calculation of Social Security benefits
March 10, 2011 8:39 AM Subscribe
When calculating how much Social Security a person is going to collect, does the social security administration value any years of earning over others? For example, does it matter if you've earned more in the five years prior to collecting (retirement) then in previous years, or are all the years you've worked averaged , or...what? Essentially my husband, who is five years away from collecting benefits at the oldest age to begin doing so, wants to know if he should work his brains out now or if it won't really matter since he's been working all his life. Thanks.
More in = more out. Done deal.
posted by Freedomboy at 9:10 AM on March 10, 2011
posted by Freedomboy at 9:10 AM on March 10, 2011
Response by poster: Excellent. thank you very much.
posted by DMelanogaster at 9:38 AM on March 10, 2011
posted by DMelanogaster at 9:38 AM on March 10, 2011
Interestingly, since it's likely that due to inflation he's probably earning MUCH more now than he did 30+ years ago, the last 5 working years will probably have quite an impact on his earnings.
posted by eas98 at 9:42 AM on March 10, 2011
posted by eas98 at 9:42 AM on March 10, 2011
eas98, that would be true if SSA didn't adjust for inflation when doing the calculations, but the figures used by the Social Security Administration to calculate your income are inflation-adjusted, so inflation shouldn't have an impact.
posted by phoenixy at 10:20 AM on March 10, 2011
posted by phoenixy at 10:20 AM on March 10, 2011
The important factor is that past wages are adjusted for inflation.
For example, after adjusting for inflation, $4,500 earned in 1970 would be weighted the same as $25,000 earned in 2010.
After adjusting for inflation, they sum your 35 highest earning years over your lifetime.
posted by JackFlash at 10:20 AM on March 10, 2011
For example, after adjusting for inflation, $4,500 earned in 1970 would be weighted the same as $25,000 earned in 2010.
After adjusting for inflation, they sum your 35 highest earning years over your lifetime.
posted by JackFlash at 10:20 AM on March 10, 2011
That statement you get in the mail should have a listing of annual Social Security earnings. If there's any low years in the average you can replace with this year's income, that'll boost the benefits. But each year is only 3 percent of the total so it depends on work history and "bend point" whether it's worth much to you.
There's a number of online benefits calculators, so you can create alternative scenarios and decide among them. If it were me, I'd cook up a spreadsheet to calculate the payout as exactly as I can under various methods using their official, slightly complicated formulas.
posted by pwnguin at 10:39 AM on March 10, 2011
There's a number of online benefits calculators, so you can create alternative scenarios and decide among them. If it were me, I'd cook up a spreadsheet to calculate the payout as exactly as I can under various methods using their official, slightly complicated formulas.
posted by pwnguin at 10:39 AM on March 10, 2011
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A. No. Retirement benefit calculations are based on your average earnings during a lifetime of work under the Social Security system. For most current and future retirees, we will average your 35 highest years of earnings. Years in which you have low earnings or no earnings may be counted to bring the total years of earnings up to 35.
-http://www.ssa.gov/planners/faqs.htm
posted by Nonsteroidal Anti-Inflammatory Drug at 8:44 AM on March 10, 2011