Hello Everyone:
One component of my early retirement plan deals with social security. While I am not using any Social Security money to fund my retirement plan, I nonetheless do want to attempt to maximize the amount of social security benefit I receive. My goal is to receive the maximum benefit possible, given the current rules, without having to work "excess" years paying into the system when such payments will either not increase, or only slightly increase, my potential retirement benefit. In fact, just how my benefit changes with added contributions could convince me to work an extra year or two if such contribution would have a substantial effect on my retirement benefit. I am having, however, a hard time getting a sense of just how much of a benefit I will receive once I retire given my earning history. While I do receive the annual social security statement that gives a projection, given the fact that I plan to retire early I don't know how accurate this statement really is. And I have looked at the social security website and some other links. But I still do not have a good sense that I am accurately projecting my potential social security benefit. Party, this is because of my peculiar earning history. Because of a long period of grad. school, I started earning money relatively late in life. I have about five years of earnings that are very modest indeed, with some social security money being withheld, but not a particularly large amount. Following this, I have an eleven year (and counting) period where I have had the maximum annual social security contribution deducted from my earnings. I anticipate that when I retire I will have paid the maximum level of withholding for a period of some 17 or 18 years in a row.
So, getting to my question. Will 17 or 18 years of maximum social security withholding get me close to the maximum benefit that I would receive even if I worked many extra years and continued to have the maximum and ever rising social security tax withheld? (Also, as I mentioned, there were some minor earning years prior to this.) Or, will my benefits be greatly reduced because I retired in my late 40's as opposed to working until my full retirement age of 67, or at least a few years closer to said full retirement age? Does anyone have a general sense of "how close" I will be to the maximum benefit given these data? Does anyone know of any sort of calculator or data base that can give me a more precise estimate? I do have the actual dollar amounts withheld for each year I earned income, so I could plug that data in easily enough. I am really interested in knowing this number. While, as I said, I am not using Social Security as a component of my retirement nest egg calculations-I will work until I have a large enough nest egg without social security-I feel that knowing this number is important. My plan is to wait until age 70 and then draw whatever amount of social security I can to act as an additional "annuity payment" in the event I live to be very, very old. This acts as an extra safety cushion for me in case my nest egg calculations are wrong and I deplete my nest egg even having drawn only 3 to 4% starting in year one of retirement. And, truthfully, knowing this number will help give me the courage to retire early. Even with an appropriate nest egg, I will worry. Knowing there is a grand or two coming monthly somewhere down the road will help me psycologically. That is likely the biggest return I will get from social security.
Thanks in advance for any input on the benefit calculation or other thoughts and comments.
Best Regards,
eye
One component of my early retirement plan deals with social security. While I am not using any Social Security money to fund my retirement plan, I nonetheless do want to attempt to maximize the amount of social security benefit I receive. My goal is to receive the maximum benefit possible, given the current rules, without having to work "excess" years paying into the system when such payments will either not increase, or only slightly increase, my potential retirement benefit. In fact, just how my benefit changes with added contributions could convince me to work an extra year or two if such contribution would have a substantial effect on my retirement benefit. I am having, however, a hard time getting a sense of just how much of a benefit I will receive once I retire given my earning history. While I do receive the annual social security statement that gives a projection, given the fact that I plan to retire early I don't know how accurate this statement really is. And I have looked at the social security website and some other links. But I still do not have a good sense that I am accurately projecting my potential social security benefit. Party, this is because of my peculiar earning history. Because of a long period of grad. school, I started earning money relatively late in life. I have about five years of earnings that are very modest indeed, with some social security money being withheld, but not a particularly large amount. Following this, I have an eleven year (and counting) period where I have had the maximum annual social security contribution deducted from my earnings. I anticipate that when I retire I will have paid the maximum level of withholding for a period of some 17 or 18 years in a row.
So, getting to my question. Will 17 or 18 years of maximum social security withholding get me close to the maximum benefit that I would receive even if I worked many extra years and continued to have the maximum and ever rising social security tax withheld? (Also, as I mentioned, there were some minor earning years prior to this.) Or, will my benefits be greatly reduced because I retired in my late 40's as opposed to working until my full retirement age of 67, or at least a few years closer to said full retirement age? Does anyone have a general sense of "how close" I will be to the maximum benefit given these data? Does anyone know of any sort of calculator or data base that can give me a more precise estimate? I do have the actual dollar amounts withheld for each year I earned income, so I could plug that data in easily enough. I am really interested in knowing this number. While, as I said, I am not using Social Security as a component of my retirement nest egg calculations-I will work until I have a large enough nest egg without social security-I feel that knowing this number is important. My plan is to wait until age 70 and then draw whatever amount of social security I can to act as an additional "annuity payment" in the event I live to be very, very old. This acts as an extra safety cushion for me in case my nest egg calculations are wrong and I deplete my nest egg even having drawn only 3 to 4% starting in year one of retirement. And, truthfully, knowing this number will help give me the courage to retire early. Even with an appropriate nest egg, I will worry. Knowing there is a grand or two coming monthly somewhere down the road will help me psycologically. That is likely the biggest return I will get from social security.
Thanks in advance for any input on the benefit calculation or other thoughts and comments.
Best Regards,
eye
