Where’s the cap on your benefits? The past few years I get an annual statement, and it pretty much lists the same figure I can expect at various ages–about 1500 bucks a month, give or take, at age 62.
Is this holding steady because my income is about the same? Or because I’ve reached the cap? If the latter, what is the highest someone can collect at age 62? Anyone know how this works?
I’ve been maxed out on contributions for years, so should be receiving the max benefits, which in my case will be $1,606/month according to the Social Security Administration. I may be older than you. There’s a sliding scale. When are you eligible for full retirement?
I’m 58. A sliding scale according to what? Age? Contributions?
Age. Your normal retirement date depends upon your birth year. From the Social Security Website:
1937 or earlier 65
1938 65 and 2 months
1939 65 and 4 months
1940 65 and 6 months
1941 65 and 8 months
1942 65 and 10 months
1943-1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 and later 67
Neither of you have maxed out. Since your benefit is based on your 35 years of highest wages, it is likely that your benefit will increase as future years wages exceed earlier years with lower wages. Also, COL adjustments will affect cause an increase.
The exact formula can be found at the SS site. Here is a brief explanation.
I went on SS Disability at the age of 38 (I didn’t receive it until I was 42 as it took 5 years to get approved, but it was backdated from the day of application) and I receive $1655 per month minus $100 for Medicare Insurance. I was a fairly high income earner, but not near rich. I made on average about 70k a year. When I got my determination the attorney who represented me told me that my payout was among the highest he’s seen.
My mother OTOH worked 30+ years when she retired. She earned approx $45k a year and her retirement benefit is $1200 a month minus the $100 Medicare. So, it does seem to vary widely. I have often wondered what would a very high income earner (say 250k a year) would receive if they became disabled. I am assuming not much more than I do, I think that I am near the max out.
FWIW, I would give anything to go back to work. Being on disability sucks Donkey B***s. If anyone would like to “retire” I will take your healthy back and job and you can have my SS Disability and my back. I will assure you I will be the winner in that deal.
Thanks–as they explain, the formula is too confusing to understand, other than in general terms. The part that puzzles me is that every year I continue to work, I earn six figures and replace one of those 35 years I made almost nothing (as a grad student, I made peanuts for years in my twenties and early thirties), yet the annual statement stays almost identical in dollar figures. Seems to me, if I’m replacing a peanuts-year with a six-figure year, it should go up considerably, no?
This is what I was thinking.
Even though PRR still presumably has several low-income years to replace with higher-income years within that 35-year period, surely there must be a point where one reaches the max allowed.
(And sorry for calling you Shirley)
mmm
Several factors can cause a Social Security benefit to increase less than you might think. First, there’s a cap on how much of your earnings count towards your benefit amount. In 2011, the cap was $106,800. No matter how much more you earned, only that amount goes toward your benefits. Next, as explained in the article that was cited, the benefit amount is based on your total wages (indexed for inflation) over the highest 35 years (called the Average Indexed Monthly Earnings, or AIME for short). If a year of max earnings replaces a year of little or no earnings, the AIME increases by about $106,800/420 = $254 (420 = # of months in 35 years). Finally, for earners with high AIMEs, the marginal rate of increase is 15%. That is, an increase in the AIME of $254 yields an increase in the monthly benefit (at full retirement age) of $254 x 0.15 = $38/month. The increase would be smaller for benefits taken before full retirement age.
My wife’s SSDI was $1901/mo.
so if I understand you correctly, my projected SS benefits at age 62 will necessarily be less than $38 per month for every year of six-figure income I replace a 0-income year with? That’s just about how much my annual SS statement projects.
Yes, if you begin drawing SS at age 62, the above increase will be about 75 - 80% less.
for those of us in the 66 bracket, it is 25%.
There is a lot of debate over when to start, for me, if I waited until 66 it looked like it would take until age 78 before I got ahead of starting at 62. In other words, it would take 12 years to recover the dollars I could have collected from 62-66. YMMV.
The reduction for early retirement is 5/9% a month. You can also defer benefits until age 70, with an increase of 5/9% a month.
The part that gets me is that it’s actually slightly longer than that, if you calculate only on dollar amounts, because your other moneys will accumulate a little interest (in this market VERY little interest, I know), so there that AND the real kicker is that delaying retirement costs you THE FOUR HEALTHIEST YEARS OF YOUR ENTIRE RETIREMENT. As you can SEE, I think that value is incalculably valuable.
Do I want to be spending these years going in to work, when I can be enjoying my retirement? I think not.
Of course, do I want to eat cat food and live in a cardboard box from age 85 on? If I’m lucky, I’ll think the cat food is caviar and the box is a luxury condo.
If SS would be your only source of money in retirement, then you’re screwed. But, if I"m assuming correctly, SS only supplements your retirement-- No big deal in the scheme of things.