Every individual has a possible variation that prevents making a general calculation accurately and anyone that does this privately for a fee has insurance in most cases or denies responsibility for mistakes. It is true that social security alone is in most cases is not enough to live on, but you must realize some people don't even get social security and it is a relatively new way of helping support older people that would not receive pensions when you look at the history of the USA. I recently became interested in other countries and how they deal with older populations. It is quite amazing, you should take a look!
Interest rates in 2020 and beyond
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Here are two quotes from my previous Link:
"By the 1930s, the United States was the lone modern industrial country where people faced the Depression without any national system of social security, though a handful of states had poorly-funded old-age insurance programs."
"Compared with the social security systems in western European countries, the Social Security Act of 1935 was rather conservative."
"By the 1930s, the United States was the lone modern industrial country where people faced the Depression without any national system of social security, though a handful of states had poorly-funded old-age insurance programs."
"Compared with the social security systems in western European countries, the Social Security Act of 1935 was rather conservative."
So I guess there is no one else who has done the calculation I asked about.SLB_SA said:
Is there no one else? (to quote Achilles in the movie Troy).
Here is some data on France, try to boil down the confabulation, I surely cannot, LOL. Are the top level people getting $90,000 for two over there? If they are, I am sure the people would riot. What, they're already doing that, you say.
https://www.ssa.gov/policy/docs/progdesc/ssptw/2016-2017/europe/france.html
Qxxx said:
1. If you paid French people in dollars (e.g. $90,000), of course they will riot.
2. I don't live in France; I have only been there once and it is my least favorite country in Europe to visit. I suspect that politicians there get more than 80896 euros per year in retirement, just as politicians in the US get far more than $90,000 per year in retirement. But individuals and married couples who paid their money in FICA taxes should get the benefits they earned, without means testing.
3. Many retired people are not receiving enough from social security to live on. I think we are in agreement here. Trying to punish higher earners like your sister will not help lower earners in any way and is a completely different issue; one on which we seem to completely disagree.
"Is there no one else? (to quote Achilles in the movie Troy)".
I guess we know the answer to that question, lol.
In the 1990s, I spent 18 months living and traveling in europe. Possibly the best time of my life. I would say that the French people were not the most overly hospitable towards americans. I found the Italians and Greeks and Spaniards to be much friendlier.
I also discovered that my grad school advisor from Berkeley was making $175,000 a year when he retired and his state funded pension was $140,000 (80% of final salary) after retirement. Small wonder there are so many homeless in California.
I guess we know the answer to that question, lol.
In the 1990s, I spent 18 months living and traveling in europe. Possibly the best time of my life. I would say that the French people were not the most overly hospitable towards americans. I found the Italians and Greeks and Spaniards to be much friendlier.
I also discovered that my grad school advisor from Berkeley was making $175,000 a year when he retired and his state funded pension was $140,000 (80% of final salary) after retirement. Small wonder there are so many homeless in California.
I really enjoyed Italy (2002,2003), Germany (2003,2005,2014), Lithuania (2015,2017) and Spain (2012), as well as England & Scotland, in Europe. Australia, Taiwan, etc were also really nice. I always like visiting Canada. But France? Not so much.
Read the book "The Prudent Professor: Planning and Saving for a Worry-Free Retirement from Academe" if you want to see how well Stanford treats its retired faculty. Both Berkeley and Stanford are amazing universities.
Read the book "The Prudent Professor: Planning and Saving for a Worry-Free Retirement from Academe" if you want to see how well Stanford treats its retired faculty. Both Berkeley and Stanford are amazing universities.
My wife retired at 45 after about 25 years of SS contributions and the SS site says her benefit in today's dollars would be $2615 a month at age 67 or 3243 a month at age 70. That is $31,380 a year at 67 or $38,916 at 70.
Had she kept working another 20 years from 45 to 65, her benefit would have only gone up a couple hundred a month. I figure those are the "sucker" years.
The real bonus is I can claim for myself half of her benefit in addition to hers, even though I don't have a full 40 credits. So combined, we could have about $46,000 a year at age 67 from SS or $58,374 at age 70.
This is assuming of course that the laws don't change.
Had she kept working another 20 years from 45 to 65, her benefit would have only gone up a couple hundred a month. I figure those are the "sucker" years.
The real bonus is I can claim for myself half of her benefit in addition to hers, even though I don't have a full 40 credits. So combined, we could have about $46,000 a year at age 67 from SS or $58,374 at age 70.
This is assuming of course that the laws don't change.
IGBT said:
If I understood your information correctly, your wife has ten zeros in her list of top 35 indexed earning years. Her benefits would be 40% higher if she earned the same salary (adjusted for inflation) since 35/25=1.40. This would be $54,482 per year, starting at age 70, and this is about $9000 larger than the maximum social security benefit for one person. I would double check your information.
ADDED: I should have said that her AIME would be 40% higher. I need to calculate her PIA; your figures might be correct.
Your wife's year of birth affects her "bend points" and so my calculation might not be completely accurate but it should be close. Your story did not sound right initially and I would not want you to get a nasty surprise upon retirement. As you can see below, your figures could be correct. Congratulations.
If I use the current cap on FICA taxed earnings of $132,900 and assume your wife earned (the SSA indexed equivalent of) $132,900 for 25 years, then her list of 35 highest (SSA indexed) earning years would consist of 25 items with $132,900 and 10 items with $0. If I add these up and divide by 35 (i.e. if I average these) and divide by 12 (to get monthly averages), I get:
(1) $3,322,500
(2) $3,322,500 / 35 = $94,929
(3) $94,929 / 12 = $7911 (AIME)
Now the bend points become important and I don't know her bend points. My guess at her PIA is $2560 but her amount will be a little higher because her bend points are higher than the ones I used. So $2615 is within the realm of possibility.
If she had 35 years of earning $132,900, her AIME would be $132,900/12 or $11,075 and her PIA would be (somewhat above) $3034, let's say $3094. Since $3094-$2611 = $483, your comment "Had she kept working another 20 years from 45 to 65, her benefit would have only gone up a couple hundred a month" is correct if $483 is "a couple hundred"
If I use the current cap on FICA taxed earnings of $132,900 and assume your wife earned (the SSA indexed equivalent of) $132,900 for 25 years, then her list of 35 highest (SSA indexed) earning years would consist of 25 items with $132,900 and 10 items with $0. If I add these up and divide by 35 (i.e. if I average these) and divide by 12 (to get monthly averages), I get:
(1) $3,322,500
(2) $3,322,500 / 35 = $94,929
(3) $94,929 / 12 = $7911 (AIME)
Now the bend points become important and I don't know her bend points. My guess at her PIA is $2560 but her amount will be a little higher because her bend points are higher than the ones I used. So $2615 is within the realm of possibility.
If she had 35 years of earning $132,900, her AIME would be $132,900/12 or $11,075 and her PIA would be (somewhat above) $3034, let's say $3094. Since $3094-$2611 = $483, your comment "Had she kept working another 20 years from 45 to 65, her benefit would have only gone up a couple hundred a month" is correct if $483 is "a couple hundred"
My numbers are straight off the SS site using her actual income and contributions. She retired at 45/46 in 2015 (although we had a little SS income that year from her vacation pay and stuff). Zeros since then.
She did have very high earnings the previous 20 years, hitting the cap on all of them I think (although the cap was not $130,000 back then)
I mean we are still 15 to 20 years from collecting anything so the laws could very well change, I am just putting out there what they currently say we will get in today's dollars.
I figure between her and her employer she put in over a quarter million, maybe a bit more or less. And obviously it could have been growing if in a retirement account, so this isn't really "free" money.
The shocker is the meager (about $500 a month) additional payment she would get if she were to put in another quarter million plus into the system over the next 20 years.
She did have very high earnings the previous 20 years, hitting the cap on all of them I think (although the cap was not $130,000 back then)
I mean we are still 15 to 20 years from collecting anything so the laws could very well change, I am just putting out there what they currently say we will get in today's dollars.
I figure between her and her employer she put in over a quarter million, maybe a bit more or less. And obviously it could have been growing if in a retirement account, so this isn't really "free" money.
The shocker is the meager (about $500 a month) additional payment she would get if she were to put in another quarter million plus into the system over the next 20 years.
IGBT said:
This is a great post because it points out how younger (than me) people are being put at disadvantage. My FRA is 66 and (I assume) your wife's FRA is 67; if not, then let's pick someone else out who has the same earning history as your wife and a FRA of 67.
If I start SS at 70, I will get 1.32 times my PIA as my monthly social security benefit; that is, I get a 32% bonus.
If your wife starts SS at 70, she gets 1.24 times her PIA as her monthly social security benefit; that is, she gets a a 24% bonus.
What makes this a great example is that my AIME is lower than her AIME and my PIA is lower than her PIA but my benefit at age 70 is higher than her benefit at age 70. This illustrates how Congress, when it raised FRA over time, put younger people at a disadvantage.
The real problem, although I guess it is designed this way on purpose, is that you don't pay SS on investment income.
Of course if they were to make a change where SS is taken out of investment income, then probably that income would also qualify for retirement account contributions as earned income does now and investment income does not. We would then shelter much more money in IRAs and self directed 401Ks so a change like that could be a net benefit.
There really are a lot of ways to work the system even if you are not a billionaire.
Of course if they were to make a change where SS is taken out of investment income, then probably that income would also qualify for retirement account contributions as earned income does now and investment income does not. We would then shelter much more money in IRAs and self directed 401Ks so a change like that could be a net benefit.
There really are a lot of ways to work the system even if you are not a billionaire.
IGBT said:
I agree that it is "complicated" (and "unfair"). I had some earnings overseas in 2018 and did not pay FICA taxes on these earnings, although I did pay taxes in the country where I worked (and did reduce my federal taxes because I paid taxes in a foreign country).
SLB_SA said:
We made over $250,000 on some investments in 2018 and didn't pay a dime in SS which seems really unfair considering all I did was click a few buttons here and there for about 20 minutes a week. Some poor guy at Amazon is paying SS while lifting 50 pound boxes all day. I feel guilty and try to overtip and contribute to charities to compensate a bit.
IGBT said:
You had a great year in 2018; 2017 and 2019 (so far) were better years for me than 2018.
I agree on wanting to "pay it back" and plan to contribute to HOWA (and maybe elsewhere) once my cash flow issues (i.e. expenses for (adult) kids) are resolved; multiple mortgages can get expensive.
