Social Security [Benefit calculation vs claiming age]

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
Sahara
Posts: 603
Joined: Tue Dec 04, 2018 5:21 pm

Social Security [Benefit calculation vs claiming age]

Post by Sahara »

I believe I understand correctly that when social security computes your benefits, it projects your current earnings into the future.

Does this apply through each claiming age?

For example, is the age 62 claiming benefit based on earning through age 62, the age 67 claiming benefit based on earning through age 67, and the age 70 claiming benefit based on earning through age 70?
RubyTuesday
Posts: 2241
Joined: Fri Oct 19, 2012 11:24 am

Re: Social Security

Post by RubyTuesday »

Sahara wrote: Tue Jun 15, 2021 6:24 am I believe I understand correctly that when social security computes your benefits, it projects your current earnings into the future.

Does this apply through each claiming age?

For example, is the age 62 claiming benefit based on earning through age 62, the age 67 claiming benefit based on earning through age 67, and the age 70 claiming benefit based on earning through age 70?
I believe the answer is a qualified yes.

That said, in both the “retirement estimator” and within mySocialSecurity you can input zero income for future. There is (or at least used to be) a downloadable program called anyPIA that allowed you more flexibility. You can also download earnings record and make your own or use other estimators.
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
RubyTuesday
Posts: 2241
Joined: Fri Oct 19, 2012 11:24 am

Re: Social Security

Post by RubyTuesday »

RubyTuesday wrote: Tue Jun 15, 2021 6:40 am
Sahara wrote: Tue Jun 15, 2021 6:24 am I believe I understand correctly that when social security computes your benefits, it projects your current earnings into the future.

Does this apply through each claiming age?

For example, is the age 62 claiming benefit based on earning through age 62, the age 67 claiming benefit based on earning through age 67, and the age 70 claiming benefit based on earning through age 70?
I believe the answer is a qualified yes.

That said, in both the “retirement estimator” and within mySocialSecurity you can input zero income for future. There is (or at least used to be) a downloadable program called anyPIA that allowed you more flexibility. You can also download earnings record and make your own or use other estimators.
For example, using the retirement estimator, the results say something like:

Code: Select all

If you start your benefits:   And you earn an average of:           Your benefit will be about:
At full retirement            $XX,XXXX a year                       $x,xxx a month
(age 67)                      (from now until full retirement)

At age 70                     $YY,YYYY a year                       $y,yyyy a month
                              (from now until age 70)
                               
At age 62                     $ZZ,ZZZZ a year                       $z,zzz a month
                              (from now until age 62)

“Doing nothing is better than being busy doing nothing.” – Lao Tzu
We're wolves
Posts: 162
Joined: Mon Aug 03, 2020 2:25 pm

Re: Social Security

Post by We're wolves »

RubyTuesday wrote: Tue Jun 15, 2021 7:04 am
RubyTuesday wrote: Tue Jun 15, 2021 6:40 am
Sahara wrote: Tue Jun 15, 2021 6:24 am I believe I understand correctly that when social security computes your benefits, it projects your current earnings into the future.

Does this apply through each claiming age?

For example, is the age 62 claiming benefit based on earning through age 62, the age 67 claiming benefit based on earning through age 67, and the age 70 claiming benefit based on earning through age 70?
I believe the answer is a qualified yes.

That said, in both the “retirement estimator” and within mySocialSecurity you can input zero income for future. There is (or at least used to be) a downloadable program called anyPIA that allowed you more flexibility. You can also download earnings record and make your own or use other estimators.
For example, using the retirement estimator, the results say something like:

Code: Select all

If you start your benefits:   And you earn an average of:           Your benefit will be about:
At full retirement            $XX,XXXX a year                       $x,xxx a month
(age 67)                      (from now until full retirement)

At age 70                     $YY,YYYY a year                       $y,yyyy a month
                              (from now until age 70)
                               
At age 62                     $ZZ,ZZZZ a year                       $z,zzz a month
                              (from now until age 62)

Is there a way to calculate benefits at a certain claiming age while working to a different age? For example, calculate benefits if claimed at 70 but only work till 60?
RubyTuesday
Posts: 2241
Joined: Fri Oct 19, 2012 11:24 am

Re: Social Security

Post by RubyTuesday »

We're wolves wrote: Tue Jun 15, 2021 7:18 am
RubyTuesday wrote: Tue Jun 15, 2021 7:04 am
RubyTuesday wrote: Tue Jun 15, 2021 6:40 am
Sahara wrote: Tue Jun 15, 2021 6:24 am I believe I understand correctly that when social security computes your benefits, it projects your current earnings into the future.

Does this apply through each claiming age?

For example, is the age 62 claiming benefit based on earning through age 62, the age 67 claiming benefit based on earning through age 67, and the age 70 claiming benefit based on earning through age 70?
I believe the answer is a qualified yes.

That said, in both the “retirement estimator” and within mySocialSecurity you can input zero income for future. There is (or at least used to be) a downloadable program called anyPIA that allowed you more flexibility. You can also download earnings record and make your own or use other estimators.
For example, using the retirement estimator, the results say something like:

Code: Select all

If you start your benefits:   And you earn an average of:           Your benefit will be about:
At full retirement            $XX,XXXX a year                       $x,xxx a month
(age 67)                      (from now until full retirement)

At age 70                     $YY,YYYY a year                       $y,yyyy a month
                              (from now until age 70)
                               
At age 62                     $ZZ,ZZZZ a year                       $z,zzz a month
                              (from now until age 62)

Is there a way to calculate benefits at a certain claiming age while working to a different age? For example, calculate benefits if claimed at 70 but only work till 60?
I believe so, but you would need to play around with the tools to confirm. With the retirement estimator, after the initial estimate you can modify things like when you stop working. I’m not sure if it will do exactly what you want I or not.

Go to the site, create a mySocialSecurity account or use the retirement estimator and let us know what else you discover
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
RubyTuesday
Posts: 2241
Joined: Fri Oct 19, 2012 11:24 am

Re: Social Security

Post by RubyTuesday »

Using retirement estimator, you could do that, but you’ll need to do some work arounds I think.

After doing an initial estimate, click “add a new estimate”
Then you can choose when you will stop working and how much on average (in today’s dollars) you’ll earn per year until then. If you choose age 60, it will show you an estimate of the age 62 benefit. You’ll have to do some calcs to get to your age 70 benefit. Do you know how to do that?
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
We're wolves
Posts: 162
Joined: Mon Aug 03, 2020 2:25 pm

Re: Social Security

Post by We're wolves »

RubyTuesday wrote: Tue Jun 15, 2021 7:32 am Using retirement estimator, you could do that, but you’ll need to do some work arounds I think.

After doing an initial estimate, click “add a new estimate”
Then you can choose when you will stop working and how much on average (in today’s dollars) you’ll earn per year until then. If you choose age 60, it will show you an estimate of the age 62 benefit. You’ll have to do some calcs to get to your age 70 benefit. Do you know how to do that?
No I don't. I do have a mysocialsecurity account. I suppose I would need to play around with the various calculators. Was hoping there was a clean easy way to do that but it's not a pressing concern. More just curious at this point. Thanks for the reply.
Topic Author
Sahara
Posts: 603
Joined: Tue Dec 04, 2018 5:21 pm

Re: Social Security

Post by Sahara »

Bogleheads Personal Finance Toolbox has a sheet where this calculation can be done with your own earnings record.
Topic Author
Sahara
Posts: 603
Joined: Tue Dec 04, 2018 5:21 pm

Re: Social Security

Post by Sahara »

RubyTuesday wrote: Tue Jun 15, 2021 6:40 am
Sahara wrote: Tue Jun 15, 2021 6:24 am I believe I understand correctly that when social security computes your benefits, it projects your current earnings into the future.

Does this apply through each claiming age?

For example, is the age 62 claiming benefit based on earning through age 62, the age 67 claiming benefit based on earning through age 67, and the age 70 claiming benefit based on earning through age 70?
I believe the answer is a qualified yes.

That said, in both the “retirement estimator” and within mySocialSecurity you can input zero income for future. There is (or at least used to be) a downloadable program called anyPIA that allowed you more flexibility. You can also download earnings record and make your own or use other estimators.
Thanks. I've been able to calculate my benefit without further earnings. I was interested in how the projections work as a general rule.
User avatar
Eagle33
Posts: 2392
Joined: Wed Aug 30, 2017 3:20 pm

Re: Social Security

Post by Eagle33 »

You may want to try ssa.tools for a better understanding of SS benefits.
Topic Author
Sahara
Posts: 603
Joined: Tue Dec 04, 2018 5:21 pm

Re: Social Security

Post by Sahara »

Eagle33 wrote: Wed Jun 16, 2021 1:20 pm You may want to try ssa.tools for a better understanding of SS benefits.
Thanks for suggesting this site! Although at first glance it doesn't seem to define the accounting for future income, it does provide a statement regarding the effect of future earnings.

If you were to earn additional years of wages in the future, they would only affect your Social Security if you earned more than $XXXX in those years.
Topic Author
Sahara
Posts: 603
Joined: Tue Dec 04, 2018 5:21 pm

Re: Social Security

Post by Sahara »

In a recent episode of the Retirement and IRA Show, they stated that Social Security wage indexing ends at age 60. They also stated that your PIA is locked in at age 62 and only income above your highest indexed earnings will change it. This illuminates the question I was attempting to answer in this thread. If someone is 55, and plans to earn at their current rate through age 62, it sounds like their SSA projection will be accurate. But if they plan to stop earn prior to age 62, there will be a differential.
User avatar
David Jay
Posts: 14587
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Social Security

Post by David Jay »

Sahara wrote: Sat Oct 30, 2021 6:34 pmBut if they plan to stop earn prior to age 62, there will be a differential.
There may be a differential. Your PIA is based on your 35 highest years of earnings, as adjusted by AWI.

If you have 35 “good years” (not part-time college jobs) then the additional work years may or may not replace early years after those early years are adjusted upwards by the AWI.

My final full year of work (age 61) replaced a good year with a slightly better year and increased my benefit by about $2 per month. If I had worked one more year at the same salary it would not have replaced a previous year (it would have been my 36th best year).
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
Topic Author
Sahara
Posts: 603
Joined: Tue Dec 04, 2018 5:21 pm

Re: Social Security

Post by Sahara »

David Jay wrote: Sat Oct 30, 2021 6:56 pm
Sahara wrote: Sat Oct 30, 2021 6:34 pmBut if they plan to stop earn prior to age 62, there will be a differential.
There may be a differential. Your PIA is based on your 35 highest years of earnings, as adjusted by AWI.

If you have 35 “good years” (not part-time college jobs) then the additional work years may or may not replace early years after those early years are adjusted upwards by the AWI.

My final full year of work (age 61) replaced a good year with a slightly better year and increased my benefit by about $2 per month. If I had worked one more year at the same salary it would not have replaced a previous year (it would have been my 36th best year).
Thanks. This explains what I’ve seen using the Personal Finance Toolbox.
User avatar
JoeRetire
Posts: 15381
Joined: Tue Jan 16, 2018 1:44 pm

Re: Social Security

Post by JoeRetire »

Sahara wrote: Sat Oct 30, 2021 6:34 pm In a recent episode of the Retirement and IRA Show, they stated that Social Security wage indexing ends at age 60. They also stated that your PIA is locked in at age 62 and only income above your highest indexed earnings will change it.
Of course your PIA isn't really "locked in" as COLAs still get applied.
This isn't just my wallet. It's an organizer, a memory and an old friend.
User avatar
David Jay
Posts: 14587
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Social Security

Post by David Jay »

JoeRetire wrote: Sun Oct 31, 2021 6:41 amOf course your PIA isn't really "locked in" as COLAs still get applied.
Yes, there are a lot of moving parts. SS overview can be simplified if one thinks about it in real dollars.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
Post Reply