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I am rapidly approaching 62 years of age and have been retired for 10 years.

A friend told me my benefit will be substantially reduced as a result of not having significant income that was Social Security taxed/witheld during the final 3 years prior to being eligible. According to him, a big part of the formula is the amount of tax paid/withheld into the system the final 3 years prior to being eligible.

Does anyone (El Silencio perhaps) know if my benefit will be reduced when "pay day" comes around?

Jesus I hope not. As far as I know, it's the last three work years which determines the amount. I stopped working at 50 and am approaching 60 now (at breakneck speed). I got and still get statements about my expected pension and it's not based on the years after I stopped working. I believe there's a place on the government SS website that will do a calc for you based on your earings in the last years you had taxable income. http://www.ssa.gov/OACT/quickcalc/index.html

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"The only normal people are those you don't know very well." Joe Ancis

used to b now i believe they average 35 years.. don't know how you would find out for sure except once a year they send out a guesstimate onyour bday....

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I know nothing, nothing!

Luck,

El S is probably at DFW right now having a Stoli Raspberry and tonic But as Luck would have it he will be in SJO tonite, I'm sure you can find him lounging at the DR or SL the next few days.

A guy from CRL had the answer:



He sent me a link to:
Social Security Statement: How Your Benefit Is Calculated

I am quite sure the monthly benefit amount is reduced by 25% if you elect to start collecting at 62.

What did you do for work to retire at 50?

I assume you're talking to me. It wasn't what I earned, it is what I kept. I have many friends who earned more than I did, and are still living paycheck to paycheck. But to answer your question, I was a computer programmer from 1985 to 1999. I never earned 100k in any year even at my peak. (how-to video course soon to be released on DVD)

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"The only normal people are those you don't know very well." Joe Ancis

I retire in 6 years and this is what I found out after mucho research. I am far from an expert but I know that if you retire at 62 as opposed to say 70, your benefit is reduced by approx half. For instance, I would collect $996 dollars per month if I retired at 62, but $1890 if I retired at 70. They use a formula based loosely on what they call "qualifying years". This is the minimum amount that you need to earn each year in order to "qualify" for SS. It all started out around $1200 way back when and has steadily increased to around $15,000 today. To qualify for the max SS you need to have 30 years of "qualifying wages". So as long as you met the minimum for at least 30 years, you would get the max as long as your age qualifies. If you miss by as little as one year, i.e., 29 years, your benefit could be reduced by as much as 15-20 percent. Shitty at best. They live by their golden rule, we got the gold, we make the rules. If you start drawing SS before you reach full retirement age, mine is 66 (5 yrs from now), then they will also take away SS one dollar for every two that you earn through a regular job with wages. What most people do not realize is they also take away one dollar for every three that you earn in the first year of retirement. When you hit 70, you can earn what you will and still receive full benefits IF you waited until the appropriate year to receive full benefits in the first place. And it will undoubtedly get more complicated as time goes on.

3P

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CR LOS or PI Come horny, Leave Happy
Being 'over the hill' is damn sure better than being under it!
I was always taught to respect my elders, but it keeps getting harder to find one.

Money now is better than money later, especially when later we may not even exist...

The future is NOW ...enjoy it to the maximum now

A good thing to remember is that your earned income does not include interest, periodic payments, or capital gains.

So with some financial structuring some people can get additional income that does not reduce SS.

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Living life on the beach in Brazil Life could be worse
Duardo

Based on the info sheet I received from the SSA in June of this year "If you have enough work credits, we estimate your benefit amounts using your average earnings over your working lifetime."

Credits:
You earn one credit for each $1050 of wages or self-employment income. When you've earned $4200 you've earned your four credits for the year. Most people need 40 credits, earned over their working lifetime, to receive retirement benefits.

I just turned 55. Based on what I've earned so far and what they project I will earn until I retire, if I decide to begin drawing my benefits at 62 I would get $1498 per month. If I wait until age 66 (my current full-benefit age), the benefit would be $2056 per month. That jumps up to $2797 at age 70.

Not allowing for any cost-of-living adjustments (same percentage either way but a little more $ calculated on the higher benefit) it would take me until about age 73 to make up the difference of waiting until 66 to begin taking SS benefits.

Right now I'm leaning towards starting at age 62 and taking my chances. Fortunately I won't have to depend solely on my SS benefits.

They included this caveat:
Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2041, the payroll taxes collected will be enough to pay only about 78 percent of scheduled benefits.

You can find out more on your personal situation at:
http://www.socialsecurity.gov/mystatement/

If anyone plans to rely solely on Social Security for retirement income they are in serious financial trouble.

The problem people get into is considering Social Security as a pension--it is only intended to be and is a pension supplement. It is also not contractual (can change terms and conditions at any time) and it is most definitely not a type of insurance, being "pay as you go". This reiterates what others here (most notably Witling) have said though more compactly.

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"A man accustomed to hear only the echo of his own sentiments, soon bars all the common avenues of delight, and has no part in the general gratification of mankind"--Dr. Johnson
"Amen, brother"-ED

One of my pensions has the government off set which all but precludes me from receiving social security even though I have paid into it for five decades. Sh*t that make me sound old.

I know this is getting off track a bit but what angers me most about SS pay-ins is the cut-off at such a paltry rate, currently about $100K. Above that you don't pay in to the system. This cut-off was included in the original legislation in '35 so it would fly in political terms but a nuclear plant operator and a gazillionaire paying in per year the same amount?? That sound right to you? End of rant.

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"A man accustomed to hear only the echo of his own sentiments, soon bars all the common avenues of delight, and has no part in the general gratification of mankind"--Dr. Johnson
"Amen, brother"-ED