Calculating SS for someone who started SS late

[gavinsiu]

Let's say you are a person who started earning SS late, for example someone who recently immigrated to the US with a green card and plan to stay in the US, what would your retirement strategy be. Would you receive any social security for working 20 years instead of 40 years? Would you just maximize investing using existing asset and higher saving to compensate for the lower SS?

I am revising what I am asking. How do you calculate SS for a person who did not have SS previously but started working in the US later in life. Many of the quick calc makes assumptions probably basing your past earning on your current earning. A more accurate method is to grab your SS earning, but tools like ssa.tools require the PIA. I may look into a spreadsheet method with some estimated numbers.

UPDATE
The following video describe how to do this in a spreadsheet. Note that bend point changes year by year.

https://www.youtube.com/watch?v=im1IYEa_B2o&t=163s

This at least give me a rough initial estimate of what to expect for SS.

UPDATE 2
OK, I foun another way to get a semi-accurate estimate quickly.

1. Go to the quick calculator at https://www.ssa.gov/OACT/quickcalc/index.html
2. Filled out the form. For this example, I used a person borned in 6/15/1980 and then retire after 67 years and currently making $30K. The claim is that this person will have $1,327 upon retirement.
3. You should see a button "See the earnings we used". Click on the button.
4. You should see your back salary all the way back when you are 18 estimated. In this person's case, we zero out everything except the last entry because the person had no US earning perviously and click on submit. Now the amount drops to $1,244. Note that this is still assuming you will make $30K from now on with no increase and that you will have worked enough to claim SS.

[Silk McCue]

You only need 40 qualifying quarters to qualify for SS. I’m a bit surprised that you didn’t know that given your tenure here.

In the scenario provided I would seek to maximize SS and investing.

Cheers

[tibbitts]

Let's say you are a person who started earning SS late, for example someone who recently immigrated to the US with a green card and plan to stay in the US, what would your retirement strategy be. Would you receive any social security for working 20 years instead of 40 years? Would you just maximize investing using existing asset and higher saving to compensate for the lower SS?

Social security, under current law, uses a known algorithm to determine benefits, so there's no reason to speculate on how much you would receive after any specified number of years of earnings at a specified salary. There is nothing magic about SS vs. income from other sources.

Almost everybody here will say to maximize savings within reason, regardless of SS; that has nothing to do with compensating for anything. So there would be zero difference with or without SS.

[gavinsiu]

You only need 40 qualifying quarters to qualify for SS. I’m a bit surprised that you didn’t know that given your tenure here.

In the scenario provided I would seek to maximize SS and investing.

Cheers

My knowledge of SS is quite limited, though I did know about the 40 qualfying quarter mostly due to my father's limited time in the states. I recall that SS is calculated by 35 years highest earning years, so working less than that will probably result in smaller payouts.

[gavinsiu]

Social security, under current law, uses a known algorithm to determine benefits, so there's no reason to speculate on how much you would receive after any specified number of years of earnings at a specified salary. There is nothing magic about SS vs. income from other sources.

Almost everybody here will say to maximize savings within reason, regardless of SS; that has nothing to do with compensating for anything. So there would be zero difference with or without SS.

You are correct. I shouid try messing around with a social security calculator. Obviously the goal is to maximize saving regardless of SS, but it might be nice to know how much wiggle room there is.

[BD w/ Kung-Fu Grip]

Let's say you are a person who started earning SS late, for example someone who recently immigrated to the US with a green card and plan to stay in the US, what would your retirement strategy be. Would you receive any social security for working 20 years instead of 40 years? Would you just maximize investing using existing asset and higher saving to compensate for the lower SS?

The Windfall Elimination Provision does partially offset benefits for workers with less than 30 years of SS-covered employment, who also have foreign pensions, in case this applies to you. Discussion of proposed legislation is not permitted in the forum, but this is a topic of present debate in the Legislature, and an internet search may provide further information.

[gavinsiu]

Thanks for the note about the windfall. What's a good SS calculator for someone starting SS later? I feel that many calculator make assumptions about your past earnings.

Thanks.

[02nz]

Would you receive any social security for working 20 years instead of 40 years?

Yes, and recommend that you search for "Social Security bend points" to learn more. Basically, assuming the same income (adjusted for wage growth), the person who paid into SS for 20 years will typically get significantly more than half the benefit of the person who paid in for 40 years.

[02nz]

What's a good SS calculator for someone starting SS later? I feel that many calculator make assumptions about your past earnings.

Actually, the calculators I've seen (and benefit estimates provided by the SSA) make assumptions about your FUTURE earnings, i.e. that you'll make the same (after adjustments for wage growth) in the years to come until full retirement age.

[gavinsiu]

Actually, the calculators I've seen (and benefit estimates provided by the SSA) make assumptions about your FUTURE earnings, i.e. that you'll make the same (after adjustments for wage growth) in the years to come until full retirement age.

Let's say I go on the calculator and enter my current salary and my years. I have been working for 30 some years, How does it know how much I earn prvious to calculate the 35 years used to calculate SS?

[David Jay]

The Social Security website has a page showing the current bend points and the NWI inflation numbers for past years. I built a spreadsheet that matched the PIA shown on "My Social Security":

3 steps:
1. Adjust all past earnings to today's the National Wage Index (NWI)
2. Average the top 35 earnings years, include zero for all years less than 35 with no SS earnings in the average, divide by 12 for a monthly number
3. Add together the following: bottom X dollars times 90%, the X to Y dollars times 32%, dollars above Y times 15%

X and Y (the bend points) are also inflation adjusted. If your friend was 62 years old today their bend points would be X=1226, Y=7391

Due to the "90%" bracket, those with low lifetime earnings and/or limited earning years get a nice benefit. For instance, let's say that someone was earning $120,000 a year for 7 years* with no inflation between years of earnings and age 60 their benefit would be:
Average wage = 24,000 per year (7 years of $120,000, 28 years of zeros) or $2000 per month
Benefit = ($1226 x.9) + (774 x .32) = $1350/mo

*this is to show the calculation, they would need some minor income for the other 3 years to get to 40 Q.C. (10 years).

[David Jay]

Let's say I go on the calculator and enter my current salary and my years. I have been working for 30 some years, How does it know how much I earn previous to calculate the 35 years used to calculate SS?

If it's the Social Security calculator (called: AnyPIA), they know your earnings.

Any 3rd party calculator, you will need to enter past earnings for every year. You can download that data from SS. Seems like it is in the form of delimited data???

[gavinsiu]

If it's the Social Security calculator (called: AnyPIA), they know your earnings.

Any 3rd party calculator, you will need to enter past earnings for every year. You can download that data from SS. Seems like it is in the form of delimited data???

I was using the quick calculator the one that does not require any personal info. If I am helping someone I typically don’t have access to their personal data.

[David Jay]

If it's the Social Security calculator (called: AnyPIA), they know your earnings.

Any 3rd party calculator, you will need to enter past earnings for every year. You can download that data from SS. Seems like it is in the form of delimited data???

I was using the quick calculator the one that does not require any personal info. If I am helping someone I typically don’t have access to their personal data.

Without their earnings it will not be possible to even do a "ballpark" guess. Years of earnings (note that I picked 7 years so I could take 1/5 of the $120,000) and size of earnings is the basis for all calculations.

[02nz]

If it's the Social Security calculator (called: AnyPIA), they know your earnings.

Any 3rd party calculator, you will need to enter past earnings for every year. You can download that data from SS. Seems like it is in the form of delimited data???

I was using the quick calculator the one that does not require any personal info. If I am helping someone I typically don’t have access to their personal data.

If you're referring to this calculator https://www.ssa.gov/OACT/quickcalc/ I think it's assuming constant earnings (after adjusting for wage growth). I think this is explained in the verbiage in the linked FAQ. If you want precise numbers, you need to enter precise data.

Anyway, why are you not starting with the person's SSA benefits estimate?

[Silk McCue]

Let's say I go on the calculator and enter my current salary and my years. I have been working for 30 some years, How does it know how much I earn prvious to calculate the 35 years used to calculate SS?

Use ssa.tools written by a member here. You cut and paste your earnings record from ssa.gov to feed the calculations and it calculates your benefit. You can also add details about future earnings.

www.ssa.tools

Cheers

[gavinsiu]

If you're referring to this calculator https://www.ssa.gov/OACT/quickcalc/ I think it's assuming constant earnings (after adjusting for wage growth). I think this is explained in the verbiage in the linked FAQ. If you want precise numbers, you need to enter precise data.

Anyway, why are you not starting with the person's SSA benefits estimate?

Probably because they don't have any at the moment. May be after another 40 qualifying quarters?

[gavinsiu]

Use ssa.tools written by a member here. You cut and paste your earnings record from ssa.gov to feed the calculations and it calculates your benefit. You can also add details about future earnings.

www.ssa.tools

Cheers

Thanks, this will proably work.

[gavinsiu]

OK, I foun another way to get a semi-accurate estimate quickly.

1. Go to the quick calculator at https://www.ssa.gov/OACT/quickcalc/index.html
2. Filled out the form. For this example, I used a person borned in 6/15/1980 and then retire after 67 years and currently making $30K. The claim is that this person will have $1,327 upon retirement.
3. You should see a button "See the earnings we used". Click on the button.
4. You should see your back salary all the way back when you are 18 estimated. In this person's case, we zero out everything except the last entry because the person had no US earning perviously and click on submit. Now the amount drops to $1,244. Note that this is still assuming you will make $30K from now on with no increase and that you will have worked enough to claim SS.

[gregable]

tools like ssa.tools require the PIA

https://ssa.tools/ will compute your PIA for you from only your earnings records. I suspect you are thinking of open social security.

[gavinsiu]

https://ssa.tools/ will compute your PIA for you from only your earnings records. I suspect you are thinking of open social security.

Thanks, the issue was that there was nothing in the SSA because the person did not have any social security earnings yet. What ai did was punch in some estimate income numbers for this year and was able to get some numbers.

Thanks.