Early Retirement and Social Security

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Fishsticks
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Early Retirement and Social Security

Post by Fishsticks »

Hi!

I am new to the forum but have been a lurker for a couple years.

I retired December 31, 2016, at the age of 56. Yay me! As I was looking over my social security statement, I noticed it says this is the amount you will receive based upon the assumption you make xx salary until retirement age 62, 67. I am not going to make that a salary since I am retired now. I have worked since I was 16 which makes me 40 years in the workplace.

So the question is since I have 35+ years work history, am I safe to assume the current social security estimate will not change just because I retired early. I could not find the answer on the social security website.

Thanks!

SavingWithBabies
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Re: Early Retirement and Social Security

Post by SavingWithBabies »

I just saw a mention of a calculator for this scenario in the last couple of days and forgot to bookmark. I think it might be this one:

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

If that isn't it, supposedly there is one on ssa.gov somewhere...

wolf
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Re: Early Retirement and Social Security

Post by wolf »

Fishsticks wrote:
Sat Aug 19, 2017 7:52 pm
So the question is since I have 35+ years work history, am I safe to assume the current social security estimate will not change just because I retired early. I could not find the answer on the social security website.
Hi fishsticks. Are you from US?
In germany you pay a part of your salary into your retirement account. For instance if you stop paying the assumption is not valid anymore. But, that is only valid for Germany social security.

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GandK
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Re: Early Retirement and Social Security

Post by GandK »

Fishsticks wrote:
Sat Aug 19, 2017 7:52 pm
...since I have 35+ years work history, am I safe to assume the current social security estimate will not change just because I retired early. I could not find the answer on the social security website.
No. It will change a little, because the official statements and projections assume you continue making your most recent salary from the end of the stated tax period (2016) until your FRA. And that that salary will overwrite your lowest earning years from the past, for each year between now and FRA.

My official SS estimate was not accurate until about 24 months after I'd retired, after it had (a) gathered zeroes for my most recent tax year's income, and we had (b) passed the point where I might be filing amended returns for that year (it delays making new estimates if it receives a zero). Even though it won't be using those current zeroes for past earnings years, it does need to get to the point where it's projecting zeroes for your future earnings. Only then will the official projection be right.

There are calculators online that let you plug in every earnings year for SS if you need that more accurate number today. Otherwise, about 2 years after you pulled the plug, your SS statement will be right.

Fishsticks
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Re: Early Retirement and Social Security

Post by Fishsticks »

Thank you everyone. The calculator is just what I was looking for. And I will patiently wait for the two year mark for a more accurate reading from the US social security office.

George the original one
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Re: Early Retirement and Social Security

Post by George the original one »

Not only the above, but the COLA (cost of living adjustment) will make the calculator estimate go up over the years.

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Ego
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Re: Early Retirement and Social Security

Post by Ego »

I've been playing with the free open source social security calculator https://opensocialsecurity.com/

For those younger than 62 it provides strategies for optimizing payouts. It produced some interesting results for us, suggesting one of us begins taking SS at 62 while the other waits until 70. Some assumptions like life expectancy are built in, so buyer beware.

UrbanHomesteader
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Re: Early Retirement and Social Security

Post by UrbanHomesteader »

When you log into the SSA website, they now have a calculator that let's you project your SS benefit based on your own future earnings estimate. You can plug in zero future earnings there and get an estimate. I discount the estimate by 30% to account for future underfunding of SS.

I'll check out the one Ego linked as well.

jacob
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Re: Early Retirement and Social Security

Post by jacob »

A few years ago I made a spreadsheet to calculate the exact number based on bend points, wage indexing, ... retirement age, and personal income. All I need to do is to put in the latest wage index when the numbers come out in Decemberish.

(Fun fact: Giving how we're largely unaffected by inflation, we benefit a lot more from COLA than adding more to our cumulated earnings.)

Here's what you need to put it together:
https://www.ssa.gov/oact/progdata/retirebenefit2.html (the 90-32-15 rule)
https://www.ssa.gov/OACT/COLA/AWI.html
https://www.ssa.gov/OACT/COLA/bendpoints.html
Those earning more than about 130k also need the cap points, but I can happily ignore that :-P

This is easy if you're single. If you're married or divorced (but married for long enough), it quickly gets a lot more complicated. There are all kinds of tricky rules or options for couples or former couples.

chenda
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Re: Early Retirement and Social Security

Post by chenda »

Is it true you have to be resident in the US for a minimum period per annun to continue to be entitled to social security ? Asking for a friend...

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unemployable
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Re: Early Retirement and Social Security

Post by unemployable »

jacob wrote:
Sat May 06, 2023 8:46 am
If you're married or divorced (but married for long enough), it quickly gets a lot more complicated. There are all kinds of tricky rules or options for couples or former couples.
The TL;DR is once you are both past full retirement age and stay married, when one spouse dies, the other gets the greater of the two of your individual payouts pretending you were both single.

Any modification to this scenario does indeed get complicated.
Last edited by unemployable on Sat May 06, 2023 2:40 pm, edited 1 time in total.

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unemployable
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Re: Early Retirement and Social Security

Post by unemployable »

chenda wrote:
Sat May 06, 2023 1:16 pm
Is it true you have to be resident in the US for a minimum period per annun to continue to be entitled to social security ? Asking for a friend...
Forty "quarters", which can be achieved in as little as 10 years. The "quarters" do not have to correspond to calendar quarters; you can earn all four quarters' worth in a single calendar quarter, or even in a single week, and get credit for four quarters for that year.

chenda
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Re: Early Retirement and Social Security

Post by chenda »

unemployable wrote:
Sat May 06, 2023 2:39 pm
Forty "quarters", which can be achieved in as little as 10 years. The "quarters" do not have to correspond to calendar quarters; you can earn all four quarters' worth in a single calendar quarter, or even in a single week, and get credit for four quarters for that year.
But once you retire and start claiming SS can you be permanently abroad ?

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unemployable
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Re: Early Retirement and Social Security

Post by unemployable »

chenda wrote:
Sat May 06, 2023 2:44 pm
But once you retire and start claiming SS can you be permanently abroad ?
Yes, as long as you have a SS#; that is, were legally permitted to enter and work in the US in the first place.

chenda
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Re: Early Retirement and Social Security

Post by chenda »

unemployable wrote:
Sat May 06, 2023 2:49 pm
Yes, as long as you have a SS#; that is, were legally permitted to enter and work in the US in the first place.
I know someone who is currently in hospital in Asia and is unlikely to ever be able to leave. Apparently his social security stopped after 6 months. He is not a US citizen (he just worked there some years ago) but has British and Israeli citizenship. However according to my reading of this this should not be a problem:

https://www.ssa.gov/international/count ... for%20them.

jacob
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Re: Early Retirement and Social Security

Post by jacob »

chenda wrote:
Sat May 06, 2023 2:44 pm
But once you retire and start claiming SS can you be permanently abroad ?
It depends. If you're a US citizen, then yes. If you're not, where you can be depends on your citizenship and what treaty the US has with your country. There are a few different ones. For example, I can only draw SS if I live in the US or Denmark. Conversely, I have not earned enough to qualify for the Danish pension system. This means that if I want any kind of SS, I can only live permanently in either of those two countries. If I wanted to live elsewhere, I'd have to become a US citizen to leave the US insofar I wanted to take the SS payments with me. Treaties are fun :-P

chenda
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Re: Early Retirement and Social Security

Post by chenda »

Thanks @jacob. Yes its odd, looks like if you were say Swedish or German it wouldn't be a problem insofar as you could collect US SS anywhere. But Denmark is not on that rather arbitrary looking list.

WFJ
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Re: Early Retirement and Social Security

Post by WFJ »

OP: One can call SS and walk through several scenarios. Don't know if they calculator above is the one they used to estimate payments. I spoke to SS when just starting to pencil out IRA conversions and SS payments maybe two years ago. Rep could provide exact estimates for taking SS at 62, 67, 72, continue working or not working, etc.. Still not sure what I'll do as any number of benefit changes can occur between now and first date of SS availability. In general, if you have large IRA balances, better to wait until 72 and focus on converting IRA to ROTH. Without IRA rollovers, usually better to take SS early, but all this depends on when you plan to die.

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