a lot fewer "real years" due to raising kids).

The only way to tell is to run your own numbers.

Edited to Add: with your years of maxing contributions and 30 total working years, you are probably past the second bend point; thus, any addition from further years of working is likely minimal.

 

[bingybear]

much of it depends on what your other 15 years (not maxed) were like. If they were close to zero, it may have a bit of a difference, is they were just below maxed then insignificant difference. When you are looking at their estimates it assumes your income from now (age 50) to your "retirement age (when you start taking benefits)" is the same. In your case maxed out.

Just go to the SS benefits estimator site and hit "estimate you retirement benefit". If I recall it will want some identifying info and will give you the standard 3 estimates. There should be a way to add another estimate where you can pick you retirement age (when benefits start) and the assumed income for the years between now and then. Use 0 in your case. This should give the answer you are looking for.

If you want an off the cuff estimate... assume 10% less. But when it is so easy to get with just a little typing... just pull the real #

 

[Youngster]

I did the on-line calculator, and I also confirmed by calling SS that retiring at 59 would make little difference in what I would collect at 62. Of course, I have more than 35 years of earnings, and it is based upon my earning history.

 

[brainsqueeze]

Very roughly, after about $2 million in lifetime wage inflation adjusted social security earnings spread over at least 18 years, you will have reached the second bend point in the PIA calculations, and any further earnings are benefitted at the lowest amount - 15%. See thread at Bogleheads.

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=140159&hilit=social+Security+bend+point

 

[Looking4Ward]

If you want an off the cuff estimate... assume 10% less. But when it is so easy to get with just a little typing... just pull the real #

That's pretty much what I found. I have a string of $0 earning years from the ages of 17-27 and when I ran the difference between what my benefits would be if I stopped working at 55 versus continued working until 62 it only amounted to around 10%, an amount I deemed not worth it.

 

[DanP]

Thanks for the helpful replies. Found the proper calculator at the SSA site, difference of stopping contributions at 50 boils down to around $250/mo less, which is better than expected.

 

[cyber888]

That's what I said earlier "about $200 - $300" less

Thanks for the helpful replies. Found the proper calculator at the SSA site, difference of stopping contributions at 50 boils down to around $250/mo less, which is better than expected.

 

[cathy63]

Thanks for the helpful replies. Found the proper calculator at the SSA site, difference of stopping contributions at 50 boils down to around $250/mo less, which is better than expected.

Yeah, that's the same calc I did for myself. Quitting now at age 53 and claiming at age 62 vs working to age 62 and claiming then reduces my benefit by 10%. Likewise, quitting now and claiming at age 70 vs working to 70 and claiming then also reduces that (larger) benefit by 10%.

The difference in benefits for me at age 62 is $205/mo, so even if I live to 100, I'm only giving up $93K. If I needed that much more for retirement, I could earn it by working a few more months now and still have almost 9 more years of freedom.

 

[RockyMtn]

When i run the "Retirement Estimator" on the SSA website I get a monthly benefit of $2751 at full retirement age.

When I run the AnyPia estimator with the more detailed info I get a monthly benefit of $3938.

What gives? All of the assumptions are basically the same. I have 40 years of maxing out on SS payments. Still have eight years till full retirement age.

Just seems like a wide spread between the two estimates.

 

[scrabbler1]

A few years ago, I created a spreadsheet which mimics the SS benefit calculation. I eventually used AnyPIA as a check on it and it was fine.


I have 23 years of earnings before I ERed in 2008 at age 45. I projected 12 more years of earnings based on my reduced 2008 wages (I had taken a reduction in weekly hours worked so my annual pay was pretty low) to see the effect of ERing and putting all those (12) zeroes into the calculation. I was just barely into the last bend point so the reduction in monthly benefit at age 67 (FRA for me) would be about $100.