SSA.gov calculator doesn't seem to make sense.

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CnC
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SSA.gov calculator doesn't seem to make sense.

Post by CnC » Fri Jul 07, 2017 3:50 pm

If anyone here has any experience with social security future dollars I would like some help. I am putting together a spread sheet of my finances and plans for retirement.


I'm 31 so retirement is little more than a pipe dream at the moment but it does one good to have goals.


My problem is when I log into SSA.gov it says I'm eligible for around $1.4k a month in benefits. But this number assumes no raises and no inflation.

So I tried a different SSA link that let's you estimate your future benefits by putting in this year's wages and estimating next year wages.

I did that with a conservative 2.75% raise and it bumped my estimate to $4177.00 a month. That's nearly 80% of my current wages.

Is that reasonable or did I do something wrong? I mean the $4177 a month sure looks a lot better than $1400 a month but I want to use a reasonable figure for estimating.


Thanks for the help.

sport
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Re: SSA.gov calculator doesn't seem to make sense.

Post by sport » Fri Jul 07, 2017 3:58 pm

Perhaps one estimate is in 2017 dollars and the other in 2050 dollars.

CnC
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Re: SSA.gov calculator doesn't seem to make sense.

Post by CnC » Fri Jul 07, 2017 4:28 pm

sport wrote:Perhaps one estimate is in 2017 dollars and the other in 2050 dollars.
Yes I am assuming the $1400 figure was in 2017 dollars with no raise forcasted.

I just was a bit blown away by the idea that between my wife and I we will have the potential of receiving $100,000 a year from social security even if it is in future dollars..

If that is indeed a realistic number, it will make retirement planning a lot easier. I realize it won't be accurate because noone can forcasted 30 years into the future

2retire
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Re: SSA.gov calculator doesn't seem to make sense.

Post by 2retire » Fri Jul 07, 2017 4:45 pm

Providing the link to the alternate calculator may help people give you an answer.

Thesaints
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Re: SSA.gov calculator doesn't seem to make sense.

Post by Thesaints » Fri Jul 07, 2017 4:53 pm

If you contribute the maximum for 35 years, you'll get the maximum payout. Currently ~2.7k at FRA.
It all depends on the age you have selected for starting benefits. Today at 70 those 2.7k become 3.6k.
My guess is that you used 67 (FRA) and numbers are in future nominal dollars.

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celia
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Re: SSA.gov calculator doesn't seem to make sense.

Post by celia » Fri Jul 07, 2017 4:56 pm

This worksheet is accurate for people born in 1955 only (as they turn 62 this year). Yours won't be available until you turn 62 but you can get the general idea of HOW it's calculated here:
https://www.ssa.gov/pubs/EN-05-10070.pdf

You could take your SS earnings record and change the latest displayed earnings to 2016, the previous year to 2015, etc and put them in this worksheet to see what happens.

There's no way your calculation will be accurate at this point since you have lots of past years of 0 and your 35 highest earning years may not have even started yet!

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flamesabers
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Re: SSA.gov calculator doesn't seem to make sense.

Post by flamesabers » Fri Jul 07, 2017 4:58 pm

CnC wrote:I just was a bit blown away by the idea that between my wife and I we will have the potential of receiving $100,000 a year from social security even if it is in future dollars..

If that is indeed a realistic number, it will make retirement planning a lot easier. I realize it won't be accurate because noone can forcasted 30 years into the future
While it wouldn't be completely accurate, I suggest comparing the purchasing power of a dollar from 30 years ago to today as a frame of reference.

Thesaints
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Re: SSA.gov calculator doesn't seem to make sense.

Post by Thesaints » Fri Jul 07, 2017 4:59 pm

celia wrote:This worksheet is accurate for people born in 1955 only (as they turn 62 this year). Yours won't be available until you turn 62 but you can get the general idea of HOW it's calculated here:
https://www.ssa.gov/pubs/EN-05-10070.pdf

You could take your SS earnings record and change the latest displayed earnings to 2016, the previous year to 2015, etc and put them in this worksheet to see what happens.

There's no way your calculation will be accurate at this point since you have lots of past years of 0 and your 35 highest earning years may not have even started yet!
isn't there another form where he can add all the years he wants ? Naturally, since changes in thresholds are unknown, the speculation is in assuming he will always hit max. contributions in the future.

bayview
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Re: SSA.gov calculator doesn't seem to make sense.

Post by bayview » Fri Jul 07, 2017 5:06 pm

CnC wrote:
sport wrote:Perhaps one estimate is in 2017 dollars and the other in 2050 dollars.
Yes I am assuming the $1400 figure was in 2017 dollars with no raise forcasted.

I just was a bit blown away by the idea that between my wife and I we will have the potential of receiving $100,000 a year from social security even if it is in future dollars..

If that is indeed a realistic number, it will make retirement planning a lot easier. I realize it won't be accurate because noone can forcasted 30 years into the future[/quote]
I will just say that every year, I recalculate our retirement needs according to inflation adjustments. It doesn't do me any good at all to look at what SS (or anything else) might be in 2050. What if we have a combined 2050 income of $100k, but combined expenses of $120k?

I find it far more useful to figure our what our expenses would be if we retired now and what our income from SS would be if we retired now. Keeping everything in real, or at least today, dollars (as opposed to inflated) gives us a much better sense of where we will be one day. God willin' and the creek don't rise.
Last edited by bayview on Fri Jul 07, 2017 5:11 pm, edited 2 times in total.
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Thesaints
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Re: SSA.gov calculator doesn't seem to make sense.

Post by Thesaints » Fri Jul 07, 2017 5:08 pm

That is not really a problem, assuming your compensation (and contributions) keep up with inflation, using today's numbers will give you the proper information about numbers 30 years down the line.

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celia
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Re: SSA.gov calculator doesn't seem to make sense.

Post by celia » Fri Jul 07, 2017 5:09 pm

CnC wrote:I did that with a conservative 2.75% raise and it bumped my estimate to $4177.00 a month. That's nearly 80% of my current wages.

Is that reasonable or did I do something wrong?.
That pay increase is not reasonable. If you are like the typical worker, there will be years of zero increase, some years of unemployment or under-employment, or even decrease in pay. DH and I were both laid off at the same time in the 90s and were out of work for a year (different fields). The economy was horrid and unemployment was high. We were lucky to get new jobs eventually at about 3/4 our previous pay and had to work up the ladder again. Plus I took time off for each kid we had. That's life.

As far as the dollars being inflated for the future, you can look back in time to see how much things cost. When we both were looking at teaching jobs just after college (in the 1970s), we felt we were on cloud nine, since we each could earn almost $1,000 a month. For ten months, that could put us at $20K! And gas was only 25 or 35 cents a gallon! So don't get so excited about the SS benefit you will get. That $4,000 a month might pay just for your food and meds!

Thesaints
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Re: SSA.gov calculator doesn't seem to make sense.

Post by Thesaints » Fri Jul 07, 2017 5:14 pm

It is not good practice to look at past inflation to guess the future. The entire XIX Century registered deflatiin, for instance. Compare it to the XX Century.

Also, individual cases can be wildly distributed, but on average one can count on compensations to at least keep pace with inflation long term. So, certainly there is individual risk and one may, God forbid, become invalid tomorrow morning. We should take those cases into account by estimating a variance of outcomes. Expected outcome instead is well represented by considering averages: if he's contributing max. now, it is a legitimate assumption to calculate benefits with based on max. Contributions from now on.
Last edited by Thesaints on Fri Jul 07, 2017 5:16 pm, edited 1 time in total.

livesoft
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Re: SSA.gov calculator doesn't seem to make sense.

Post by livesoft » Fri Jul 07, 2017 5:15 pm

CnC wrote:I just was a bit blown away by the idea that between my wife and I we will have the potential of receiving $100,000 a year from social security even if it is in future dollars.
Some current retirees can make about $70K for two per year from SS benefits, so $100K a year in the future doesn't seem outlandish to me.
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celia
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Re: SSA.gov calculator doesn't seem to make sense.

Post by celia » Fri Jul 07, 2017 5:30 pm

livesoft wrote:Some current retirees can make about $70K for two per year from SS benefits, so $100K a year in the future doesn't seem outlandish to me.
For a couple where both people earned over the maximum SS that is taxed and turn 70 and start collecting this year, they can each collect $42,456.
http://time.com/money/4644332/maximum-s ... efit-2017/

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FiveK
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Re: SSA.gov calculator doesn't seem to make sense.

Post by FiveK » Fri Jul 07, 2017 6:06 pm

Thesaints wrote:isn't there another form where he can add all the years he wants ? Naturally, since changes in thresholds are unknown, the speculation is in assuming he will always hit max. contributions in the future.
Yes, it's Social Security Detailed Calculator.

The SocialSecurity tab in Tools and calculators - Personal_finance_toolbox goes up to 2040.

MathWizard
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Re: SSA.gov calculator doesn't seem to make sense.

Post by MathWizard » Fri Jul 07, 2017 6:09 pm

Think of it this way.

At current rates, SS contributions are 12.4% of salary 6.2 for you and 6.2 for your employer(or 12.4% if you are self employed).

This will be invested conservatively (Treasuries). SS taxes have a max after which you pay no tax for that year, changes each year,
currently $127,200 range.

Compare this to your 401K, for which you probably are putting more into for contributions, and for which you probably
don't have a conservative 100% bond allocation.

This would suggest that the earnings from your 401K will outdo that of SS. Also, SS benefits are skewed towards lower earners.
Look at the formula in
https://www.ssa.gov/oact/cola/piaformula.html
in particular below the first and second bend point.

So I would not believe a calculation that has SS providing more than half your retirement income if your income is above the median
and if you work at that for 35 years and retire and take your benefit between full retirement age and 70.

If you retire early, this may be incorrect, but the SS calculator which assumes you work until FRA will also be off.

CnC
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Re: SSA.gov calculator doesn't seem to make sense.

Post by CnC » Fri Jul 07, 2017 6:13 pm

2retire wrote:Providing the link to the alternate calculator may help people give you an answer.
:oops:

You are right. It was on the same website.


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

Ron
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Re: SSA.gov calculator doesn't seem to make sense.

Post by Ron » Fri Jul 07, 2017 6:23 pm

CnC wrote:I just was a bit blown away by the idea that between my wife and I we will have the potential of receiving $100,000 a year from social security even if it is in future dollars..
I maxed out contributions 20 of my 35 years, with the remaining 15 years close to the max. My wife never came close to the maximum for her 35 years of "countable contributions".

Even with that, we'll start our age-70 SS benefits early next year with total SS of $70k/year.

Yes, it is a very important benefit even for those that have other retirement income/investments/savings.

- Ron

CnC
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Re: SSA.gov calculator doesn't seem to make sense.

Post by CnC » Fri Jul 07, 2017 6:32 pm

celia wrote:
CnC wrote:I did that with a conservative 2.75% raise and it bumped my estimate to $4177.00 a month. That's nearly 80% of my current wages.

Is that reasonable or did I do something wrong?.
That pay increase is not reasonable. If you are like the typical worker, there will be years of zero increase, some years of unemployment or under-employment, or even decrease in pay. DH and I were both laid off at the same time in the 90s and were out of work for a year (different fields). The economy was horrid and unemployment was high. We were lucky to get new jobs eventually at about 3/4 our previous pay and had to work up the ladder again. Plus I took time off for each kid we had. That's life.

As far as the dollars being inflated for the future, you can look back in time to see how much things cost. When we both were looking at teaching jobs just after college (in the 1970s), we felt we were on cloud nine, since we each could earn almost $1,000 a month. For ten months, that could put us at $20K! And gas was only 25 or 35 cents a gallon! So don't get so excited about the SS benefit you will get. That $4,000 a month might pay just for your food and meds!

I'm well aware of inflation. Like I said it is all relative I put all our expenses it into an inflation calculator so they were much higher. For the last 100 years inflation averaged 3.1% I believe I estimated our expenses at 2.5% inflation growth because that is the average of the last 25 years.

I suppose there is the chance that Dw and or myself may lose or jobs or not get raises for an extended period of time but we seem to be in high demand skilled fields and have gotten consistent raises despite sluggish economy and having children. But no one knows the future, so I am just basing forcasts off of the data I have. We are some of the rare millennial's that are willing to stay at our current job and it seems like it is appreciated by our employers. If situations change, I'll change with them. :beer




Thanks for the replies all! I don't plan to cut back on investments this is just feel good information for me to talk to the DW about!

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