Another question on increasing Social Security

[Leeraar]

My wife tells me my Brother-in-Law is one month short of his 62nd birthday. He is unemployed, and has spent his life doing occasional jobs with some salaried positions. I do not know his earnings history.

He has discovered his SS benefit at 62 will be $900 a month. He owns nothing of value and has no savings.

I know that if he claims at 62 he will get 75% of his PIA at age 66(?) and he could get 132% by delaying to age 70.

My question is: Is he possibly in a spot where he is below of of the "bend points" in SS so that working any job at all over the next few years might yield a good return in his SS entitlement?

L.

[drawpoker]

If he is unemployed and has "no savings" as you say, how is he supporting himself now?

This seems a no-brainer. If he goes on social security at 62, he can still work and earn up to $15,720 a year with no loss of his benefit.

If he doesn't start drawing social security, how does he propose he support himself? He is still 3 years away from Medicare, what he is doing about health insurance? Going without?

[ObliviousInvestor]

With a PIA of ~$1,200 (i.e., $900 / 0.75) he is beyond the first bend point but well below the second bend point. So he is in the range where an increase in his AIME of $X will result in an increase in his PIA of 0.32*X.

However, without knowing his earnings history there's no way to know how much of an impact additional work would have on his AIME. If he has some years of zeros, then additional work would be more impactful than if he has 35+ years of roughly similar earnings (such that an additional year of similar earnings wouldn't really make a difference).

[jfave33]

Working may also mean he can delay taking his ss of course.

[danaht]

Without knowing any other details - in this case I think taking social security early will probably be the best approach. Life expectancy of men are a lot shorter than women. Take the money while you can. A lot of people die before they can collect any social security.

[mickeyd]

Since BIL is unemployed (assume $0 income) a SS check of $900/month would be wonderful, wouldn't it? Not everyone can benefit from all of the wonderful SS benefit manipulations that many of us have been able to take advantage of.

Another example of how flexible SS is.

[Leeraar]

With a PIA of ~$1,200 (i.e., $900 / 0.75) he is beyond the first bend point but well below the second bend point. So he is in the range where an increase in his AIME of $X will result in an increase in his PIA of 0.32*X.

However, without knowing his earnings history there's no way to know how much of an impact additional work would have on his AIME. If he has some years of zeros, then additional work would be more impactful than if he has 35+ years of roughly similar earnings (such that an additional year of similar earnings wouldn't really make a difference).

Mike,

Thank you. That is exactly the kind of answer I was looking for. He has lots of zero income years, so getting even a minimum wage job for a few years could make a huge relative difference for him in terms of lifetime SS benefits.

Thank God I read your book (and others), so I even have the knowledge to ask a question about "bend points".

L.

[Leeraar]

If he is unemployed and has "no savings" as you say, how is he supporting himself now?

This seems a no-brainer. If he goes on social security at 62, he can still work and earn up to $15,720 a year with no loss of his benefit.

If he doesn't start drawing social security, how does he propose he support himself? He is still 3 years away from Medicare, what he is doing about health insurance? Going without?

Do you really want to know?

He moved in with the girlfriend (GF) in a trailer in FL. GF's father (GFF) moved in with them for care, and they all lived off GFF's SS. (GF has a job.) Now, GFF has died, so the SS payments have stopped, and GF is on him for making no contributions to their little household.

For health care he has VA benefits. Navy, never saw active service.

Work ... earn ... benefit.

I don't think he understands there exists such an equation.

The danger here is his mother (age 87) lives down the street and has SS and pension income. Not well off, by any means. Of her six kids, three are indigent, two are marginally employed, and only one (my wife) has any assets to speak of. One daughter has already looted MIL's 5-figure savings.

But, the point of this thread is not other people's misfortunes or stupidity. It is that if he now gets a legitimate minimum wage job for a few years, it could make a dramatic difference in his SS benefit for the rest of his life. That said, he is much more likely to choose a cash economy under the table handyman job that will yield no lasting benefit.

L.

[Carl53]

Try using AnyPIA, downloadable from the SS website. I used it to gin up a case that got me a SS benefit of around 900 at 62. Used five working years in each of the 70's, 80s, 90s and 00's. Picked the suggested average income for each year. PIA was about 1162. Age 62 the benefit would be a little under 900. Added working in 2016 at the max earnings, around 118K. PIA jumped to 1253 an increase of 89/month. If instead the one year was at 15k, the PIA only increases to 1174, probably not enough to get him to work.

[joebh]

Without knowing any other details - in this case I think taking social security early will probably be the best approach. Life expectancy of men are a lot shorter than women. Take the money while you can. A lot of people die before they can collect any social security.

The details absolutely need to be considered - they will make all the difference.

The life expectancy for a 62 year old male is 19.8 years, and for a female is 22.7 years. Is that a lot shorter?

I'll bet not a lot of 62 year olds die before they can collect any social security.

[joebh]

He has lots of zero income years, so getting even a minimum wage job for a few years could make a huge relative difference for him in terms of lifetime SS benefits.

Certainly replacing zero income years could be beneficial, but I'm not sure a "huge difference" by working a few years is reasonable to expect.

And depending on health and life expectancy, he could likely realize far more by delaying his benefits as long as he can. Perhaps a minimum wage job could help in that regard.

[22twain]

However, without knowing his earnings history there's no way to know how much of an impact additional work would have on his AIME. If he has some years of zeros, then additional work would be more impactful than if he has 35+ years of roughly similar earnings (such that an additional year of similar earnings wouldn't really make a difference).

Calculating the increase in AIME is actually pretty simple. Take his total additional earnings, divide by 420 (number of months in 35 years), and that's how much his AIME will increase. If he stays between the first and second bend points, his PIA will increase by 32% of that amount.

An extra $10,000 in earnings translates to an increase of $7.62 in PIA.

[basspond]

He difinitely needs to work to increase his SS, especially since it appears he has no other money. But I am afraid you have a better chance of your wife's relatives moving in with you or coming to you for money than convincing him to work.

[midareff]

Since BIL is unemployed (assume $0 income) a SS check of $900/month would be wonderful, wouldn't it? Not everyone can benefit from all of the wonderful SS benefit manipulations that many of us have been able to take advantage of.

Another example of how flexible SS is.

AND, it might save you $900 a month.

[ObliviousInvestor]

However, without knowing his earnings history there's no way to know how much of an impact additional work would have on his AIME. If he has some years of zeros, then additional work would be more impactful than if he has 35+ years of roughly similar earnings (such that an additional year of similar earnings wouldn't really make a difference).

Calculating the increase in AIME is actually pretty simple. Take his total additional earnings, divide by 420 (number of months in 35 years), and that's how much his AIME will increase. If he stays between the first and second bend points, his PIA will increase by 32% of that amount.

An extra $10,000 in earnings translates to an increase of $7.62 in PIA.

Yes, now that we know there are years with zero earnings, this is true.

[dolphintraveler]

If you want to play yourself with the numbers this may help:
https://www.ssa.gov/planners/retire/AnypiaApplet.html

Getting his actual past numbers would be useful but since there are zero years you may be able to estimate deltas.

[Leeraar]

OP here.

Thank you all, especially Mike Piper.

I understand the landscape better. I do not intend to do anything other than pointing out that getting an on-the-radar job for a few years will possibly help him a lot in the long run.

And, to encourage my wife to keep an even keener eye on MIL's finances.

L.

[dodecahedron]

OP here.

Thank you all, especially Mike Piper.

I understand the landscape better. I do not intend to do anything other than pointing out that getting an on-the-radar job for a few years will possibly help him a lot in the long run.

And, to encourage my wife to keep an even keener eye on MIL's finances.

L.

It is perhaps too much to hope for, but other benefits of that on-the-radar job, even at minimum wage, could include ability to contribute to a Roth IRA (with Savers Credit easily wiping out any income tax liability if income is below $18,500). If income is a little lower (below $14,820), the on-the-radar job will qualify him for Earned Income Credit refundable credits.

[Leeraar]

It is perhaps too much to hope for

Yes, probably.

I guess there are many ways to crawl under the safety net.

L.