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March 13th, 2012 was my last day of work, and my earnings to that point for the year was $19,600. Later that year I signed on the SS website and downloaded my statement. It shows (I saved it) I'll get $1,705 at 62. This morning I wake to an email to sign on and see my new statement. For the year 2013 it shows $1,638 at 62. Why is there a decrease, will it continue to diminish, because I choose to retire early?
My thoughts were I didn't work a full quarter, and Medicare costs increased? I just hope I'm not being punished for going out early. It does say I've earned enough credits to be eligible. My work history goes from 1976 to 2012, and really bumped up when I turned 18 and started working full time.
To MrWillys: The statements which estimate your SS retirement benefits are based on certain assumptions. The primary assumption is that you will continue working at the same rate of pay until such time as you apply for benefits. SS averages your 35 highest earnings years, indexes them for inflation, and applies formulas to determine your benefit. So you were probably in a rather high earnings year when you stopped working; the fact that you will not have the earnings from that 2012 year (except at a much lower amount) will affect the average. You are not being "punished" - they are just applying the procedures and formulas, which are public knowledge and totally transparent.
To say the same thing in different words, if the $19,000 you earned in 2012 was not one of your 35 highest earnings years (as indexed for inflation), then that would have the same effect as if you had earned nothing in 2012 - that year simply is not part of the averaging. On the other hand, if it was one of the 35 highest years, then it would still lower the "expected" average, as your last bunch of years working full-time were certainly higher than $19,000.
Quite apart from when you stopped working, there is a penalty for taking benefits at age 62, as opposed to any later age, but this is already figured into whatever estimates they are giving you for taking benefits "at age 62". I don't see how your amount can "continue to diminish".
To MrWillys: The statements which estimate your SS retirement benefits are based on certain assumptions. The primary assumption is that you will continue working at the same rate of pay until such time as you apply for benefits. SS averages your 35 highest earnings years, indexes them for inflation, and applies formulas to determine your benefit. So you were probably in a rather high earnings year when you stopped working; the fact that you will not have the earnings from that 2012 year (except at a much lower amount) will affect the average. You are not being "punished" - they are just applying the procedures and formulas, which are public knowledge and totally transparent.
To say the same thing in different words, if the $19,000 you earned in 2012 was not one of your 35 highest earnings years (as indexed for inflation), then that would have the same effect as if you had earned nothing in 2012 - that year simply is not part of the averaging. On the other hand, if it was one of the 35 highest years, then it would still lower the "expected" average, as your last bunch of years working full-time were certainly higher than $19,000.
Quite apart from when you stopped working, there is a penalty for taking benefits at age 62, as opposed to any later age, but this is already figured into whatever estimates they are giving you for taking benefits "at age 62". I don't see how your amount can "continue to diminish".
Basically, because I have worked for 36 years it will no longer diminish. Thank you. I thought it was based on your 4 highest quarters, but clearly I was wrong.
Basically, because I have worked for 36 years it will no longer diminish. Thank you. I thought it was based on your 4 highest quarters, but clearly I was wrong.
Wait just a minute. There is something I failed to think of. How much longer before you turn 62? It might still diminish if you still have one or more years to wait. That would be because the assumed rate of earnings (a rather high rate) up to age 62 is no longer being met, and those assumed years would be replaced in the averaging by somewhat lower earnings years from the past.
I had assumed that you were now 62 and about to take your benefits. I apologize for missing that piece of the puzzle. My bad (as the kids say).
If I were you, I would go into a Social Security office and sit down with one of the employees and ask that very question. (Lots of folks have reported poor results by talking to SS on the phone).
Basically, because I have worked for 36 years it will no longer diminish. Thank you. I thought it was based on your 4 highest quarters, but clearly I was wrong.
I'm told it was the highest 35 years if you've worked that long...
I'm hardly a guru, but I pored and stewed over the SS site for a couple years when I was trying to decide about retirement, so I understand where you're coming from now. They figure your total monthly SS amount at whatever it is at your full retirement age, which is 66 for most of us baby boomers, 66 and adding a few months depending on your year of birth to age 67 for those born after 1962, I think it is. So any amount you collect is based on your age at the time you retire. At age 62 if I recall, you get 25% less in your monthly payment than if you started collecting it at your full age of 66; and the % gets less the longer you wait to start collecting SS. If you wait till after your 66th birthday, your SS payment gets higher the longer you wait. I tried figuring what the monthly decrease or increase might be, based on my own situations, and seemed to think it might be in the range of approximately 5 dollars a month, but that would depend on a lot of factors.
The SS site ( SS.gov) has scenarios you can plug in to estimate the amount of SS you'd get at various ages and income levels you're at when you retire. But as others have said, the amount can vary and are estimates, not exact amounts.
My situation was this- I retired from my regular job at when I was three months short of 64, but didn't begin collecting Social Security till my 65th birthday. I didn't want to wait beyond my 66th birthday to collect SS. I figured that the loss of income from retiring would make that year or two if I waited that long count against me and possibly lessen the amount I would get, so possibly it wouldn't make any difference if I collected it when I turned 64 or collected it at age 66 after two years of not working. I figured it came out about the same if I started collecting it at age 65. So that's what I did. I had approximately 40 years of working time under SS, so as it turned out, that last year I retired may have replaced one of my earliest years when I didn't make much money. I'm still working some on a very part-time contract basis ( it's all internet based, so it works well with retirement), so I'm paying into SS. I
As for your monthly amount, don't forget to count the Medicare Part B premiums they will start taking out of your SS checks once you hit 65, and any taxes you may owe for other income if that's applicable. I don't know Medicare premiums will be at that point, unless you're a "high earner" the premiums are currently $101/monthly.
When my husband and I enrolled in Medicare and SS, we contacted our local SS office ( they handle both Medicare and SS)- you can get the number in your local area phone book, or you can call the 800 number for SS/Medicare and wait for a while to get your local SS office, LOL.
You call that number, tell them what you want, and they will set up an appointment for someone to call you ( at your convenience), to get all the pertinent information, and get you set up for SS (and Medicare if applicable) right over the phone. And someone will call you at the appointed time. This is what we did and it worked very well. You can also call them with any questions you have prior to signing up for anything.
You can also visit your local SS office or sign up for SS online, but it's really convenient to do it over the phone,at least that's been our experience.
Great response, and thank you very much. I did end up on the SS website, and used their estimator. I have 36 years, but the money i made in 2012 was more than what I made in 1976, so it was used in the calculation and brought my amount down. At this point I believe that as long as I wait until I'm 62 in 2022 I'll be good. I had called SS at one point, and they said I qualified at 28 years. I was going to take a teaching position that didn't pay in.
Anyway, 9 more years and i get a raise. I'll try and have the wife wait until 67 for hers to get the higher amount.
The only thing I find as a problem is they assume you will work up to that age you collect. That is the part about the SSA website calculator that doesn't help. I will not be able to continue to work after I reach age 60 at my current job nor do I want to. I do not need to take SS at least until I reach 66 and hope I can even hold out until 70, our health will determine that. I am in a financial position to do that so I plan on waiting. I just have no idea what my withdrawal from the workforce at age 60 will do. I might take on a part time job to help pay for home improvements. That could still bring up my SS income because I earned so little when I was young.
The only thing I find as a problem is they assume you will work up to that age you collect. That is the part about the SSA website calculator that doesn't help. I will not be able to continue to work after I reach age 60 at my current job nor do I want to. I do not need to take SS at least until I reach 66 and hope I can even hold out until 70, our health will determine that. I am in a financial position to do that so I plan on waiting. I just have no idea what my withdrawal from the workforce at age 60 will do. I might take on a part time job to help pay for home improvements. That could still bring up my SS income because I earned so little when I was young.
This seem to be the 'missing link' on the social security web site calculator. You cannot calculate your benefits with a 'stop working' age that is before 62. They need to add another field where you can enter an age when you stop working and have a separate field for the age when you begin collecting benefits. For now it seems that is all in one field...they assume you stop working and begin collecting benefits at the same time.
The only thing I find as a problem is they assume you will work up to that age you collect. That is the part about the SSA website calculator that doesn't help. I will not be able to continue to work after I reach age 60 at my current job nor do I want to. I do not need to take SS at least until I reach 66 and hope I can even hold out until 70, our health will determine that. I am in a financial position to do that so I plan on waiting. I just have no idea what my withdrawal from the workforce at age 60 will do. I might take on a part time job to help pay for home improvements. That could still bring up my SS income because I earned so little when I was young.
Quote:
Originally Posted by sware2cod
This seem to be the 'missing link' on the social security web site calculator. You cannot calculate your benefits with a 'stop working' age that is before 62. They need to add another field where you can enter an age when you stop working and have a separate field for the age when you begin collecting benefits. For now it seems that is all in one field...they assume you stop working and begin collecting benefits at the same time.
You can use the SS website calculator - just plug in 0 (zero) dollars for each year between when you plan to stop working and you plan to start drawing benefits.
You can use the SS website calculator - just plug in 0 (zero) dollars for each year between when you plan to stop working and you plan to start drawing benefits.
Can you add dollar amts for each year? I didn't think it had that many line items?
for example, let's say you plan to work 5 more years at the current annual earnings rate as he prior year's earnings. Then after that 5 years, stop working completely for 10 years and then file for SS benefits. Can you enter an amt for 5 years into the future and also enter zero earnings after that time?
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Oops, I forgot something. I apologize.
