📝 The AARP Social Security Resource Center!

[Anonymous]

(4 comments)

👉 LINK TO AARP SOCIAL SECURITY RESOURCE CENTER 

[CatherineF311926]

My suggestion for improving the resource center calculator:

I understand that one's monthly benefit increases when you delay starting your benefits.  The calculators ask what your current salary is and then gives you a number if you claim early, wait til full retirement age, or wait even more until age 70.  It does not let you see the impact of continuing to work or not at your current income. If you stop working for wages at age 66 but delay claiming ss until 70 your benefit will be lower than it would be if you continued working until 70.  But how much lower? It seems to me (although it is not stated on either the AARP or SS websites), that when the projected benefit amounts are calculated, they are assuming that you are working at your current wage until the date you put in as your 'retirement' age. To make a more informed decision it would be helpful to know how much the benefit will increase if you retire from work but wait to claim your SS benefit until a later date.

[Tonster521]

@CatherineF311926 I had a chance to look at the AARP calculator and will say that it provides a sound starting point for estimating a SS Benefit. The key word is estimating. As you may or may not be aware, the SS benefit formula is complex. It uses your highest 35 years of indexed earnings to develop an Average Indexed Monthly Earnings (AIME), If you worked less than 35 years, zeroes are used for the years not worked. If you worked more than 35 years, those additional years are not used. The AARP calculator does not have your earnings history nor the index factors that you need to develop your actual SS Benefit. However, based on the amount you enter (i.e., current salary, some other number appropriate for you, etc.), the program will provide you with an estimate that is "in the ballpark". The AARP calculator advises to input an amount (for your average income/salary/pay) that is generally reflective of your earnings history. It does not need to be your current salary. I am guessing that some folks will enter either their current salary/pay or their last salary/pay if they have stopped working and are delaying their SS benefit to obtain Delayed Retirement Credits after Full retirement Age (FRA). As you probably know, folks born after 1954 have different ages for FRA . For those born in 1960 and after, FRA is age 67. The AARP calculator will calculate all the fractions/percentages  for those who elect early (before FRA) and those that elect to delay (after FRA). All the fractions and percentages are given. The only variable is your AIME. I am providing a link to the SS page that provides the indexing factors for someone born in 1957.https://www.ssa.gov/cgi-bin/awiFactors.cgi If the copy and paste function changed the year of birth to 1961, you can always change that year to whichever year is applicable for you. I guessed at 1957 because you indicated age 66 (2023 - 66 = 1957). The SS website should have your earnings history. Also, the website has a Detailed Calculator which is more challenging to use. The results will not only put you "in the ballpark", but "in the infield". Of course, it will not be able to predict future COLA,if any. The key to your SS Benefit is your AIME. For most folks, the AARP calculator is useful. 

[GailL1]

@CatherineF311926 wrote

. . . . . To make a more informed decision it would be helpful to know how much the benefit will increase if you retire from work but wait to claim your SS benefit until a later date.

I believe you can still do that by determining your benefit amount when you retire from work at FRA (but NOT draw your benefits) and then add in the Delayed Retirement Credits you will earn on that benefit amount for each year until you reach 70 years old.

It won’t be exact but pretty close because the only thing that would be missing is what amount your benefit might increase due to cost of living adjustments between your FRA and 70, if there is one, or the added age years if you decide to take the benefit before 70. 

Figure the DRC. (Delayed retirement credit) at 8% per year.

[Tonster521]

@GailL1 I agree with your suggestion. Most folks should have a couple of years of tax returns available that will indicate their Earnings (if covered by the SS Program). I suggest this because the SS Earnings History may be a few years behind. Some employers are prompt whereas others are slow in sending data to the SSA. If folks already stopped working a few years ago, the SS Earnings History should be accurate and up to date. I can't believe anyone has 35 years of earnings records at their home. 

Anyway, I and probably many others know the your intent in the last sentence, "at 8% per year". However, some folks may think that DRCs are compounding at 8% per year like an investment. DRCs do not compound. The FRA is increased by 8% and by that same dollar amount for each year that is delayed. For example, if the FRA is $1,800, the first year DRC is $144 ( $1,800 X .08). If the person has stopped working, the AIME will not change due to additional earnings. So, the next year DRC is also $144, not $155.52 ($1,944 X .08). It does not compound. The SS Benefit at that time would be $2,088 ( $1,944 + $144).  The next year DRC  continues at $144 and the SS Benefit would be $2,232 ($2,088 + $144). Of course, COLA, if any is additional. I think some folks believe the DRCs are compounding.