Social Security Questions

[mjkacmom]

So you had the income to save for retirement on your own. Yes, I have been paying into the system since 1973, so pretty close to 50 years when I retire. I have no complaints with social security. My dad died when I was 9 and I got survivors benefits until I turned 21. I understand now it only goes to 18. My mom invested that money, paid for my college, with money to spare. But that was also an era when you could get 16% interest on a bank CD.

Not necessarily, especially for those in high COL areas. I did my dad’s finances before he passed, there is no way he could’ve lived on SS, even with no mortgage. There are many here living paycheck to paycheck, with no savings.

 

[aprilgail]

Not necessarily, especially for those in high COL areas. I did my dad’s finances before he passed, there is no way he could’ve lived on SS, even with no mortgage. There are many here living paycheck to paycheck, with no savings.

I agree- my mom gets 1200 a month- you can't even get a 1 bedroom apartment for that and if you could that still leaves her no money for food, meds and Dr's-

 

[tvguy]

I have come to understand that those statements show how much you would get if you continue earning what you're earning now until you reach full retirement age. I lost my job in October 2017 and my older brother lost his last week. The best I've been able to do is find a job earning less than 75% of what I was earning previously, in an utterly horrible working environment, and my brother doesn't think he'll do as well as that. Age discrimination is a very significant factor if you end up having to change jobs in your late 50's or early 60's. Many of us are finding that we either have to take really big pay cuts or take jobs with horrible working environments by comparison to what we had before, or both.



Actually, there was no such thing as "retirement savings" per se until 1974 - there were pensions, and there was savings - period..

.They base your benefit on your 35 highest earning years. I'm 5 years away from full retirement age and those highest earning years are behind me. Not much overtime these days.
There certainly were no tax deferred retirement plans, but my dad had a retirement account at the bank, and he died in 1967 so they were around. I think they offered higher interest but carried penalties if you made a withdrawalo.

 

[tvguy]

Not necessarily, especially for those in high COL areas. I did my dad’s finances before he passed, there is no way he could’ve lived on SS, even with no mortgage. There are many here living paycheck to paycheck, with no savings.

Well it is certainly one reason people down size or move when they retire. But you don't have to watch a whole lot of those financial makeover shows to see that an awful lot of people had more than enough income to save for retirement.....or just save.......and made a choice not to. Our schools really need to include classes on money management. I know I could have done better, but even a little bit every year over 45 years has added up to a lot of money for retirement.

 

[tvguy]

I agree- my mom gets 1200 a month- you can't even get a 1 bedroom apartment for that and if you could that still leaves her no money for food, meds and Dr's-

My mom's benefit was $1,250 a month. I managed her finances the last year of her life (2012-13) and her expenses were never more than $700 a month. Social Security covered it all. She also had a $400 pension and a $200 a month annuity and $300 a month required distribution from her IRA. But like I said, my parents lived through the depression, and their mindset was to keep expenses down. She drove one car 27 years, another 14 years, one that was a lemon she only had 2 years, and her car when she passed away was 10 years old.

 

[4kids4karen]

I'm pretty sure the first rule of thumb for retirement is to have all debt paid off, including mortgage.

College debt is a hot topic around here. If you're serious about retirement, consider having your kids go to affordable schools. Even if "they" take on a lot of debt, and not you, you may wind up with them needing your support later on.


Interesting point about benefits still increasing while working. I suppose this is true even if one is working part time and still paying into the system? Does anyone know what the income limits are for someone working while collecting?

There are not "rules" for when it is best to retire (maybe in a DIY book from the bookstore LOL). People retire for various reasons, some health reasons where they would want to keep working but physically can not. Those individuals may not be out of debt but have very few options. Yes, it is "nice" to be out of debt and retired. I just don't think the average person is fully out of debt when they fully retire.

My husband retired in 2005 after 25 years of military service, but started working as a civilian three desks over. LOL. I retired after 20 years of service and took a civilian job with a private company. As part of my job I speak to people everyday, many retired who are buying and financing houses at age 70+. We both also get VA disability checks. I did mention the kids college, which we will pay for without incurring any debt. That is why I said we will work until they graduate college, because we are paying for it and there will not be any student loans. There will be some GI Bill coverage, 529 plans are in place, and the rest we will pay cash. It's also about standard of living. I personally like to travel and vacation. I like international travel as well, so working my current job allows that. After the kids graduate, we will reassess our situation. DH does have some health issues and by that point, may want to fully retire while I keep working.

As far as income when taking SS: Google results says:

"Limits on Earned Income If Claiming Early Benefits
Until you reach full retirement age, Social Security will subtract money from your retirement check if you exceed a certain amount of earned income for the year. For the year 2019, this limit on earned income is $17,640 ($1,470 per month). The amount goes up each year. If you are collecting Social Security retirement benefits before full retirement age, your benefits are reduced by $1 for every $2 you earn over the limit. Once you reach full retirement age, there is no limit on the amount of money you may earn and still receive your full Social Security retirement benefit."

For us, early SS doesn't make sense based on DH current income, and what he would get under early SS.

 

[vacationer1954]

.They base your benefit on your 35 highest earning years.

To be precise, they base your benefit on the 35 best years with regard to your "indexed earnings", which is an inflation-adjusted projection of your earnings. During these past three years my indexed earnings have been lower than every year prior back to 1987. So I had 31 years with indexed earnings better than I'll be able to get now that age discrimination has depressed my income. So what my income during these recent years is doing is displacing the best four years of my working life prior to 1987. So, yes, that is having impact, but not lots of impact.

I'm 5 years away from full retirement age and those highest earning years are behind me.

All 35 of them?

There certainly were no tax deferred retirement plans, but my dad had a retirement account at the bank, and he died in 1967 so they were around. I think they offered higher interest but carried penalties if you made a withdrawalo.

I suspect you're referring to a Keogh plan. I forgot about them. Keogh plans were effectively self-funded pensions, and therefore effectively a form of life insurance (and perhaps even more specifically, a type of annuity), since they guaranteed an income stream regardless of longevity. They've been around a bit longer - since the early 1960s. Other than that, I don't recall there being any legal provisions for any accounts for which terms and conditions were predicated on reaching some advanced age after which working life was expected to end.

 

[longboard55]

I will go at full term which is 66 and 7 months. We have everything paid off and large savings, plus my wife gets a sizable pension.

 

[tvguy]

All 35 of them?

I suspect you're referring to a Keogh plan. I forgot about them. Keogh plans were effectively self-funded pensions, and therefore effectively a form of life insurance (and perhaps even more specifically, a type of annuity), since they guaranteed an income stream regardless of longevity. They've been around a bit longer - since the early 1960s. Other than that, I don't recall there being any legal provisions for any accounts for which terms and conditions were predicated on reaching some advanced age after which working life was expected to end.

Well, I guess anything can happen, but my base pay really hasn't changed much, the overtime has. I am making $10,000 a year more in base pay now than I was 1989. In 1989 I made $20,000 more than I make now due to overtime, 2005 $15,000 more. 10 years ago in my current job I had an hour a day built into my schedule, about 250 hours a year just there, not counting vacation and sick day coverage.. Last year I had 40 hours of overtime for the whote year. So I would be shocked if any of my remaining years will jump again. But if I retire in 18 months like I plan and live off savings , I will have 3 years with no earned income before full retirement age.
I was 9 when my dad died, but Googling Keogh plans, they started in 1962 so it is likely this account was a Keogh plan.

 

[mjkacmom]

My mom's benefit was $1,250 a month. I managed her finances the last year of her life (2012-13) and her expenses were never more than $700 a month. Social Security covered it all. She also had a $400 pension and a $200 a month annuity and $300 a month required distribution from her IRA. But like I said, my parents lived through the depression, and their mindset was to keep expenses down. She drove one car 27 years, another 14 years, one that was a lemon she only had 2 years, and her car when she passed away was 10 years old.

A family of 4 here making under $68,000 is considered low income, there is no way anyone could survive on that.

 

[georgina]

A couple of people mentioned looking online at the website. It was recommended to us to go online to ssa.gov and make accounts so that no one who got a hold of our SSN's could fraudulently file for benefits under our numbers.

 

[tvguy]

A family of 4 here making under $68,000 is considered low income, there is no way anyone could survive on that.

Gross income or net? Where is here? I'd be low income there for sure. And I'm in California which is often considered a high cost of living area and our net income is below that and we're firmly middle class here. Low income here is below $43,260 .

 

[4kids4karen]

So what am I not understanding here? Everyone seems to feel l like it's worth taking early. Was talking with DH at work and a guy one pay level over him is also taking it early and is going to keep working. So I came home and looked up his info again on the SSA.gov website where you put in all the data and it gives you the numbers.

Monthly Benefit at age 62 is $1607
Monthly Benefit at age 70 is $2991
Monthly Benefit at age 67 is $2375 <-- Full Retirement.

Following the formula for the penalty if he keeps working his current job, his monthly penalty is $2589.
I did read that once reaching full retirement age they add the penalty back into the benefits. So does that mean at age 67 he is recalculated to get $2589 MORE over the $1607? For a total of $4197? That might make a difference long term.

So if the monthly penalty to pay back each month is $2589, how is he going to get $1607?

I admit I am learning, but based on my numbers I don't know how he would draw a SS check if working? Someone feel free to explain in simple terms since I don't see the benefit and if I am missing something, please let me know.

Note: These numbers are based on his full-time job. His retirement pension or VA disability wouldn't count as income for these calculations.

 

[4kids4karen]

NOLO has a different answer for getting the penalties back than the first article I read saying it is added to the monthly benefit.

Gaining Back the Reduction in Benefits From Working
The amounts of early retirement benefits you lose as a setoff against your earnings are not necessarily gone forever. When you reach full retirement age, Social Security will recalculate upward the amount of your benefits to take into account the amounts you lost because of the earned income rule. The lost amounts will be made up only partially, however, a little bit each year. It will take up to 15 years to completely recoup your lost benefits. And remember, none of this readjustment will change the permanent percentage reduction in your benefits that was calculated when you claimed early retirement benefits (the early retirement penalty).

 

[mjkacmom]

Gross income or net? Where is here? I'd be low income there for sure. And I'm in California which is often considered a high cost of living area and our net income is below that and we're firmly middle class here. Low income here is below $43,260 .

That would be gross, Essex County, NJ. I just looked at rentals and there are no 3 bedrooms for rent in my town under $3000.

 

[disykat]

speaking of living on SS... my parents did that pretty easily for a period of time, but not their entire retirement. They also had money saved in investments, retirement accounts, etc.

The first 10 years of retirement they lived like they always had plus more - traveling, socializing, eating out, etc. (ages 65 - 75)

Then they had a period of about 10 years where they weren't as inclined to do those things (health, energy, etc.) and spent less than their SS income. Their home was paid for, they rarely went anywhere so not much gas or car maintenance, new clothing, entertainment, etc. costs. As mom cooked less, even food got less expensive - lots of meals were scrambled eggs or baked potatoes, etc. Even utilities went down as rooms in their home got closed off, less hot water was used, etc. It was crazy how little they spent - because they had plenty of money to spend. My mom was horrified when we eventually forced her to have Home Instead in because she couldn't justify paying someone to help her when she was just fine! Their savings grew dramatically during those years. (75 - 85)

Then they moved into senior residential and spent their monthly income of SS + minimum distributions from their retirement investments. Now they live in assisted living and are spending that plus spending down their investments. We're anticipating another move to memory care so they'll spend even more. All that money they saved will come in handy paying those bills. (85+)

DH and I anticipate our spending will be the same - higher at first, then lower as we slow down, then higher as our needs increase.

My MIL is younger and lives on only SS, but with help from her children and grandchildren. We pay her electricity, others help out with gifts of food, etc. We pitch in if there's a home maintenance issue. We're also helping her gradually sell off assets for infusions of cash when needed. It's not the most fun way to live.

 

[tvguy]

Now they live in assisted living and are spending that plus spending down their investments. We're anticipating another move to memory care so they'll spend even more. All that money they saved will come in handy paying those bills. (85+).

Yes, everyone should consider long term care insurance. My mom had it. My wife and I have had it for about 10 years. My mom's policy covered all but $300 a month of her long term cost. Her social security easily covered that, and the upkeep on her home which I did not sell until she passed away.

 

[jo-jo]

My mom's benefit was $1,250 a month. I managed her finances the last year of her life (2012-13) and her expenses were never more than $700 a month. Social Security covered it all. She also had a $400 pension and a $200 a month annuity and $300 a month required distribution from her IRA. But like I said, my parents lived through the depression, and their mindset was to keep expenses down. She drove one car 27 years, another 14 years, one that was a lemon she only had 2 years, and her car when she passed away was 10 years old.

Well, that's amazing - $700 a month.

Did she have her own home? I would think taxes would take a big bite.

 

[tvguy]

Well, that's amazing - $700 a month.

Did she have her own home? I would think taxes would take a big bite.

Yes, she owned her own home. Property taxes were $980 a year. California, home of Prop 13 which benefited folks like my mom who owned her home for 53 years.

 

[gwynne]

Yes, everyone should consider long term care insurance. My mom had it. My wife and I have had it for about 10 years. My mom's policy covered all but $300 a month of her long term cost. Her social security easily covered that, and the upkeep on her home which I did not sell until she passed away.

Are you saying you and your wife have 10 year policies covering LTC?
If not (and you don't mind me asking) what is the approximate length of your policy?