Social Security Questions for you smart people

[GeorgeParker]

Here is the other confounding factor. I have earned about 20% less in 2020 and anticipate to be about the same in 2021 as in 2020. A lot of it has to do with COVID. And frankly, I don't want to work 20% harder at this point. So, my estimated benefits are not going up, they are actually depreciating a little.

The monthly SS benefit you will actually receive is based on your 35 highest earning years. And IIRC some kind of inflation adjustment is applied to your earnings so your early years and late years will have equal weight.

The question you need to be asking yourself is, "Do you feel lucky?" If your 2020 or 2021 income is among your 35 highest, your lowest earning year will fall off the list and your actual SS benefit will go up. If neither year is among your 35 highest, neither will be added to the list and they will have no effect on your actual benefit. IMO if you think the current year will be among your 35 highest, you should keep working because every dollar you make will count. If the current year won't be among your 35 highest, go ahead and quit if you want to.

The SS estimates you're looking at are like weather forecasts; a best guess based on you earning the same amount this year that you earned last year.

True story: I applied for SS in January of 20xx. During the 90 days I had to wait for my SS benefits to start, I earned a bit more than $7000, and one of my 35 highest earning years was less than $7000. So, my tiny $7000 20xx income pushed a worse year off my record and increased the SS benefit I'm receiving.

[GeorgeParker]

$100/month less income is a lot of money less to me.

Everything is relative in it's own way.

The average Social Security retirement benefit in 2021 is $1,543 a month. $100 is about 6.5% of that.
But for Bill Gates, a $100 bill is what he uses to scrapes dog crap off his shoe.

[Alan]

Personally, I wouldn't concern myself too much about waiting 6 months for the additional $100. I'm not sure what your SS benefit will be but for the purposes of comparison I'll use an example of $3000 per month. By applying 6 months early you'll receive $18,000 during the time you'll otherwise be waiting. If you do decide to wait the additional 6 months it will take you 180 months at an additional $100 per month to break even.

I'd go ahead and apply now.

[jp1]

I knew about the 35 highest years calculation. Is it from at the time of filing for benefits or from the time of full retirement age?

[mschrisgo2]

I spent some time on ssa.gov poking around and working up scenarios. In the end, I realized I had really already made up my mind and I was looking for justification.

it came in nearly the same format that Alan detailed. Listen to Alan, lol

[GeorgeParker]

I knew about the 35 highest years calculation. Is it from at the time of filing for benefits or from the time of full retirement age?

The earnings record SS shows for me goes all the way back to a summer job I had in the mid-1960s, and my 35 highest years are widely scattered across that whole range. I applied for SS when I was barely 69. The $7000 I earned in 20xx was earned after I applied for SS, it bumped a year when I earned less than $4000 off of my highest 35 years list. So it's not based on retirement age or filing date, it's the 35 highest earning years from your entire work history.

The calculation made when you apply includes only the years that you've already filed income tax forms for, but if you earn money after you file, that income will be noted by SS when your income tax form for that year is processed, and if that new income increases your monthly benefit, SS will automatically adjust your future benefit and send you a check for the additional money you would have received if SS had known about that income at the time you applied.

[Tybee]

I would agree with Alan here, but I understand, the hundred dollars a month is a lot of money for anyone.

Still, if you could get into paying the debt off faster, there is a lot to that. On the other hand, there is a lag of about two months when you apply; you won't get it for a bit so it might be more like four months for the purposes of calculation.

[catherine]

Happystuff's post on another thread made me think to update you guys on my decision... which defaulted to no decision. I'm going to turn 70 in March. I just submitted my application, so by the time they get around to calling me and approving the amount, I'll have used the time I was thinking of jumping on early. So I'll be jumping on full boat, and continuing to work. On one hand, I'm glad I waited, but OTOH, wow, time goes fast. I didn't realize how quickly 70 was going to creep up on me.

[Tybee]

Good for you! Sounds like your decision kind of evolved naturally, and glad you will get more money!

[happystuff]

Good for you, catherine! I don't think I can hang on until I'm 70 - at least not in this job. Dh, on the other hand, has finally found a job that he is good at and - more importantly - really likes. Not sure how long he will stay with it though.