ER and effects on Social Security

[tps7742]

I retired at 54 and at the time I looked at My Social Security for my estimated benefits amount I would be able to draw on. I understand it estimates this amount if I continued to work until 62/67/70. I am now 58 and the estimated benefits shown have risen but I haven’t contributed to the social security In 2016/17 or 2018. So the estimated benefits I pulled up today is it correct or is there a formula to calculate the projected income in the future from SS?

 

[Ready]

It assumes you will continue earning about the same amount when giving you the 62/67/70 estimates. If you want to calculate the amount assuming you are no longer working, there is an online calculator on the SS website where you can plug in 2018 as the year you stopped working. It will recaculate your age 62 number. It won’t give you the 67/70 numbers because it assumes if you stop working prior to 62 that you obviously want to begin collecting as soon as possible, which we know on this forum is not necessarily the case for ER folks. But you can take the age 62 number and recalculate the 67/70 numbers manually.

 

[Al18]

On your SS statement, in the middle of page 2 should say 'Your estimated taxable earnings per year after 2018' , followed by a dollar amount or 'NONE'. After roughly 3 years after retiring, your statement should say NONE, reflecting no future earnings.

 

[tps7742]

Thanks for the input. I need to play around with the quick calculator vs the detail calculator.

On page 2 it does state”your estimated taxable earnings per year after 2019” none.

Once again thanks, I love this website and it’s members!

 

[RunningBum]

Check out this current thread, which is similar if not exactly the same topic.

http://www.early-retirement.org/forums/f28/fire-effect-on-ss-benefits-96343.html

 

[statsman]

Cost of living adjustments? I am seeing something similar. What I had captured two years ago @58 is now a bit higher @60. I haven't worked in over five years, and I have been entering "0" for the previous, current, and future years.

 

[Dtail]

Cost of living adjustments? I am seeing something similar. What I had captured two years ago @58 is now a bit higher @60. I haven't worked in over five years, and I have been entering "0" for the previous, current, and future years.

Until one reaches 60 y.o. IIRC, there are cost of living wage adjustments added to your SS estimated payments even though there are zero earning years.
Additionally, even after 60 y.o., you will still see COLA related adjustment added to your estimates.

 

[Perryinva]

Its through age 61.

 

[statsman]

Its through age 61.

So, once you hit 62, the earliest Social Security can be started, the numbers are locked in until it is actually started, and then COLAs take over again?

If true, I wonder what the rationale is for that. Ease of calculations or bookkeeping?

 

[Perryinva]

Actually, I was incorrect., but it is confusing. The wage indexing is indeed based on the calendar year you turn 62. I turned 60 in 2018, so I should have 2 more years where all previous earnings are ADJUSTED to calculate my AIME (average indexed monthly earnings) based on the below link. The PIA will always adjust as long as you do not file, based on COLA. However, looking at the SSA AIME calculation sheet, it is apparent that my earnings will be adjusted only one more time, for calendar year 2019. After that, all old earnings remain fixed and any updated earnings in the years 2019 and beyond remain fixed at a 1 times multiplier.

https://www.ssa.gov/oact/ProgData/retirebenefit2.html


I have no idea why that is nor is it explained anywhere that I could find. Ease of bookkeeping sounds plausible.

 

[tps7742]

Check out this current thread, which is similar if not exactly the same topic.

http://www.early-retirement.org/forums/f28/fire-effect-on-ss-benefits-96343.html

Thanks

 

[Dtail]

Actually, I was incorrect., but it is confusing. The wage indexing is indeed based on the calendar year you turn 62. I turned 60 in 2018, so I should have 2 more years where all previous earnings are ADJUSTED to calculate my AIME (average indexed monthly earnings) based on the below link. The PIA will always adjust as long as you do not file, based on COLA. However, looking at the SSA AIME calculation sheet, it is apparent that my earnings will be adjusted only one more time, for calendar year 2019. After that, all old earnings remain fixed and any updated earnings in the years 2019 and beyond remain fixed at a 1 times multiplier.

https://www.ssa.gov/oact/ProgData/retirebenefit2.html


I have no idea why that is nor is it explained anywhere that I could find. Ease of bookkeeping sounds plausible.

So you say your through age 61 comment is incorrect, but then state that the last AIME adjustment for you will be at age 61 not 62?
A little confused.

 

[Perryinva]

Yes. The link I pasted above states the year you turn 62. So I said my age 61 comment was incorrect. Yet when I look at the actual sheet where the AIME is calculated, IT indicates only 2019 will be my last year (year when I turn/ when I am 61) for wage indexed adjustments. But that calculation is actually MADE in 2020, (when I will be 62) FOR 2019. Confusing to say the least.

The problem I think, is that all the adjustments are based on the calendar year. So if you compare a person eligible for and files for SS at 62 with a birthday of Jan 10, vs a person who’s birthday is Dec 10, they are both eligible in the same year, but 11 months apart. So the Jan person that retires at 62, has essentially their last wage adjusted full year as the previous year, but the Dec person had essentially none of their last working year (the current year in which they are 62) wage adjusted which is 11 of the last 12 months. Somehow it seems that anyone with a late in year birthday is screwed out of as much as a years adjustments compared to an early year birthday, even though, technically, the older person in the same year could have started earlier. In reality, it depends more on what year you graduated from high school/college and started and then stopped working, earned income. But for a full career, those first years typically count for zilch as far as SS is concerned. My first real earnings are 1980, but only my earnings from 1984 will count as my 35 highest.