SSA Offering: Retirement Estimator

Retirement calculators litter the web. The newest (quite possibly!) is published by Social Security Online. Called the Retirement Estimator, this tool estimates Social Security (SS) benefits only for people who are not yet collecting SS. The calculation is based on your data already in the system plus your entry of your last year's income or what you think your "last year" will be at the time you stop working. If you are a very young boomer (in your 40s), you may have difficulty projecting your salary 20 years out. If you are closer to the typical retirement ages (62 and 66), you can probably make a good guess and thereby produce a realistic estimate of future benefits.

Multiple scenarios. What I like best about the calculator is the ability to produce several different estimates. So, I entered stats for age 55, age 62, and age 66. Scenario building requires that you name a salary for each "stop" year, so precision is not the goal here. Making comparisons is.

Extra boomer woman issue: Playing around with the Retirement Estimator invites consideration of an issue for women who may end up drawing on a spouse's or ex-spouse's figure. (Complex enough for its own blog entry. On another day.) That information is not incorporated, so the Estimator provides just part of the picture for women.

One more issue: Using the Estimator requires that you enter your Social Security number in addition to name, birth year, and last year's salary. If you have a concern about entering such data, this benefit calculator is not for you. (You can find more generic versions around the web.)

Imagining the research potential: On the topic of data, I found myself imagining what the Retirement Estimator produces for the Social Security Administration. I doubt that SSA is tracking my personal "what if" scenarios, but I do wonder if a more general data set is being generated. Wouldn't it be neat to know if Americans are seeking estimates for 5 years from now? Or maybe 10 years? Or even more?

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Retirement: When Minimum Wage is Maximum Wage

U.S. minimum wage going up: As of this week the minimum wage in the U.S. will be $6.55/hour. And for retirees between 62 and 66 who are already drawing Social Security, that will be (just about) their maximum earnings limit without offsetting some of their retirement check. Rounding the figures for convenience:

Minimum wage of $6.55 = $13K per year income
Maximum "extra" wages for boomer on Social Security = $13K

Early retirees draw a percentage of "full retirement." Leaving the workforce early (for the current crop of leading boomers, that's before age 66) is allowed but the Social Security benefit is reduced by up to 30%, with the reduction running 5-7% per year of age. I'm referring to retirees at the start of the baby boom, meaning birth year 1946 and later. For a full breakdown on percents and year of birth, see Full Retirement Age at Social Security Online (www.socialsecurity.gov, a site that is sure to need no SEO* in the coming years).

What's wage got to do with it? Age 62 retiring boomers have an earnings limit of about $13,000 after which Social Security benefits are effectively "reduced" by about a third. So, if your Social Security benefit is $12,000, you can earn $13,000 from a job with no penalty. But if your total income goes above $25,000 for the year, your "extra income" will be offset by a reduction in SS benefit. Fancy math and a consult with the folks at Social Security may assure you that upon "full retirement" age, an "early" penalty may work in your favor eventually. The point is, you'll need to do some figuring. (After full retirement age, no figuring is needed as there is no limit on earnings from that point onward.)

The comparison between minimum and maximum wages: Just by coincidence, the 2008 increased minimum wage is approximately the same amount as the early retirees' maximum extra wage. $6.55/hour for 40 hrs/week for 52 weeks/year = $13,624. The earnings limit under Social Security was $12,960 for 2007; it will be $13,560 for 2008.

A handy formula that's realistic for converting hourly wage to annual income is to multiple $6.50 times 2000, because that's very close to a full year's work with a couple of weeks off. This formula permits you to quickly inform your threatening-to-drop-out adolescent relative that the outstanding job paying $7 an hour is actually only $14K a year. And the even more outstanding wage of $8 comes to only $16K a year. It's amazing how many adolescents marvel at the arithmetic. Eventually, they realize it was simple multiplication. (Or maybe if they drop out, they won't.)

*SEO: Search engine optimization, or processes whereby Internet publishers increase the volume of "traffic" to web sites. ~ Lida

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.