Social Security calculation for retiring before 62

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coachz
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Social Security calculation for retiring before 62

Post by coachz » Sun Aug 23, 2015 12:11 pm

If I already have 35 years of employment and quit work today at age 55, are the current values that the Social Security web site posts for ages 62, FRA 66 & 10mos and age 70 correct?

From everything I read, there is no penalty and the values in the top 35 years are already indexed so the values should be exactly correct. Am I missing anything?

I also see sites with mumbo jumbo like this "For example, if your social security statement says you will get $1,100 a month at age 62, that estimate assumes you work until you turn 62. This means if you take early retirement your social security benefits may be less than what you see on your statement."

Then other sites talk about how if I quit at 55 they fill in zeros for all the other years. That's fine since I already have 35 years. So are the numbers accurate for someone quitting early with 35 years already?

Even the government website makes no sense: "You can retire before reaching full retirement age and receive reduced benefits. The earliest age you can start receiving retirement benefits is age 62. If you retire when you reach full retirement age, you will receive full retirement benefits."

It seems you can quit when you are any age if you have 35 years and still receive full retirement benefits by waiting till your FRA age to file. Yes, No, I'm nuts ? Why they can't spell out all scenarios is beyond me.


Thanks as always ladies and gents !

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ObliviousInvestor
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Re: Social Security calculation for retiring before 62

Post by ObliviousInvestor » Sun Aug 23, 2015 12:40 pm

coachz wrote:I also see sites with mumbo jumbo like this "For example, if your social security statement says you will get $1,100 a month at age 62, that estimate assumes you work until you turn 62. This means if you take early retirement your social security benefits may be less than what you see on your statement."
This isn't mumbo jumbo. It's exactly accurate.

The calculation of your actual benefit is done using your 35 highest years of earnings after adjusting each year for wage inflation.*

If you have less than 35 years, they fill in the remaining years with zeros.

Even if you already have 35 years though, the number on the statement isn't necessarily correct, because it assumes that you continue working at your most recent level of earnings until the age at which you claim. So (depending on how your most recent earnings compares to your wage-inflation-adjusted earnings in prior years) the statement could be assuming that some of your lower-earning years will be knocked out of the calculation, when in reality they won't be.

After the SSA sees that you have a year with zero earnings though, they will project zero earnings going forward when preparing your statement. So at that point the benefit estimate on your statement should be correct. Alternatively, you could use one of the calculators on the SSA website (which allow you to enter your future earnings) to get a good estimate of your benefit.

*Starting at age 60, earnings aren't adjusted. They're just included at their actual dollar amount.
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NightFall
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Re: Social Security calculation for retiring before 62

Post by NightFall » Sun Aug 23, 2015 12:43 pm

The values you refer to assume you continue to work and earn your present level of income. If that is more than one or more of your adjusted years of earnings history, then the estimate you refer to is not accurate. You could try

http://www.ssa.gov/planners/retire/AnypiaApplet.html

Which allows you to input your future earnings ($0 in your case).

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coachz
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Re: Social Security calculation for retiring before 62

Post by coachz » Sun Aug 23, 2015 1:12 pm

Ok, thanks so much, I get it now, finally. Looks like a 10% hit for quitting early after using their online calculator. Thanks again.

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