How to Calculate Social Security Benefit

[kannon8833]

Happy Holidays to all.

Question for the masses.

I am in FERS and planning to retire at MRA of 56. I know I will be collecting a Social Security supplement at age 56 thru to 62 when I start Social Security. I am using the (30/40) rule of age 62 social security benefits.

I went to my social security website to get estimate of benefits at ages 62, 66, and 70. These amounts are based on (what I believe) is continuing working thru to age 62 at my current salary. Not everyone is lucky enough to be able to retire earlier.

My question is will I receive the amount quoted on their website at age 62 if I do not be work from age 56 to 62? If not, how do I calculate the correct amount? Is it the Social Security supplement at age 56 with some type of inflation factor (knowing that the supplement is fixed from age 56 to 62 cause there is no COLA).

Thanks

Kannon

[burrocrat]

if i remember from junior high math class correctly, any number times zero is still zero.

[kannon8833]

Social Security will still be around.

[SkyPilot]

I have studied this pretty thoroughly, and if you are a special category employee (FLEO,ATC or FireFighter) and you are referrung to your Special Supplement, you can expect to receive about half of what SS projects your age 62 income to be, i.e., age 62 projection of 1,300 per month = $650 special supplement (until age 62). At age 62, you can apply for and collect SS, or delay and earn greater income per month. If you delay until age 70 you may increase your benefit by up to 65%, not including COLA's. This may impact your spouse who may be eligible for the greater of either their won benefit or a benefit equal up to half of your monthly benefit. Secret Ways to Boost Your Social Security - Kiplinger

Also a helpful tool: http://www.fedcalc.com/

[uscfanhawaii]

Social Security will still be around.

Ah, yes....SS will still be around. But it may not look the same!

The biggest pushes now against the Fed worker pay is the SS Supplement in FERS (that you are talking about) being taken away completely, and increasing contributions to our FERS Retirement, as all NEW fed workers will be doing come January.

But, yeah, I understand that you can expect about half the SS what you would have gotten at 62, if you retire at 56, like Sky says. You should get an official estimate from OPM. You can request only 1 estimate per year, but your request CAN be for TWO dates, so you should definitely ask for the 2 dates (maybe 1 at 56, and one at 62?).

The other thing to consider is that FERS workers get a 10% kicker to their retirement annuity if they wait to 62 to retire (factor is increased to 1.1% from 1%). Not trying to convince you to stay....just so you know that sticking around those extra 6 years can make a BIG difference in your retirement annuity (not to mention the extra 6 years of gov't matching to your TSP, and 6 more years of additional service time!).

I am in the same situation, actually. I am 58 and eligible to retire under FERS, but have decided to stick around at least until 62.

Good Luck in whatever you decide!!

[SkyPilot]

uscfanhawaii! Another consideration regarding staying around is how much you can make by leaving early and working another job, AND collecting your special supplement. Besides that, you will not pay any penalty back to SS until you are 56 or so (same penalty that SS pensioners must pay after about $15k per year, that is $1 for every 2 until you earn after 15k in income).

It is a number crunching problem to be sure. That is another reason to put of taking SS at 62 if you will continue to work, cause you get hit with a reduced pension, pay SS taxes on what you earn AND pay back 1 for 2... seems so unfair to me... Full retirement age is golden, no more payback if you still work! But, who wants to HAVE to work then?

Ah, yes....SS will still be around. But it may not look the same!

The biggest pushes now against the Fed worker pay is the SS Supplement in FERS (that you are talking about) being taken away completely, and increasing contributions to our FERS Retirement, as all NEW fed workers will be doing come January.

But, yeah, I understand that you can expect about half the SS what you would have gotten at 62, if you retire at 56, like Sky says. You should get an official estimate from OPM. You can request only 1 estimate per year, but your request CAN be for TWO dates, so you should definitely ask for the 2 dates (maybe 1 at 56, and one at 62?).

The other thing to consider is that FERS workers get a 10% kicker to their retirement annuity if they wait to 62 to retire (factor is increased to 1.1% from 1%). Not trying to convince you to stay....just so you know that sticking around those extra 6 years can make a BIG difference in your retirement annuity (not to mention the extra 6 years of gov't matching to your TSP, and 6 more years of additional service time!).

I am in the same situation, actually. I am 58 and eligible to retire under FERS, but have decided to stick around at least until 62.

Good Luck in whatever you decide!!

[Stoplight]

Kannon,

I just retired FERS, no "specials" (ATC, LE, etc) at age 57. If you use the Social Security estimator on their web site, it has an option to "add a new estimate". There, you can specify your retirement age (57, for me), and how many dollars you plan on making per year ($0, for me !). Once you "submit" that, a new line appears in the table that gives you the estimated amount based on your criteria...in my case, it was not much less than the amount at age 62...maybe $40 a month on the SS benefit.

Also, in my case...my actual FERS supplement that I'm FINALLY receiving is about 2/3 of my SS benefit at age 62, not 1/2.

As Sky sez : You gotta crunch the numbers !!! Everyone's situation is different.

BUT : I retired at age 57. If I worked until 62, my pension would be ~$8 K per year more for the rest of my life, and I'd have 5 more years of contributions to my TSP. But...I'd be 5 years closer to dropping dead Right now I'm getting a FERS supplement until 62 of $13 K per year ! Granted, no COLA, so that'll be chipped away until I draw SS...and I AM subject to the reduction of the supplement if I work and make > $15 K or whatever the number is, as Sky noted.

You didn't say how old you were now, or how long you have until MRA. So much depends on other factors, as well, both monetary and non-monetary. Are you still building up your high-3 ? Will you ever get a promotion, raise or step increase again ? Do you have a working spouse who will get a pension and/or social security ? Do you love your job ? Will Congress dork around with the retirement program, like eliminating the supplement, as USCFAN mentioned ? Do you know what you want to do when you DO decide to retire ? Do you have children or other financial obligations or goals you need to consider ? Just some other thoughts to consider !

In my case, between the Wife and I, we hope that when my 62nd birthday rolls around, we won't NEED to start my SS, and we can delay taking that benefit, as also noted by Sky !

Anyway...break out that spreadsheet and start looking at all your "what-if's" !!!

Best of luck to you !


Stoplight...

[kannon8833]

Stoplight - many thanks.

I actually spent a few hrs on line at the SSA website and my Excel spreadsheet and became familiar with AIME and PIA and reduction tables. You are so right about doing the number crunching. Bottom line - for those on FERS, going early out before your NRA (Normal Retirement Age) be careful - the SSA website statement of benefits are not for us.

I did find that there is a Detailed Benefits calculator that you can download (Social Security Benefit Calculator Download) that allows you to have zero yrs of earnings before your NRA and also takes into account the PIA reduction due to early retirement (and that really hurts, a 28% reduction for me).

Hope this helps. Stoplight et all - great feedback - thanks. BLUF - number crunch, be careful.

Kannon

[Stoplight]

Stoplight - many thanks.

I did find that there is a Detailed Benefits calculator that you can download (Social Security Benefit Calculator Download) that allows you to have zero yrs of earnings before your NRA and also takes into account the PIA reduction due to early retirement (and that really hurts, a 28% reduction for me).

Hope this helps. Stoplight et all - great feedback - thanks. BLUF - number crunch, be careful.

Kannon

Glad to offer my "opinions" and experience

Not sure I want to download and run the "detailed" calculator...it might blow all my carefully-crafted assumptions out of the water !

One thing I've noticed again and again, since I started down this retirement path, and why I mentioned your age and time left to go...it's basic "Economics 101"..."compounding"...etc etc. When you become an Old Fart, you hit the point where the "tail is wagging the dog" ! No matter what you do (increasing your TSP contribution ; working more years, etc), it just doesn't affect the bottom line all that much ! Perhaps I'm blessed to NOT have to quibble over a few hundred dollars a month, but you really have to balance the $$$ against the "benefit", and your life !

My hope is that the "Youngsters" recognize this, and do what they need to do NOW, to make retiring before age 70 an option ! You're right...we're lucky to even HAVE the opportunity to retire at 57 !!!

"BLUF"...good summary...I see you're DOD


Stoplight...