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Go to this site: https://www.ssa.gov/oact/cola/awifactors.html In the box asking the year you want indexing factors for, put the year you will turn age 62. Click on Submit. Scroll down to the year you earned the $30,000 and that decimal number will be your indexing factor. Multiply your $30,000 wage by that factor and that will give you your indexed earning. To knock that year's wages out of your calculation you will have to exceed that indexed earning figure.
Hi, thanks everyone for the inputs - plenty to think about !!
A couple of follow on questions.
- So if I am trying to compare working another year and whether or not those earnings bump a lower earning year off the calculation - do I just look whether I maxed out the SS Tax or do I have to try and adjust a 35 year old income into todays dollars. For example, 35 years ago I earned say $30,000 which maxed out my SS for that year. Next year if I earn say $130,000 which also max's out the SS Tax - is it not worthwhile working since both yrs max'd out the tax. OR should I work in order to remove a low income year from the calculation??
- Does anyone have a projection of the minimum payment in 2030 assuming I am 70 at that time, ie, the minimum has gone up by ~24% since I waited from age 67 to age 70 to start payments
I will try to answer, though I’m no expert. My husband began ss at 70. He got max benefits for his lifetime work record. He has continued to work and makes the max still. His base amount has been adjusted up each year he continues to work, as his early years are being bumped off the calculation. Just got the letter for the new adjustment and it is a couple hundred a month more than last year. Not factoring in cola. So yes, I would say it does make a difference if you can add a few more years maxing out. Hope this helps!
I'm 59 and very seriously considering early retirement. I can support myself and wife until I am 70 then begin to take Social Security. I have 35 years of history paying SS. I have my most recent projection from the Social Security people and wanted to know a few details;
- If I retire now and claim when I am 70 will I get approximately what the estimate says?
No, you'll get a lot more.
The current estimate isn't totally useless, as you can look at current expenditures now to create a monthly budget for planning purposes in the future.
Quote:
Originally Posted by ScotsmanUS
- Do I lose out by not working for the next 10 years or so, ie, I have a 35 yr record but when I retire at 70, I will still have the same 35yr history buy no payments for the last 10 years - does that impact things?
Not really.
Quote:
Originally Posted by ScotsmanUS
- Does the estimated number continue to grow with Inflation/COLA over the next 10 years before I start payments ?
Yes, plus there are other adjustments.
Your wages are indexed to the 2nd year before the year you apply. You'll be applying in 2029, so your wages will be indexed to 2027.
By 2027, the average wage should be $59,420 or higher. So, if you earned $15,000 in 1985, divide $59,420 by $15,000 which is 3.96 then multiply that by $15,000 and you get $59,400 and that is what Social Security uses to determine your average monthly income, not the $15,000.
The Primary Insurance Amount goes up every year, too. This year it is 90% of $895, but in 2019 it is 90% of $926 so the base amount went from $805/month to $833/month.
If you work a few more years, assuming you made as much or more, it results in lower wage years being kicked out, because Social Security takes your 35 highest wage years, indexes them and then divides the total by 420 to get your average monthly wage, then you apply the bend points to determine the actual benefit amount.
Don't forget to have your spouse file at FRA if your spouse is the lower owner.
That doesn't work anymore.
Every month you put it off means a higher payout. If you have fewer than 35 "good" years and you can replace one of those with a higher earning year, your benefit also increases. If you can put it off till FRA, the bonus accelerates until 70.
I thought you could still file and suspend, thus allowing a spouse to take benefits at FRA, but the spouse couldn’t take spousal while deferring their own...?
Nope. File and suspend is off the table. Has been that way for a couple of years now. It ended April 29, 2016, so if you hadn't done it by then you no longer can.
- Somewhat different question - I worked in Canada for 3 of my 35 years - my Social Security estimate shows those years as 0 income and 0 taxes paid in. Has anyone any experience of getting the SS to recognize my Canadian equivalent of SS which I paid at the time. Note - I did file US Taxes in addition to my Canadian taxes etc for all 3 years, its just no SS taxes were paid.
Brian
I am totally not an expert on this, but I vaguely recall reading a news article or two about reciprocal tax treaties between the US and Canada. There may be an agreement on reciprocal credit for retirement tax payments.
Something worthy of an online query using some of the terms/words I have suggested. Also, ask this specific question in the Canada forum. I bet a larger portion of the Canadian population has worked in the US and has some knowledge of reciprocal tax treaties, than vice versa.
Nope. File and suspend is off the table. Has been that way for a couple of years now. It ended April 29, 2016, so if you hadn't done it by then you no longer can.
Good to know. Thanks for clarifying.
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