Steerpike

G/F just received her annual SS Benefit summary. Under 'retirement', it says 'you have earned enough credits to qualify for benefits. At your current earnings rate, if you stop working and start receiving benefits ...
... at age 62, your payment would be about $x."

Casually, she was reading this as ... at 62 you get '$x'. But I'm reading this to say, you must keep working at your current rate of pay until 62 in order to get $x.

She is 55 and trying to plan on getting through the period from 55 to 62 without working/earning (worst-case planning), and wants to know what SS benefit she will receive at 62 under that scenario.

So first of all, am I correct in interpreting this as 'you must keep working till 62 in order to get the stated benefit at 62'? And if so, how do you calculate the amount she would get at 62 if she stopped working (contributing) now? She's been working and contributing for over 30 years in the US so she's not 'borderline' ... I just want to know how to calc. the amount. I'm concerned that they may 'weight' the payments based on last few years; in other words, if she's unemployed for last 7 years prior to 62, they will ding her badly.

Kaffy Mintcake

Steerpike - check out this link. It may help you create an estimate.

http://www.ssa.gov/planners/calculators.htm

scrubbedexpat091

Only 40 more years to go.....

cindyabs

Doesn't it say that the payment they project is on what you are currently earning?

Rete

It is the 10 highest earning years and it doesn't matter when they were. So if she want to stop work now or work p/t, it won't effect the amount stated. The amount for her if she does this means it will not get higher or lower but remain constant. If she continues to work earning the same or more, the amount will get higher with each year contributed to.

She will note that what she gets at 62 is nothing compared to what she will get at full retirement age, which for her is probably 66-1/2 or 67. I know I am age 66 and I'm a full 6 years older than she is. Also she will not be eligible for free medical under SS until age 65.

Michael

Social security retirement benefits are based on the highest 35 years of social security taxed earnings (indexed). Once you have 35 years of earnings that create the maximum benefit, any further earnings do nothing to improve the benefit.

The maximum social security benefit tops out if you made an indexed earnings of about $55,000 for 35 years.

The following link explains everything (but is quite complicated) about calculating social security benefits. There is also a calculator that allows someone calculate their future benefit from their social security benefits statement.

http://www.ssa.gov/OACT/COLA/Benefits.html

In my case, I quit working at age 56 and started to draw maximum social security benefits at retirement (maximum benefit possible for collecting benefits 1 year before my full retirement age of 66).

md95065

If by "free medical" you mean Medicare then you have a curious definition of "free" ...

Steerpike

I plan to follow the various links posted by everyone here - thanks. Rete and Michael - I respect both of your opinions; would either of you care to comment on the post of the other? They seem to be at odds. If Rete is correct, she's cool - she's been making over the SS max for over 10 years. But she's only been working in the US for 30 years, so a 5 year period of not working may be an issue?

Michael

10 years (40 quarters) it the minimum requirement to collect social security. If you follow my link at the ssa site, it says 35 years in many places including where it shows how the benefit is calculated.

Also when I use the social security calculator and zero out years to make it less than 35 years, the benefit drops. If I zero out 10 years, the benefit will drop by about 20%.

I just got though checking out their online calculator and it is out of date. It reflects approximately the benefit for a year ago and the new benefit is about 5% more.

cindyabs

How does that work for the GC holders or new USCs then that have say worked 30 years or less in the UK and are elgible for a UK pension but may also qualify for a US SS payment?

Rete

That is how it was explained to me by the SSA. Not that they are always right, of course.

Not working will not be an issue. My mother didn't work for the last 16 years of her life before applying for and getting her ss benefits at age 62. Didn't harm her one bit.

My husband, age 68, only this March became eligible for ss benefits because he didn't start working in the YS until he was 58 years old and had to work 10 years to qualify for benefits. He will work one more year to age 69 and then retire with both his ss benefits and his Canadian old age benefit.

Rete

It is in the eye of the beholder. The amount paid is minimal for what is covered and far less than what would be paid privately for the same coverage or what someone who is not eligible needs to pay for coverage B.

You have a curious way of being the negative in any discussion.

Rete

Well then you are quite a few years older than I am since I will not receive maximum benefits until age 70 and I'm 61 at present.

Michael

Maybe I misquoted that slightly. The maximum full retirement benefit for someone retiring in 2009 at age 66 is $2318 per month (full retirement age).

When I was referring to full retirement benefit, I was referring to the current maximum amount that someone would draw at age 66 in 2009 (full retirement age). However, the maximum benefit will increase beyond that amount if you delay retirement up to the age of 69 (beyond full retirement age) or will decrease if you retire earlier (early retirement). No further increases will occur after age 69. However, delaying retirement beyond full retirement age does help much (if at all) since most of what you gain in monthly income will be lost in the fewer number of years that you will collect benefits. It is only an advantage if you live to beyond the normal life expecteny.

Of course the benefit always increases each year due to inflation.

Yes, I am older than you but only by about 4 years - currently 65.

This is probably another thing that they didn't tell you from the SSA.

How much, if any, of your social security benefits are taxable depends on your total income and marital status. Generally, if social security benefits were your only income for 2008, your benefits are not taxable and you probably do not need to file a federal income tax return.

http://www.irs.gov/newsroom/article/...179091,00.html

Also only 1/2 of your social security benefits are taxed.

Provisional income is your total worldwide income, including tax-exempt income, plus half of your Social Security benefits.

http://taxes.about.com/od/income/qt/Social_Security.htm

Rete

Knew that. My dad received a pension and social security and passed at age 91 only two years ago so he paid taxes on part of his social security.

Hubby and I will start paying taxes married, separate, once he is retired if the calculations prove that it is beneficial. Also we won't be living together any longer as he will be living in the south while I continue to live in NY so I can continue working until I'm qualified to retire.