|
#1
19th June 2024, 12:56 PM
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
Social Security benefits math
Presumably almost everyone here knows the basics... if you are eligible to collect Social Security, you can take it as early as age 62 or hold off on taking it in order to get larger payments once you start. Payments are at their maximum if you wait as long as age 70. All of this is based on current law and assumes Social Security remains solvent, etc.
I've heard that for each year that you wait, your payments increase by 8%. Actually as I am composing this OP I have just confirmed that the Social Security Administration says this directly in this document on Page 8. I'm currently 56 and have a January birthday. Here is a table showing my projected potential Social Security benefits:
Those monthly dollar amounts come directly from the Social Security Administration. I multiplied those by 12 to get yearly amounts and came up with the year-to-year increases using simple math. I'm confused as to why the last column isn't a constant value of 8.00%. The first value (of 6.52%) might be off because it reflects a February to January increase instead of a January to January increase like all the others, but I would expect an 8.00% value for all the other rows. I am either making a math error or making bad assumptions somewhere. Can anyone spot where I'm going wrong? Thanks! 
|
|
#2
19th June 2024, 03:49 PM
|
||||
|
||||
|
I can tell you that your math is right. Why it isn't exactly 8%, I couldn't guess.
|
|
#3
19th June 2024, 04:44 PM
|
||||
|
||||
|
It may have something to do with assumed future earnings. If you stop working at 62 you will have a lower basis than if you continue to work until you are 70. You'll have higher numbers for your qualifying quarters.
That said, I did my chart and it's bizarre. I'm 60 with a December birthday and retired at 56 with very minimal consulting income since retirement. I double checked the results. We are a little off on the first year which is explained by the birthday difference. We match exactly from 64 - 67. Then I have this crazy anomaly at 68 and 70. Age Monthly Yearly Increase 62 2407 28884 62 2563 30756 6.48% 64 2734 32808 6.67% 65 2962 35544 8.34% 66 3190 38280 7.70% 67 3418 41016 7.15% 68 3441 41292 0.67% 69 3714 44568 7.93% 70 4238 50856 14.11% Edit: excuse the formatting. You get the idea
|
|
#5
20th June 2024, 03:54 AM
|
|||
|
|||
|
That’s the way it is. The longer you wait, the more you get monthly. The question is how long will you live, and knowing that, does less for longer exceed more for a shorter time? The magic variable is how long you live. Also, those premiums don’t show the Medicare premium deduction you pay. Unless your job provides better medical benefits post retirement, you definitely want Medicare.
|
|
#6
20th June 2024, 09:05 AM
|
||||
|
||||
|
Even if your employer offers continued benefits after retirement, you should plan to add Medicare on top of it.
|
|
#7
20th June 2024, 12:02 PM
|
||||
|
||||
|
Thanks to everyone responding. I'm more than happy to let this thread encompass all things Social Security and Medicaid but for my part I'm focused on getting projected SS monthly payments to jibe with my understanding of how they are calculated.
Double thanks to haj for posting his projected amounts. Those are super-weird, like you said. Assumed future earnings perhaps affecting things is a great thought, but I don't think that's what is going on for either of us... I believe that when the SSA includes those they use the last known year's earnings and assume you'll earn that same amount in years going forward. I am a proud member of the 'great resignation' in 2021 so my earnings have been zero since then, and your earnings from consulting probably aren't cracking your best 35 years. So even if the SSA is trying to project future earnings I don't think they would be projecting amounts that would affect our Social Security payments even a little. Although per the OP I am missing something very basic in how these numbers are being produced so I can't definitively rule out anything. I also don't think different monthly payment amounts at a certain age depending on when you started receiving payments is the answer, either... that's the very thing that the chart is trying to produce, so it's already baked in unless we are just on very different pages. The SSA website has a feature that I haven't used in some time that lets you see your projected SS payment for every different starting month between the months you turn 62 and turn 70. It's a manual process but I think I'll try to produce a more granular table like the one in the OP to see if it reveals anything. May or may not get to that today.
|
|
#8
20th June 2024, 12:24 PM
|
||||
|
||||
|
Quote:
When you should take SS is very dependent on your individual situation and there are certain common situation where the choice is an easy one. Key fact: If you start at 70, you won't catch up in total dollars received to the person who started at 62 until around the age of 81 and that doesn't include inflation. That's the part that's the crapshoot. The life expectancy for a 62 year old in the US is 82 for a man and 85 for a woman. If you are flat broke at 62 and not working, take the money at 62. If you have health problems and a probably limited life span, take the money at 62. If you have enough funds to last you into your early 70s and that's it, wait. You're going to need the extra income. If you are like me and I assume Borby, large IRA and home equity and have enough stocked away to not need SS, take it at 62. That money is replacing money that would otherwise be pulled out of the IRA and not only be taxed but no longer invested. IAN a Financial Planner but I am pretty good at that stuff.
|
|
#9
20th June 2024, 01:20 PM
|
||||
|
||||
|
Quote:
(crystal ball would be nice)
|
|
#10
20th June 2024, 02:14 PM
|
||||
|
||||
|
OK, more granular table, spoiled for length and general lack of helpfulness. It reveals that after my "full retirement age" waiting to collect will result in increased monthly payments only in full year increments. Good to know! But it doesn't get me any closer to understanding why waiting to collect doesn't result in 8% increases for every year waited.
|
|
#11
20th June 2024, 04:12 PM
|
|||
|
|||
|
I don’t think that table represents a monthly increase, instead it is the month you choose to draw the benefit. The payments stay the same for the year, then the next year the increase, if any, is what congress decides. I’m not sure that there is a COLA increase each year. That schedule is deceptive. Anyway, it’s possible there could be no increase for the next year, however, Medicare goes up regardless.
|
|
#13
20th June 2024, 09:23 PM
|
||||
|
||||
|
Quote:
|
|
#14
21st June 2024, 05:51 AM
|
||||
|
||||
|
Some straight-up speculation on hajario's weird increases in monthly payments if he waits to turn 68 or 70...
Per my own spoilered chart, it seems that after 'full retirement age' — age 67 for anyone born in or after 1960 — you don't get an increase in monthly payments by delaying when you start collecting UNLESS you delay in full-year increments. So, say, if you are 68 years and 3 months old in August and haven't started collecting SS yet, you do NOT get the benefit of a larger monthly payment by waiting to start collecting in September or October. I have a January birthday. If I delay collecting SS until after my full retirement age of 67, I get substantial increases in my projected monthly payments by delaying until January 2036 when I turn 68 or January 2037 when I turn 69 or January 2038 when I turn 70. haj has a December birthday. He gets a weirdly small (0.67%) increase for delaying until age 68, a substantial (7.93%) increase for delaying until age 69, or a weirdly large (14.11%) increase for waiting until age 70. I'm speculating that there's some interplay between month of birth and calendar year. I suspect that the 0.67% increase for waiting until 68 is based on only the 1-ish month between his birthday and a new calendar year, then he gets another conventional year's increase for waiting until 69, then when he turns 70 he gets the additional conventional year's increase plus the additional 11 months' increase for the year in which he just turned 70. Strange if true! And of course it gets me no closer to my original goal of determining why delaying collecting SS by 1-year timeframes doesn't seem to result in starting payments that increase by 8.00% increments as my understanding dictates that they should.
|
|
#15
21st June 2024, 06:27 AM
|
||||
|
||||
|
That could be it. I’ll put together a monthly chart later if you tell me how to get it to format correctly.
I remember being pissed when they changed the rules for people born after 1960. My recollection is that it only affected people under 18 and I was 17 at the time. I had been putting into the system since I was 15.
|
|
#16
21st June 2024, 07:08 AM
|
||||
|
||||
|
Quote:
|
|
#17
21st June 2024, 07:13 AM
|
||||
|
||||
|
So what is the consensus?
My thoughts are if you don't really need it, wait for max or near max unless you don't think you'll live past 80. On the other hand, take it early and invest the extra money and hopefully match the increases. Someone has had to run all the math on this and figured out the age you need to live to, to get the most benefit from the system based on the roughly 3 or 4 options.
|
|
#18
21st June 2024, 07:22 AM
|
|||
|
|||
|
All of you keep forgetting to factor in Medicare.
The standard monthly premium for Medicare Part B enrollees will be $174.70 for 2024, an increase of $9.80 from $164.90 in 2023. The annual deductible for all Medicare Part B beneficiaries will be $240 in 2024, an increase of $14 from the annual deductible of $226 in 2023.. From Google. Medicare consists of; Part A is hospitalization, which is free. Part B is medical visits. Doctor visits, care, treatment, medical supplies. This is the part that costs the 174.70 Part C is dental, vision, wellness stuff. It is an extra payment in addition to part B. Part D is drug coverage. Medication. The older ya get the more medication you take. The premium is, depending on many variables, could be nothing or more. When you turn 65, 66, 67, whatever retirement age, you’ll get bombarded with Medicare plans in the few months before the annual enrollment period. Shop them and check Medicare Advantage plans. Some offer Part A, B, C & D with little or no extra cost to you. Whichever plan you take, you’re stuck with for a year. Also, it you don’t sign up for some parts, you will probably have to wait until the next enrollment period. Planning for retirement, or what your income might be, should include medical/Medicare planning. It’s expensive and you’re going to need it if it’s not part of your employers retirement offering. ETA: I’ve added this because medical care may be a factor in retiring you’re not considering. Last edited by Sputnik; 21st June 2024 at 07:34 AM.
|
|
#19
21st June 2024, 07:59 AM
|
||||
|
||||
|
Quote:
|
|
#20
21st June 2024, 08:04 AM
|
||||
|
||||
|
Quote:
There’s also the (I think very small) chance that the program will become insolvent and future benefits will be reduced.
|
|
#21
21st June 2024, 08:15 AM
|
||||
|
||||
|
Quote:
I think she's going to work two more years, as she is still covering my son also.
|
|
#23
21st June 2024, 12:24 PM
|
||||
|
||||
|
Mrs. Larsen is still working, so I'm waiting until 70 to file. I see it as an insurance policy if one or both of us lives much longer than planned.
|
|
#24
21st June 2024, 02:31 PM
|
||||
|
||||
|
Quote:
For collecting the numbers I don't have any good tricks; I used the slider to display one month's value at a time and then hand-copied into Excel. For displaying the table in vBulletin, the basics are simple... the tags are [TABLE] to start and [/TABLE] to close. The cells in each row are separated by the 'pipe' character ("|"). I did some bolding and centering of values in individual cells but that's not necessary to produce a good-enough table for our purposes here. Also the vB TABLE tags are kind of kludgy so even if you fuss to try to make the table perfect vB might defeat you anyway. If I have data in Excel that I want to put into a vB table, I find the easiest way is to first copy the cells to Notepad, which preserves whatever numeric formatting you are displaying in Excel. The result is tab-separated values in Notepad. Then I copy one of the tabs* to the clipboard, start a find-and-replace, paste what is on the clipboard to the 'find' field and type the pipe character in the 'replace' field, and execute the find-and-replace. This results in the pipe-separated values that make up the body of the vB table. *Like, actually select the empty space between values and copy it to the clipboard. I don't know any other way to tell Notepad to 'find' tabs.
|
|
#25
22nd June 2024, 09:16 AM
|
||||
|
||||
|
Quote:
Quote:
|
|
#26
22nd June 2024, 05:27 PM
|
||||
|
||||
|
Quote:
|
|
#27
6th July 2024, 09:02 AM
|
||||
|
||||
|
BUMP
Okay, some progress. After reaching my 'full retirement age' of 67 years, each year's increase really is the fabled 8%. But, I always assumed that was compounded and it is not. So if I wait until age 68 I would collect 8% more than if I started when I was 67, if I wait until age 69 I would make dumb jokes and collect 16% more than if I started when I was 67, and if I wait until age 70 I would collect 24% more than if I started when I was 67. I am still not getting how increases are calculated between starting at age 62 and starting at 67, but it could be something very simple like the obvious calculation I was missing above.
|
|
#28
6th July 2024, 10:01 AM
|
||||
|
||||
|
I did a full monthly spread sheet like you did. It confirmed your theory about the difference in months of the year. Also, my monthly increases weren’t the same as yours but it was in the last digit. Like you’d be 0.58 and I’d be 0.62.
|
|
#29
31st August 2024, 07:49 AM
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
BUMP
Okay, I just revisited this and quasi-solved it, at least to my own satisfaction. My bad assumption about the 8% increases for delaying until after 'full retirement age' compounding when they actually do not was key in also figuring out what was going on if you start taking benefits before 'full retirement age'. The figures all finally come out reasonably if I look at how they relate to the amount based on 'full retirement age':
So, if I start collecting three years early, for example, my payments will be 20% less than if I had waited until full retirement age. If I delay collecting until three years late, my payments will be 24% higher than if had started collecting right at full retirement age. The figures for each age come out even, at least if you count thirds of percents as even. In hindsight the calculations were pretty simple and I feel like I should have been able to suss this out quickly without starting a thread. But I made that bad assumption about compounding, and I found it surprisingly difficult to find a table like the one in this post anywhere I was looking. As full disclosure, the math to get the -30% value in the first row of the table is fudged. I have a January birthday and the SSA website indicates that I can start collecting payments as early as February when I am 62. If I did that, the amount would be, like, 29.6% less than the amount that I would receive at full retirement age instead of 30.0% less. But working backwards from the monthly increased amount I would be receiving for waiting, I project that the amount I would receive in my birthday month would be 30.0% less than my full retirement age amount, if I was actually allowed to start collecting then. Thanks again to all and especially to hajario for helping to crack this and for putting his own data out there.
|
 |
|
|
Linear Mode
