SSA benefit projections / Liz's latest article

[haapai]

Our founding mother, Liz Weston has recently published an article for AP regarding Social Security Administration estimates of benefits that is well worth reading.  It prompted me to finally create a My Social Security account do a little road-testing of the numbers. 

Since I am cheap and nerdy, I didn't spring for the software that would allow you to examine the reliability of the projected benefit numbers.  Instead, I created a simple spreadsheet that listed each year's reported earnings and multiplied that number by the appropriate inflation indexing number. 

Once you have those numbers adjusted for inflation, they begin to tell you things that are worth knowing. 

Has anyone else here done something similar with their own earnings records?  Have you sprung for the software and if you have, what did you learn? 

[justme]

I've only checked the projection from the SSA when I remember to log in and check my earnings. 

[haapai]

You might want to capture those earnings records on a spreadsheet and apply the appropriate index factor like I did.   I

I dinked around a lot in the first two decades of my working life and my income during those years, even after adjustments for inflation, was pretty poor.   (You never really know how bad those numbers will be until you actually apply the index numbers.)  My projected benefits, include the assumption that 13 or 15 of those years of weak earnings will be replaced with earnings similar to what I made last year. 

This is not particularly likely to happen, at least not for me. 

I hope that you don't discover something similar, but if you do, it is definitely worth knowing about as soon as possible. 

[justme]

I'm just barely in my mid 30s.  If I retire early at 55 I'll have 30 years in at a decent salary and a couple stragglers. There's a damn good chance I'll be at the max taxed amount before I'm out of my 40s.   I'm pretty sure a lot will change between now and when I get anywhere close to using it - I'm saving like I won't have it but figuring it'll be nice bonus money.

[hoops902]

I think Liz does a competent job of pointing out the potential issues with the assumptions the SSA makes (I say competent because I think they're pretty obvious potential issues and nothing all that insightful, but useful to people who haven't thought about it).  There's really no GOOD solution to her recognized issue though.  The solution would be "everyone accurately predict your future earnings and then use this type of calculator"...the problem is most people are probably not great at predicting their future earnings, and most probably overestimate them (which leads to the larger problem of then overestimating what you'll get from SS later).  

I also think the idea of estimating future SS payments isn't ALL that important for people who are likely to have overestimated or underestimated earnings.  For people who make less now, and have low projected SS payments, but who will start making more and more money as time goes on...those people will continue to see their estimated SS rise as their income is reported and rises.  Those people are not in any real harm from having a low current projection, because they'll need lots of high-earning years in the future to change that...so if they're simply staying on top of it they'll see the SS estimated payments rise over time.  

If you're on the flip side, and you've had lots of high earning years and then suffer a job loss or other income setback...it's relatively difficult to predict that you're going to suffer a disability or significant job loss that never again gets you back to that income level.  

From the article:


“You can see why Americans are confused and surprised when they go into the Social Security office with an old statement and learn their benefits will be lower than they thought,” says William Meyer, founder of Social Security Solutions, another claiming-strategies site.

Yes, they probably do, but it's primarily driven by the idea they have no clue how it works.  

Another example of clickbait headlines (IMO) "Will you get what Social Security promises?"...the SSA estimate is not a promise.  2/3 of the article is about things that could change from what your estimate says...by no means a promise, and the things which impact it are things folks with some common sense should understand (If I take a big reduction in income, i won't pay as much into SS, and therefore get less...or if I had a job that pays less into SS, I will get less).  Then 1/3 of the article talking about what might happen with a SS shortfall in 15 years...which also has nothing to do with what SS promises, since it then goes on to express she doesn't think they'll impact people who are close to retirement...so by the time SS promises you anything, that shortfall (if there still is one) would be factored in at the time you're promised a payment.

She also makes a point to say this is to help people decide WHEN to claim their benefits...I think by the time you CAN claim your benefits, the calculations would be pretty close and much less likely to fluctuate wildly.

[swamp]

That sounds like a lot of work to me.  I'm just assuming there won't be social security when I retire, and am planning accordingly.  

[msventoux]

I’m thinking Social Security may be a nice little bonus if it’s still around when I retire. I’m not counting on it.

[haapai]

I think that I am on the flip side, which surprises me.  .I didn't drop out of the workforce to raise kids.  I have earnings for every year since 1986. 

Unfortunately,  my record of 33 years of employment includes eight years in which I made less than half of what I currently make after adjusting for inflation and an additional seven years in which I made between 50 and 90 percent of what I currently make. 

The way that projected benefits are calculated assumes that none of those 15 crummy-earning years will be part of the calculation of my eventual benefit and that every single one of them will be replaced with earnings equal to my current level of social security income. 

I come from robust, stoic, hard-working, and long-lived stock, but I seriously doubt that at 65 or 67, I will be able to earn what I currently earn.   It will take incredible levels of luck for me to be able to earn and claim the benefits that are projected for me. 

I also see my projected level of benefits jumping around quite a bit during my final decade of employment instead of stabilizing.  The benefit formula can be quite sensitive to the most recently reported income data and if that number falls, the projected benefit shudders. 

I miss the old SSA statements that included calculations of disability benefits.  That calculation gave folks with earnings histories like mine a clue as to what was going on. 

[TheOtherMe]

I download my projected earnings statement every year.  There was a year (maybe 5 or 6 years ago) when my W-2 did not show up.  Happened to be one of my highest earning years because I worked most of work life for the federal government.

As long as WEP exists, I won't see a dime from Social Security. 

[Tiny]

I've been saving for retirement under the assumption that SS will not be there.   Two years ago I set up my account and got access to the reports/numbers.   At that time I attempted to figure out what my SS benefit MIGHT be...    I don't plan on working my high income/high stress job until I'm 67.  I'm hoping to achieve a version of Financial Independence at 60 or so... so I'll have 7 years of little to no income.    The online statements weren't very helpful as I figured out it assumes I'm working/earning big bucks  til 67.         I poked around to see if there was some way to change the assumptions, couldn't figure it out,  and then gave up.    

When I'm working with FIREcalc or any other retirement calculator - I just put in $0   (or sometimes $500 per month at full retirement age) when asked for a  SS benefit.   

That said, I can totally and completely see how someone could be blindsided by what their actual SS income will be when they retire.   Especially if they are basing their retirement plans on the arbitrary $ amount the Social Security report gives them. 

I know a lot of people who seem to be "hoping for the best" without actually knowing or wanting to know. I'm not sure if  it's "quiet desperation", lack of curiosity, faith in authority (they're assuming  SS$ will be plenty because they hear about the "Average" or what high income earners get so therefore they will get the same),  or maybe a case of what you don't know can't hurt hurt you. or some combination of them.   I find that approach terrifying. 

[haapai]

This is off-topic but somewhat interesting to me.  When I look at my adjusted calendar-year income numbers, the great recession doesn't show up in the data. 

I'm a bit baffled by this.  Yes, I remained employed during the entire recession, but I also work retail.  My part-time coworkers were really struggling during that time but my earnings did not slip.  2006-2013 are some of my best years.   I don't understand this. 

[hoops902]

Oct 23, 2019 16:24:08 GMT -5 haapai said:

This is off-topic but somewhat interesting to me.  When I look at my adjusted calendar-year income numbers, the great recession doesn't show up in the data. 

I'm a bit baffled by this.  Yes, I remained employed during the entire recession, but I also work retail.  My part-time coworkers were really struggling during that time but my earnings did not slip.  2006-2013 are some of my best years.   I don't understand this. 

Were your part-time coworkers getting reduced hours?  If it's indexed, and you were making the same pay, but the index number is lower in comparison to the pay you received, that might explain it?  Were the part-time coworkers struggling because of the retail job they had?  Or was it because the recession hit them in other ways (partners who made less money, or got laid off, or less hours/layoffs at 2nd part-time jobs?)

[haapai]

Oct 23, 2019 16:28:20 GMT -5 hoops902 said:

Oct 23, 2019 16:24:08 GMT -5 haapai said:

This is off-topic but somewhat interesting to me.  When I look at my adjusted calendar-year income numbers, the great recession doesn't show up in the data. 

I'm a bit baffled by this.  Yes, I remained employed during the entire recession, but I also work retail.  My part-time coworkers were really struggling during that time but my earnings did not slip.  2006-2013 are some of my best years.   I don't understand this. 

Were your part-time coworkers getting reduced hours?  If it's indexed, and you were making the same pay, but the index number is lower in comparison to the pay you received, that might explain it?  Were the part-time coworkers struggling because of the retail job they had?  Or was it because the recession hit them in other ways (partners who made less money, or got laid off, or less hours/layoffs at 2nd part-time jobs?)

Part-timers got dramatically fewer hours during the recession.  Prior to the recession, they could hire in and be guaranteed 16 hours and frequently land up working 24 hours a week for the entire calendar year and close to 40 during the busy seasons.  During the recession, they worked much closer to 16 hours a week, no matter what the season was. 

You could read the struggle in their bodies.  A lot of them had terrifyingly low BMIs and when it got hot, the ones who could not afford to chill their sleeping areas and get their core body temperatures down sorta fell apart in front of your eyes.  I work in a grocery store, and some of these part-timers did not shop for groceries there.  They bought calories at the slightly cheaper dollar store instead.  Not all of the probably-homeless, effectively phone-less, part-timers that I am describing were in the system or struggling with substance abuse.  Some of them just didn't have anyone in their lives that they could ask for help from. 

If they had second part-time jobs, or were looking for one, they didn't mention it and I don't fault them for not doing so.  Letting anyone that they worked with know anything about a second source of income or restrictions on their available hours was not a good idea.  Appearing to be ready and willing to work any available hours on very short notice was a big part of their survival strategy. 

But my compensation remained steady.  This is not what I expected to see.  At the very least, I expected my gross compensation to fall due to restrictions on the overtime that has always been a too-important part of my pay.  I'm confused. 

[souldoubt]

I created an account some years back so they could stop sending me my annual statement in the mail.  Like others in this thread SS doesn't factor into my retirement planning at all.  If I get the projected amount or even part of that then that's great but in 25+ years when I'm eligible to start drawing I have no idea what SS will look like.  I know it will be around in some form but I don't know if it will be means tested or if they come up with some other way to penalize people who saved more for retirement.  

[CCL]

Oct 23, 2019 15:48:33 GMT -5 haapai said:

I think that I am on the flip side, which surprises me.  .I didn't drop out of the workforce to raise kids.  I have earnings for every year since 1986. 

Unfortunately,  my record of 33 years of employment includes eight years in which I made less than half of what I currently make after adjusting for inflation and an additional seven years in which I made between 50 and 90 percent of what I currently make. 

The way that projected benefits are calculated assumes that none of those 15 crummy-earning years will be part of the calculation of my eventual benefit and that every single one of them will be replaced with earnings equal to my current level of social security income. 

I come from robust, stoic, hard-working, and long-lived stock, but I seriously doubt that at 65 or 67, I will be able to earn what I currently earn.   It will take incredible levels of luck for me to be able to earn and claim the benefits that are projected for me. 

I also see my projected level of benefits jumping around quite a bit during my final decade of employment instead of stabilizing.  The benefit formula can be quite sensitive to the most recently reported income data and if that number falls, the projected benefit shudders. 

I miss the old SSA statements that included calculations of disability benefits.  That calculation gave folks with earnings histories like mine a clue as to what was going on. 

I don't understand this. Do you mean your statement doesn't tell you what your disability benefit would be? Or that it doesn't tell you how they calculated the amount?

[haapai]

I spoke too soon.  The first set if numbers that I got from establishing a My Social Security account included my projected social security benefits if I filed for them at ages 62, 67 (my FRA), and 70.  No disability benefit if-you-filed-today was included. 

And then, when I started closing tavs, something very similar to the old, paper, mailed whether you wanted it mailed to you or not, mailing showed up.  A disability-today number showed up in addition to the 62, FRA, and 70 projections.   The presentation was identical to the mailings that I received in the late 1990s and early aughts. 

I cannot explain how this requested report got buried under other stuff that popped up.   I honestly thought that it had been conveniently omitted until I started closing tabs. 

[Tiny]

Oct 23, 2019 17:16:50 GMT -5 haapai said:

But my compensation remained steady.  This is not what I expected to see.  At the very least, I expected my gross compensation to fall due to restrictions on the overtime that has always been a too-important part of my pay.  I'm confused. 

You got  the hours/overtime before the other coworkers,  so even if there were less "hours" overall to be worked you where in the group that got picked first to work?   Due to your seniority? reliability? (or Charming Personality?  superior Knowledge? or just plain old nepotism <--- sorry those last items are probably uncalled for wry sarcasm)     Maintaining the numbers of hours worked would have been how how you managed to keep that same level of income.     The Recession wasn't fair or equal.  

FWIW:  I weathered the Recession quite well.  I was in a good financial place and did not loose my job (although I did loose raises for several years). 

[haapai]

Oct 23, 2019 19:25:42 GMT -5 Tiny said:

Oct 23, 2019 17:16:50 GMT -5 haapai said:

But my compensation remained steady.  This is not what I expected to see.  At the very least, I expected my gross compensation to fall due to restrictions on the overtime that has always been a too-important part of my pay.  I'm confused. 

You got  the hours/overtime before the other coworkers,  so even if there were less "hours" overall to be worked you where in the group that got picked first to work?   Due to your seniority? reliability? (or Charming Personality?  superior Knowledge? or just plain old nepotism <--- sorry those last items are probably uncalled for wry sarcasm)     Maintaining the numbers of hours worked would have been how how you managed to keep that same level of income.     The Recession wasn't fair or equal.  

FWIW:  I weathered the Recession quite well.  I was in a good financial place and did not loosen my job (although I did loose raises for several years). 

I got picked first to work.  This was probably due to seniority and the union contract, full stop.  Reliability, personality, knowledge, and nepotism had nothing to do with it.  I like to think of myself as reliable, reasonably civil, and willing to learn, but I'm pretty sure that seniority trumped all those and that nepotism had nothing to do with it. 

I don't understand how, during a period in which overtime was tightly controlled, my wages pay seems to have gone up instead of down.  My coworkers were damn near starving and some of them were terrifyingly exposed to the elements, yet my gross earnings increased. 

[tractor]

I, like several other posters do not factor SS into my retirement planning. While I know I will be receiving something, my goal is to not plan on it. I’m dealing with just the opposite with my father, who’s only source of retirement income is SS, and it’s not enough for him to live on (SS was not intended to cover 100% of your expenses), yet here he is.

As it stands now, my retirement savings will generate 1/2 of my take home pay and I have 15-18 years left to work/save. Also, as I approach those magical “highest earning” years, I hope to sock away even more. The SS projections are fun to look at though.

[TheHaitian]

Oct 23, 2019 15:11:33 GMT -5 swamp said:

That sounds like a lot of work to me.  I'm just assuming there won't be social security when I retire, and am planning accordingly.  

Same assumption I am going by!

[jerseygirl]

I’ve been consulting since I retired, nicely lucrative
Work from home with maybe 1 or 2 trips to company
My SS keeps increasing since these past years are replacing low pay years when I worked part time as home with kids