SS slider bar estimates

[Finance Dave]

Ok all you SS experts, I have a question.

When I log into mySS account, they now have a slider bar under the chart. The chart shows estimates of what you would receive at 62, FRA (for me that is 67...birth year 1961), and 70. However, there is a slider below the chart which you can move around to see estimates of your benefit at various ages.

Up to FRA, this works as expected...but there is something I don't understand after that. For me, my benefits show as follows when I use the slider.

67 - $3,143
67 and 1 month - $3,143
67 and 2 months all the way up to 68 and 1 month - $3,184
68 and 2 months up to 69 and 1 month - $3,436
69 and 2 months up to 70 - $3,687
70 and beyond - $3,897

My understanding was that the increase after FRA was 3%/year up until age 70. But...several things above are confusing me.

1) What's with the small change from 67 and 1 month to 67 and 2 months? Is that just the 2/3%/mo for the delay from 66 years 1 months until 67, but paid in arrears? When I do the math, it comes out to 1.3%.

2) It looks like the 3%/year increase past FRA is only an annual amount, so it seems there is no benefit to waiting "a few months" to increase your benefit but you'd have to wait a full year to see the increase, is that right?

3) The increases from one step to the other don't make any sense. For example, the increase from $3,436 to $3,687 is 7.3%...so it appears waiting one more year results in a 7.3% increase...not a 3% increase.


Also, FYI I did set the "future earnings" box to $0....so that should not be a factor.

What's going on? What am I not understanding?

 

[Jerry1]

My understanding is that SS increases 8% per year after FRA, not 3%.

 

[potto0213]

Between FRA and age 70, the payment amount will increase by 2/3% each month. However, the increase is only applied in January of the next year. So waiting WILL increase the payment amount but you will not see it right away.

 

[FI_RElater]

... you need to understand how DRC's work

Ok all you SS experts, I have a question.

When I log into mySS account, they now have a slider bar under the chart. The chart shows estimates of what you would receive at 62, FRA (for me that is 67...birth year 1961), and 70. However, there is a slider below the chart which you can move around to see estimates of your benefit at various ages.

Up to FRA, this works as expected...but there is something I don't understand after that. For me, my benefits show as follows when I use the slider.

67 - $3,143
67 and 1 month - $3,143
67 and 2 months all the way up to 68 and 1 month - $3,184
68 and 2 months up to 69 and 1 month - $3,436
69 and 2 months up to 70 - $3,687
70 and beyond - $3,897

My understanding was that the increase after FRA was 3%/year up until age 70. But...several things above are confusing me.

1) What's with the small change from 67 and 1 month to 67 and 2 months? Is that just the 2/3%/mo for the delay from 66 years 1 months until 67, but paid in arrears? When I do the math, it comes out to 1.3%.

2) It looks like the 3%/year increase past FRA is only an annual amount, so it seems there is no benefit to waiting "a few months" to increase your benefit but you'd have to wait a full year to see the increase, is that right?

3) The increases from one step to the other don't make any sense. For example, the increase from $3,436 to $3,687 is 7.3%...so it appears waiting one more year results in a 7.3% increase...not a 3% increase.


Also, FYI I did set the "future earnings" box to $0....so that should not be a factor.

What's going on? What am I not understanding?

you definitely need to understand that DRC's are only credited to you in the Jan of the year after you have earned them (there's lots of threads here and over at Bogleheads about this).

As a result, if you had say six months of DRC's in November and wanted to start SS.... you would see the actual payments for Nov (made in December) would have been the same as in the month of your FRA. It's not until the next year that the DRC's get credited and you start to get the amounts that you were otherwise expecting (and any COLA, if there is one)

see:
https://www.bogleheads.org/forum/viewtopic.php?t=357688

https://www.bogleheads.org/forum/viewtopic.php?t=270053

 

[wdwwildbill]

Between FRA and age 70, the payment amount will increase by 2/3% each month. However, the increase is only applied in January of the next year. So waiting WILL increase the payment amount but you will not see it right away.

+1

 

[jazz4cash]

I thought they just didn't bother to make the slider tool more accurate as recently discussed here:
https://www.early-retirement.org/forums/f28/ssa-estimate-117240.html

 

[Finance Dave]

Thanks all for the replies...explains a lot. But this brings up new questions. (By the way, I did read all those other threads, thank you!)

1) Are the DRCs applied such that they simply appear as a higher monthly benefit, or are they paid as a lump sum? If a lump sum, this would seem to cause potential tax issues.

2) I think what I'm seeing is that the most financially beneficial thing to do (for someone anticipating beginning benefits at an age between FRA and 70) is begin receiving benefits in January of a given year, is that correct? Or are you saying that it makes no difference which month, as the higher benefit caused by the DRCs will make things whole?

3) No one has commented on the "slider" tool on the SS website. What overall statements should be made about it's accuracy or interpreting its output?

4) If I want to start my benefit in January (such that my first check is in Feb), then when should I actually TELL the SSA that I want to start it. In other words, how far in advance should I file?

 

[Finance Dave]

I thought they just didn't bother to make the slider tool more accurate as recently discussed here:
https://www.early-retirement.org/forums/f28/ssa-estimate-117240.html

I don't think I see any reference in that thread to the slider tool I was referring to. They are referencing a 3rd party calculator, whereas I'm referring to the one on the "My Social Security" website when you log into your account.

 

[statsman]

It doesn't appear any of this applies if someone files for SS benefits on or before FRA. Is that correct?

 

[SevenUp]

you definitely need to understand that DRC's are only credited to you in the Jan of the year after you have earned them (there's lots of threads here and over at Bogleheads about this).

As a result, if you had say six months of DRC's in November and wanted to start SS.... you would see the actual payments for Nov (made in December) would have been the same as in the month of your FRA. It's not until the next year that the DRC's get credited and you start to get the amounts that you were otherwise expecting (and any COLA, if there is one)

see:
https://www.bogleheads.org/forum/viewtopic.php?t=357688

https://www.bogleheads.org/forum/viewtopic.php?t=270053

Yes to all that.

Another thread is Bogleheads® Live: Submit ?s for Mike Piper on Social Security - Bogleheads.org. The pertinent one-liner from that: "Filing for your benefit to begin in January (received in Feb) means that no months are 'missed'."

 

[MissMolly]

*

Thanks all for the replies...explains a lot. But this brings up new questions. (By the way, I did read all those other threads, thank you!)

1) Are the DRCs applied such that they simply appear as a higher monthly benefit, or are they paid as a lump sum? If a lump sum, this would seem to cause potential tax issues. They are an increase to benefits going forward.

2) I think what I'm seeing is that the most financially beneficial thing to do (for someone anticipating beginning benefits at an age between FRA and 70) is begin receiving benefits in January of a given year, is that correct? Yes Or are you saying that it makes no difference which month, as the higher benefit caused by the DRCs will make things whole? Not sure what you mean by "make things whole". DRCs are earned every month after you reach FRA but are only applied in the following January (except for if you wait until 70 to file). If you file after FRA and then apply for SS beginning in November, you would not receive any of the DRCs you earned from Jan - Nov of that year. However, two months later those DRCs from Jan - Nov would be applied and beginning with the check received in February you would see the increase in your benefits. However, you will not be made "whole" for the DRCs you missed out on for your previous Dec and Jan payments. They are just gone.

3) No one has commented on the "slider" tool on the SS website. What overall statements should be made about it's accuracy or interpreting its output? Can't comment since once you start SS you no longer have access to the slider.

4) If I want to start my benefit in January (such that my first check is in Feb), then when should I actually TELL the SSA that I want to start it. In other words, how far in advance should I file? You absolutely must tell SS when you want to start. Otherwise they have no way of knowing. During the application process you will see where you can specify your start date. You can apply beginning 3 months before the month you want to start.

 

[qwerty3656]

Yes to all that.

Another thread is Bogleheads® Live: Submit ?s for Mike Piper on Social Security - Bogleheads.org. The pertinent one-liner from that: "Filing for your benefit to begin in January (received in Feb) means that no months are 'missed'."

So if I was planning to wait til I was 70 and my birthday is June, should I instead start in January (at 69 1/2)?

 

[MissMolly]

So if I was planning to wait til I was 70 and my birthday is June, should I instead start in January (at 69 1/2)?

No. You will lose your DRCs from Jan - May. If you wait until you are 70 to file they apply all your DRCs. It's only if you apply between FRA and 70 that they only credit the DRCs in the following January.

 

[Finance Dave]

*

Thank you Molly!

 

[SevenUp]

Yes to all that.

Another thread is Bogleheads® Live: Submit ?s for Mike Piper on Social Security - Bogleheads.org. The pertinent one-liner from that: "Filing for your benefit to begin in January (received in Feb) means that no months are 'missed'."

So if I was planning to wait til I was 70 and my birthday is June, should I instead start in January (at 69 1/2)?

Starting in January at age 69 1/2 would get you the full age 69 1/2 benefit, including all Delayed Retirement Credits (DRCs) for that age.

Starting at ages 69 7/12 through 69 11/12, you would miss the DRCs for those months above age 69 6/12 in your first calendar year. Your monthly payment in the next calendar year would include the DRCs, but you aren't "made whole" on the ones you missed.

Starting at age 70 you get all the DRCs starting with your first monthly SS check. See the referenced thread for details. Thus if you are planning to wait until age 70 anyway, do so!

 

[jazz4cash]

I don't think I see any reference in that thread to the slider tool I was referring to. They are referencing a 3rd party calculator, whereas I'm referring to the one on the "My Social Security" website when you log into your account.

Ok sorry, maybe I extrapolated my own experience/frustration with the slider graphic tool. There also a box to enter a month and year to begin benefits all on SS website. I don’t see reference to a 3rd party.

 

[sakowitzm]

I don't get a graphic chart or a slider when I log in to MySocial Security. Perhaps this is because I'm already receiving Survivor Benefits? My wife passed in 2018. Sure would be useful to see the chart and use the slider.