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Social Security: doing the math...

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 lisa53 Joined: Apr 2015 Posts: 4,988 Senior Member
lisa53

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Social Security: doing the math...
04-28-2017, 06:46 AM
 #1

I got my social security statement yesterday, and dh and I were talking about whether to take it early, wait till age 66, or hold off till age 70. Here are the calculations we did. Just basic, no adjusting for inflation or changes in our expenses:

If I live to age 80 (yes, I know I may live longer...this is just for illustration purposes) and take SS at:

age 63:
1. Multiplying 80-63=17 years times annual payment, I will get a total of:
\$380,000
2. Expenses above those covered by my pension over those 17 years:
\$306,000
3. \$380K-306K = \$74K in discretionary income over the 17 years, or \$363/month

age 66:
1. Over 14 years I will get a total of:
\$368,000
2. Anticipated expenses:
252K
3. Discretionary income:
116K or \$690/month

age 70:
1. Over 10 years I will get:
\$347K
2. Anticipated expenses:
\$180K
3. Discretionary income:
167K or \$1392/month

We decided it is well worth it to wait till age 66 in order to have almost twice as much discretionary income per month...but we would not hold off to age 70 because (a) we could not guarantee our physical ability to enjoy the additional income by traveling, etc and (b) neither one of us wants to work that long!

Just thought this might be of interest to you all.

How have you made the decision about when to take your SS benefits, if you are eligible?

 connieg Joined: May 2006 Posts: 3,151 Senior Member
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04-28-2017, 07:05 AM
 #2

I love that you really did the math. I wish others would take the time to work the numbers. It seems that you are making a very sensible decision in going at 66.

 1956BD Joined: Aug 2007 Posts: 22,788 Senior Member
1956BD

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Goal
04-28-2017, 07:13 AM
 #3

is to wait till I turn 66. That is about 5 years away. So in reality I will wait and see what happens.

 lisa53 Joined: Apr 2015 Posts: 4,988 Senior Member
lisa53

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One thing I didn't factor in...
04-28-2017, 08:32 AM
 #4

Is dh's social security. He is currently working part time. He earns just about what he will make from ss if he retires at 66. So that part is a wash...just exchanging one income for another. He never had a career like I had...he was a SAHD and then worked part time for most of our marriage. He only had a "real job" for about 7 years when the kids were in high school and college.

I think sometimes it's more complicated when both members of the family have had careers or if they are quite different in age. We are only 6 months apart, so everything will change at about the same time for us.

 amiga13 Joined: Feb 2014 Posts: 10,802 Senior Member
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04-28-2017, 08:57 AM
 #5

Not arguing, just trying to understand. I won't even get any SS.

Why do your expenses decrease? How can that be?

Last edited by amiga13; 04-28-2017 at 09:21 AM..

 Cassyree Joined: May 2011 Posts: 1,610 Senior Member
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04-28-2017, 09:40 AM
 #6

I took mine at 62. I'm divorced and the bulk of my income is from a state pension plus Social Security. Without SS, I could certainly survive and pay all my bills, but I would be dipping into my own capital for home repairs, some travel and entertainment, and many things that make my life quite enjoyable. I have a very comfortable but not extravagant retirement. My savings have actually grown in retirement.

Because of my divorce, I have half the capital/investments that I initially imagined going into retirement with. I'd like to keep as much of my cash and personal investments intact as possible. My income is strong compared to many other retirees, but my cash and investments are not as strong. I want to keep enough to buy into a continuing care community or decent nursing home if I don't get hit by a bus earlier.

I am healthy now, but I am a seven year cancer survivor. I know I'm mortal. I'm not willing to delay too many things too long.

My ex-husband's SS is much larger than mine because he made more money than I did and he's just started taking his SS at 66. If he should die before me, my SS will increase to the amount he now gets. A substantial increase in my income. So I guess in making my decision, I was not only gambling on how long I'd live but how long he'd live! Seems a little morbid, I know.

Not everyone who takes SS at 62 is being short-sighted. There are often good reasons that have been thought about for a long time.

They used to say the break-even point for SS was about 78. If you lived longer than that, you'd make more money over your lifetime by waiting for full retirement age (for me that's 66, not 62) to collect.

The future is always a gamble. Both of my grandmothers lived past 90. My father died at 67 and my mother at 75. You pay (or collect) your money, you take your chance.

 Abbigal Joined: Jan 2017 Posts: 824 Senior Member
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In my state
04-28-2017, 10:21 AM
 #7

retired teachers don't collect SS.

For those that do, what is the average monthly amount that each spouse collects?
For married couples, does each spouse collect the full amount, or is it reduced for married couples? It seems like if both spouses worked, they would each collect their full amounts.

Just trying to compare how people on pensions vs those on SS make out financially.

 cvt Joined: Jun 2007 Posts: 8,316 Senior Member
cvt

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Ss
04-28-2017, 10:22 AM
 #8

Like amiga13, I won't get any SS, not even DH's SS when he dies, even though I worked and paid into SS before becoming a public school teacher. This is thanks to the Government Pension Offset/Windfall Elimination Provision that we have in 17 states.

 Ruby tunes Joined: Sep 2012 Posts: 2,850 Senior Member
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Cvt regarding SS
04-28-2017, 11:04 AM
 #9

And this is one reason I'm a member of CalRTA.org, California Retired Teachers Association. Its main purpose is to protect our CA state teacher pension from the ravages of politicians and to work for repeal of the WEP/GPO which unfairly affects so many of us who worked as teachers.

 connieg Joined: May 2006 Posts: 3,151 Senior Member
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04-28-2017, 11:14 AM
 #10

I don't think our state teachers' retirement organizations have any real influence. All they can do is to write a letter in opposition.

WEP/GPO also affects me and I really doubt it will ever be repealed as they were enacted THIRTY years ago and nothing good has happened.

I would sincerely like to join a group but I don't see them being effective. Not their fault; they just don't have the political clout of \$\$\$\$ behind them!

 MathWA Joined: Aug 2011 Posts: 5,027 Senior Member
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04-28-2017, 11:16 AM
 #11

I have heard of states where teachers do not collect ss but is it because the state teachers decided not to pay into ss or did they not pay enough to reach the 10 year (40 point) requirement? Why would states choose to opt out of ss? Do they offer better retirement benefits to compensate for the lack of ss? I am just trying to understand this situation. Thanks!

 amiga13 Joined: Feb 2014 Posts: 10,802 Senior Member
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04-28-2017, 11:18 AM
 #12

Quote:
 Not everyone who takes SS at 62 is being short-sighted. There are often good reasons that have been thought about for a long time.
Thank you, cassyree! I think we all have different needs and to present SS info as a statement that waiting is always better is hugely erroneous. It might be better for some, but definitely not for others.

We have always believed that we are better at investing money than the government. Hence, we don't overpay taxes and DH took his SS at 62. Just our opinion.

 amiga13 Joined: Feb 2014 Posts: 10,802 Senior Member
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04-28-2017, 11:33 AM
 #13

MathWA, as I understand it, in California we don't pay into SS as public school teachers because we only pay into STRS. So we don't get SS. That's fair if one is a single (never married) public school teacher who never worked in the private sector. And, as you point out, those who did work the requisite quarters and also paid into SS will get a nominal pension in addition to STRS. However, many of us paid into SS for years and have husbands who receive SS and we won't see a cent of either one.

 2grade Joined: Jul 2006 Posts: 1,179 Senior Member

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Average Social Security Benefits
04-28-2017, 01:19 PM
 #14

As of July 2016, the average Social Security benefit is \$1,237.15 per month.
The majority of Social Security beneficiaries, about 72%, are collecting retirement benefits, either on their own work record, or the work record of a spouse. Within this category, here's how the average Social Security retirement benefit breaks down:
Retired workers \$1,349.59
Spouses of retired workers \$700.82

Taken from Motley Fool Sep 25, 2016

The maximum monthly Social Security benefit payment for a person retiring in 2016 at full retirement age is \$2,639. However, the maximum allowable benefit amount is only payable to those who had the maximum taxable earnings for at least 35 working years.

Many folks' SS benefits are further reduced by Medicare payments that may be deducted from the original amount.

Until recent Congressional changes stopped it, one spouse used to be able to file & suspend their benefit (at full retirement age) allowing it to grow until age 70, while claiming a spousal benefit from the other's SS benefit.

Everyone's situation is different. Choosing when to take SS is a personal choice. Though many financial folks are recommending waiting until age 70 to claim, longevity may play a role. A SS rep told me that that break even point would be living to 85 years old!

FYI: Here is a link that shows US Public School Teacher Pension Amounts.
https://www.teacherpensions.org/blog...nsion-my-state

This doesn't include private and parochial school pension amounts.

 MathWA Joined: Aug 2011 Posts: 5,027 Senior Member
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04-28-2017, 01:28 PM
 #15

Ok - I understand that some states dont collect ss and instead provide their own STRS. I dont understand why it would make a difference if a husband paid into ss and so did his wife? Shouldnt they each be able to draw their own ss as long as they worked the minimum of 10 years and also paid into the system during that time? How can that be denied?

 cvt Joined: Jun 2007 Posts: 8,316 Senior Member
cvt

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MathWA
04-28-2017, 01:37 PM
 #16

That's what's so unfair about the WEP/GPO law. It has been brought up to Congress many times and it has failed each time.

 amiga13 Joined: Feb 2014 Posts: 10,802 Senior Member
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04-28-2017, 01:57 PM
 #17

2nd grade, thanks for the link. After reading it, I am doubly happy to be in California.

Quote:
 That's what's so unfair about the WEP/GPO law.
MathWA, That's what I tried to say. Sorry I was unclear.

 Cassyree Joined: May 2011 Posts: 1,610 Senior Member
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You won't be convinced but...
04-28-2017, 02:04 PM
 #18

There are plenty of good reasons for the WEP/GPO law, but many people who live in states affected by it are not convinced by any of them. Social Security is not a retirement savings account. You don't get out what you put in. Many people get nothing although they contributed for 40 years and then died. There is no return of contributions. Most people collect more than they ever put in although you can't convince people of that either.

The system is set up to give the most help to people with low incomes. They get the highest percentage of return on their average salaries. On paper, some people who were covered by SS for just enough quarters to qualify (even if they didn't have low pay jobs) and those who worked in non-SS covered jobs which paid fairly well (like many teachers) but also worked part-time at low wage second jobs-all these people look like low income workers on paper because of their average SS taxed income over their working lifetime. When you consider their larger salaries on which they paid NO SOCIAL SECURITY TAX for years and years and their larger pensions which were intended to replace SS, these people (like teachers) were never the low income people that their SS covered average income would indicate on paper. It was a big loophole, closed by the WEP/GPO. Before that, people in those states were collecting disproportionately too much money from the system and were being financed by people in states where everyone paid into SS for all jobs their whole lives.

https://www.fool.com/retirement/gene...provision.aspx

Last edited by Cassyree; 04-28-2017 at 02:34 PM..

 Ruby tunes Joined: Sep 2012 Posts: 2,850 Senior Member
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Connieg
04-28-2017, 02:16 PM
 #19

On Tuesday this week, two other retired teachers and I met with our Congressman's district director to discuss WEP/GPO. We went as representatives of our local CalRTA division. Believe me, he listened very carefully to what we had to say. We may not have big bucks, but we have committed, active members who vote. And there is strength in numbers. If one thinks there is no possibility of change, then no change will occur.

Our contact with federal and state representatives is not a one time thing, it is ongoing. The security of our teacher pensions is at stake. And yes, I believe we can and do make a difference! We did here in CA just a few years ago when an agreement was finally reached in Sacramento to more fully fund our STRS. That was in large part due to CalRTA lobbying efforts. BTW, we are not aligned with any Union, we are exclusively about and composed of retired teachers.

Last edited by Ruby tunes; 04-28-2017 at 02:47 PM..

 spedder1 Joined: Sep 2014 Posts: 5,985 Senior Member
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Abigail re:SS
04-28-2017, 03:58 PM
 #20

I taught in private school for 18 years, plus worked before that in factories and fast food. I have paid in over 80 quarters. Illinois is a "windfall" state so I will only get a portion of my SS. I need to make an appointment to talk with them to see how much I am getting. I really need to start getting it at 62 as I will lose my IMRF pay. Well it will go from \$280 to \$11 per month starting July 1st.
Kathy

 amiga13 Joined: Feb 2014 Posts: 10,802 Senior Member
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04-28-2017, 04:38 PM
 #21

Spedder, what is IMRF?

Last edited by amiga13; 04-28-2017 at 05:26 PM.. Reason: Initials in wrong order

 Abbigal Joined: Jan 2017 Posts: 824 Senior Member
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04-28-2017, 05:32 PM
 #22

that there were so many details about SS benefits!

I did pay into SS, but as I mentioned will get no monthly benefit in my state since I collect a pension.

One good thing is that I worked enough quarters and had money taken out of my paycheck to qualify for Medicare Part A without having to pay for it when I reach 65.

On another note, I'm hearing that in the future (when we're long gone), there will be no SS and no Medicare in our country.

 juliet4 Joined: Aug 2006 Posts: 900 Senior Member
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SS retirement date
04-28-2017, 06:33 PM
 #23

I am retired but not yet taking SS. My husband is 67 but still works full time. Every year past 66 he waits is an 8% increase. Starting at 62 is a 25% reduction for life. For us, it just made sense to wait. In my district, teachers paid into SS and receive full benefits. I have a sister who teaches in a non contributing district so she will not collect. But she did not have to pay into SS for her entire career and put a like amount away every month. She has a huge 403b to draw from now in addition to a pension. I do agree that every situation is different and one has to make a decision based on personal finances.

 sonoma Joined: Sep 2010 Posts: 792 Senior Member
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question for lisa53
04-28-2017, 07:33 PM
 #24

Does social security automatically send you a statement at a certain age?

 spedder1 Joined: Sep 2014 Posts: 5,985 Senior Member
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Eimrf
04-29-2017, 04:56 AM
 #25

Is Iilinois Municipal Retirement Fund. I was a Teacher's Aide for one school year so was able to collect a small amount of money, about \$45/month. I had the option of collecting more for 2 years. That comes to an end soon. I will still get a little over \$10/month.
Kathy

 Abbigal Joined: Jan 2017 Posts: 824 Senior Member
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sonoma
04-29-2017, 09:02 AM
 #26

I've gotten some sort of summary statement from SS in the past.

SS has a website where you can check on things. You will have to create a user name and password to check on your record.

That's how I recently checked on my total "points" needed to quality for Medicare Part A. Good to know, because you might still have time to work a few quarters to earn enough points. If you don't have enough points, you can still get Part A, but you'll have to pay a premium.

Checking on your "points" might be a wise idea for everyone!

You could also go by a SS office to check on things, if one is nearby. I pass by the one near me very often, and there's always a line to get in the door!

 MKat Joined: Sep 2005 Posts: 4,899 Senior Member
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04-29-2017, 09:52 AM
 #27

I think I'd probably look at the overall number and take #1. I get that it's a bit of a luxury to be able to do that because you have to have other income streams to make it workable. However, more overall seems like a better deal to me. Am I looking at it wrong?

 lisa53 Joined: Apr 2015 Posts: 4,988 Senior Member
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MKat
04-29-2017, 10:40 AM
 #28

One reason to wait till your full retirement age is that if you retire early but continue to work and earn more than a specific amount by working, you will lose some portion of your SS check, I think. You can work any amount after your full retirement age without penalty.

Everyone has a different situation and different priorities. We are making up for the difference between my pension and our expenses by dh working part time, me working very part time, and using some money I inherited from my mother. That is working for us pretty well...but we can already tell that full retirement, with enough cash to have some fun, is pretty enticing.

So take the numbers for what they are worth...and do the math for yourself. The expenses and income drop at higher ages because you have fewer years till you die, and hence, fewer years of drawing SS.

You also have to consider your spouse and his/her benefits, possible inflation, other savings you may have, and a host of other things! This is just one piece of the puzzle, and everyone's situation is different.

 MKat Joined: Sep 2005 Posts: 4,899 Senior Member
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04-29-2017, 11:07 AM
 #29

Oh I definitely agree that everyone has to look at their own situation. For me, I'll probably take early if I take my own benefit. DH is younger and will still be working. If it's more advantageous for me to take half of dh's we'll need to look into if I have to wait until he claims to do so. It's all so confusing!

 amiga13 Joined: Feb 2014 Posts: 10,802 Senior Member
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Lisa
04-29-2017, 11:12 AM
 #30

Quote:
 The expenses and income drop at higher ages because you have fewer years till you die, and hence, fewer years of drawing SS.
I just don't get it. I'm sorry. How can expenses drop?

In my lifetime, expenses have basically risen. Utilities, for example, continue to rise. The price of a car is more than it was 10 years ago. It now costs \$7 to ride the cable car in San Francisco. I don't get the "fewer years" explanation. Please help me.

 amiga13 Joined: Feb 2014 Posts: 10,802 Senior Member
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04-29-2017, 11:20 AM
 #31

And, I think it's just a matter of how much you want when you want it. I want all that I'm entitled to as soon as I'm eligible because I want to manage the money and I don't know how long I'll live. It's not like I'm losing money. Please read this from SS:
If you start receiving retirement benefits at

age 62, you will get 75% of the monthly benefit because you will be getting benefits for an additional 48 months.
age 65, you will get 93.3% of the monthly benefit because you will be getting benefits for an additional 12 months.

BTW this is hypothetical for me because I don't get the SS I paid in, but I'm glad DH decided to draw early.

I don't think there's a right/wrong, but I do think we all need to be careful.

 lisa53 Joined: Apr 2015 Posts: 4,988 Senior Member
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Amiga
04-29-2017, 11:32 AM
 #32

What I calculated for expenses is the monthly amount over and above what my pension covers, multiplied by the number of months between the age I take SS and age 80. So, it's a total of expenses that would need to be covered by SS (or some other way). It does not take into account inflation, for two reasons:

1. I don't know how to determine how much that will be.
2. Both SS and my pension have COLA done from time to time (yes, I know, it is usually inadequate...but it is something).

So for me, it's just a rough estimate of how much income I must have in addition to my pension in order to cover my bills over the course of the time I take SS. It's a total over those years. If I take SS later, then fewer years, so a lower total.

It is also true that we expect to move to a smaller home (lower property taxes and energy expenses, hopefully), go down to one car, and make other money saving changes as we age. So (again not considering inflation) our expenses overall may drop even if the price of groceries does not.

 amiga13 Joined: Feb 2014 Posts: 10,802 Senior Member
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04-29-2017, 11:56 AM
 #33

Thanks, lisa.

 teach1975 Joined: Jun 2010 Posts: 1,922 Senior Member
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Wep
05-06-2017, 03:59 PM
 #34

I also think it's unfair for many of us. I will have over 30 years of substantial earning years paid into SS next year,when I plan to retire, but since I only had 27 or 28(not sure how they figure it) years at age 62, I lose SS money because I have a small pension (10 years)from a state that doesn't have teachers pay into SS. My husband had his 30 in by age 62, so he won't have to forfeit any SS.(He had 7 years in a state job with no SS) Why shouldn't years after 62 count???? It is confusing, but think I'll lose around \$200 a month, if I calculated correctly. The online site wasn't much help.

 SeaGlass Joined: Dec 2006 Posts: 2,981 Senior Member
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In Maine
05-10-2017, 08:33 AM
 #35

We can't take social security AND our pension....so I am left with about \$3,000 a month Our only option is our pension which isn't much.

Just not fair!

My husband is not a teacher so he gets his SS and his 401K.

 pausebutton Joined: Jun 2008 Posts: 914 Senior Member
pausebutton

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In VA
05-21-2017, 02:35 AM
 #36

You get your pension plus SS. I've recently been reading up on the mySS website. It's really informative. Hopefully this program will still be around once I get to the point of retiring.

Do most of you have an IRA or 403b in addition to this? I'm trying to learn about those as well.

 SeaGlass Joined: Dec 2006 Posts: 2,981 Senior Member
SeaGlass

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In Maine
05-26-2017, 07:48 AM
 #37

we cannot collect SS and our pension. We only get our pension.

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