Social Security Benefit Calculation

[kannon8833]

Good Morning All - hoping someone could point me in right direction.

For someone in FERS who volunteers to retire earlier than 62, my understanding is that they will receive the Social Security supplement benefit. Ok.

My question is how will the Social Security benefit at age 62 be calculated. Looking at the Social Security benefit estimator 4 pager we get it assumes you continue to work to age 62. If you voluntarily leave federal gov't at age 56, does SS recalculate your benefit based on now 6 yrs (age 56 to 62) of no income?

I read that SS benefits are based on 35 years of employment, so now I will show that 6 of those years as being $0 and therefore my monthly benefit will drop. Cause if that's the case, both the SS benefit at age 62 goes down as well as the SS Supplement at age 56.

If anyone could shed some light on this, be appreciated.

Thank you.

 

[clester]

Good Morning All - hoping someone could point me in right direction.

For someone in FERS who volunteers to retire earlier than 62, my understanding is that they will receive the Social Security supplement benefit. Ok.

My question is how will the Social Security benefit at age 62 be calculated. Looking at the Social Security benefit estimator 4 pager we get it assumes you continue to work to age 62. If you voluntarily leave federal gov't at age 56, does SS recalculate your benefit based on now 6 yrs (age 56 to 62) of no income?

I read that SS benefits are based on 35 years of employment, so now I will show that 6 of those years as being $0 and therefore my monthly benefit will drop. Cause if that's the case, both the SS benefit at age 62 goes down as well as the SS Supplement at age 56.

If anyone could shed some light on this, be appreciated.

Thank you.

The way I understand it, your supplement is based on fers years and has no cola. At age 62 you actually go on regular social security. So, all the years you worked before fers will count and cola at that time is recalculated. Your do lose years but your supplement is based on fewer years already so your benefit should be higher than supplement.

 

[KevinD]

Thanks for the reminder. I just bought the Kindle edition of Social Security: The Inside Story, 2011 Edition by Andy Landis.

http://www.amazon.com/Social-Security-Inside-Story-ebook/dp/B004H1T9BE

http://www.youtube.com/watch?v=Eje3yNJdn9E

 

[konakathy]

http://www.myfederalretirement.com/public/department15.cfm

This is a good resource for federal retirement questions. Once you hit age 62 SSA stops and you start to withdraw your full SS amount.

 

[Warrenlm]

Do FERS retirees get the full retirement age(~66) SS benefit at 62 or the 25% reduced benefit at 62?

 

[konakathy]

http://www.myfederalretirement.com/public/department15.cfm

This is a good resource for federal retirement questions. Once you hit age 62 SSA stops and you start to withdraw your full SS amount.

I have to correct myself...you get your calculated amount for age 62 which is higher than your SSA. The full amount is at age 66.

 

[kannon8833]

I guess my question wasn't clear.

My understanding is that our Social Security benefit at age 62 (at the earliest) is based on your income history. To be more specific, I believe it is your highest 35 years of indexed income.

For FERS folks who go out at age 56, they may not have 35 years in. Between 56 and 62 we would leave 6 years of $0 income until Social Security kicks in.

My question is does the Social Security benefit look at your yrs of $0 income (to total up to 35 indexed earning years) and thus lowers your overall income average used to calculate your benefit?? Or is the overall benefit calculated differently for FERS folks?

Thanks

 

[KevinD]

http://www.ssa.gov/planners/benefitcalculators.htm

 

[eccougar]

http://www.opm.gov/retire/pre/fers/annuitysupp.asp
The FERS annuity supplement is computed as if you were age 62 and fully insured for a social security benefit when the supplement begins. OPM first estimates what your full career (40 years) social security benefit would be. Then we calculate the amount of your civilian service under FERS and reduce the estimated full career social security benefit accordingly. For example, if your estimated full career social security benefit would be $1,000 and you had worked 30 years under FERS, we would divide 30 by 40 (.75) and multiply ($1,000 x .75 = $750). The result would be your FERS annuity supplement, prior to any reductions.

 

[eccougar]

http://federalretirement.net/fers_annuity.htm
You may be eligible for a Special Retirement Supplement if you retire:

After the Minimum Retirement Age (MRA) with 30 years of service;
At age 60 with 20 years of service; or
Upon involuntary or early voluntary retirement (age 50 with 20 years of service, or at any age with 25 years of service) after the U.S. Office of Personnel Management determines that your agency is undergoing a major reorganization, reduction-in-force (RIF) or transfer of function. You will not receive the Special Retirement Supplement until you reach your MRA.

 

[alevin]

http://federalretirement.net/fers_annuity.htm
You may be eligible for a Special Retirement Supplement if you retire:

After the Minimum Retirement Age (MRA) with 30 years of service;
At age 60 with 20 years of service; or
Upon involuntary or early voluntary retirement (age 50 with 20 years of service, or at any age with 25 years of service) after the U.S. Office of Personnel Management determines that your agency is undergoing a major reorganization, reduction-in-force (RIF) or transfer of function. You will not receive the Special Retirement Supplement until you reach your MRA.

I've been planning on hanging in til at least 62, more likely 64-65. My full SS doesn't kick in til 66.5, so was planning on working part time doing something or other til around age 70, post fed service. Local organization planning on budget-based downsizing by 2015, almost 2 years earlier than it will take me to get to MRA+30. The conceptual org chart for the reduced budget says I may not be last person standing when we get to that point.

If I started the supplement at age 59-60, it was my impression that supplement would stop once I hit age 62, and I'd have a big donut hole to replace incomewise til I finally hit age 66.5. Not true?

At least I've got 20+ years and 50+ going for me by now, and a paid-off house, so I have better options than I did a few years ago when facing similar prognosis that never arrived when they thought it would.

 

[MacDaddy]

http://federalretirement.net/fers_annuity.htm
You may be eligible for a Special Retirement Supplement if you retire:

After the Minimum Retirement Age (MRA) with 30 years of service;
At age 60 with 20 years of service; or
Upon involuntary or early voluntary retirement (age 50 with 20 years of service, or at any age with 25 years of service) after the U.S. Office of Personnel Management determines that your agency is undergoing a major reorganization, reduction-in-force (RIF) or transfer of function. You will not receive the Special Retirement Supplement until you reach your MRA.

There are some other stipulations that will affect a smaller number of FERS employees. In my case as a military reserve technician, being "Non-selected" for retention in military service will effectively end my FERS employment under a "discontinued service retirement". After meeting any of the above retirement criteria I would receive the supplement immediately without having to wait for my MRA........ I like that option
If you take any voluntary retirement option you will still have to wait until MRA to receive the supplement.

 

[jimijr]

You don't have to wonder. Look at your most recent annual statement from SS. The benefit listed for you at age 62 will be the basis of the annuity supplement calculated for you by OPM. The supplement ends when you reach 62, regardless of whether you apply for SS benefits at that time or choose to wait until you reach 'full retirement age' which I believe you mentioned as 66.5 years in your case.

But more importantly, if you plan on working after you retire, why retire? I had the best job in the National Weather Service, GS12 forecaster responsible only for myself, at Key West where 94% of all hours are "VFR" -- I forecasted a lot of good weather -- and a 30% special salary rate due to high cost of living. I was earning GS14 pay RUS, grossing six figures. I had the best job in Key West, in a building rated CAT 5, working in air-conditioned comfort, a large organization behind me in case of emergency, good community relations, etc. Had I wished to keep working I'd'a stayed put! Where else could I earn that kind of dough?

But 25 years of rotating shift work wore me out. My retirement was a matter of the public safety! The terrifying thought of going to work at 1130 PM confirms me in my decision.

The first thing that happened is I lost 15 pounds in 15 weeks, just from not sitting on my arse 8 hours a day. Amazing given the quantity of beer I drink! I spend an hour a day doing PT and feel better than ever.

Hey,I'll never have to work again!

 

[alevin]

You don't have to wonder. Look at your most recent annual statement from SS. The benefit listed for you at age 62 will be the basis of the annuity supplement calculated for you by OPM. The supplement ends when you reach 62, regardless of whether you apply for SS benefits at that time or choose to wait until you reach 'full retirement age' which I believe you mentioned as 66.5 years in your case.

But more importantly, if you plan on working after you retire, why retire? Had I wished to keep working I'd'a stayed put! Where else could I earn that kind of dough?

The first thing that happened is I lost 15 pounds in 15 weeks, just from not sitting on my arse 8 hours a day. I spend an hour a day doing PT and feel better than ever.

Thanks for confirming the donut hole. that's what I thought I was looking at. so, Um, yes. If I wanted to keep working 80-hour pp after I hit 64-65, I'd do that. My thinking was that I could work part time up til 70 (if I can find or make a job working for myself), reduced income but still enough to cover the donut hole and not dip too deep too soon into real retirement funds accumulated to that point, make sure I really had enough $ in the kitty to cover real retirement years, spend less time sitting on my butt and have more time during daylight hours to be physically active while still young enough to enjoy being physically active.

As it is, a RIF may be coming my way in the next 2-5 years based on current agency projections. Reality there is, I'd take full advantage of opportunity to get more physically active while unemployed, meanwhile hunting for work to replace income still needed. and continuing to reduce discretionary spending to reduce income requirements.

 

[burrocrat]

Thanks for confirming the donut hole. that's what I thought I was looking at. so, Um, yes. If I wanted to keep working 80-hour pp after I hit 64-65, I'd do that. My thinking was that I could work part time up til 70 (if I can find or make a job working for myself), reduced income but still enough to cover the donut hole and not dip too deep too soon into real retirement funds accumulated to that point, make sure I really had enough $ in the kitty to cover real retirement years, spend less time sitting on my butt and have more time during daylight hours to be physically active while still young enough to enjoy being physically active.

As it is, a RIF may be coming my way in the next 2-5 years based on current agency projections. Reality there is, I'd take full advantage of opportunity to get more physically active while unemployed, meanwhile hunting for work to replace income still needed. and continuing to reduce discretionary spending to reduce income requirements.

Alevin, you have been doing everything right. Unfortunately things have gone way wrong. It sucks. Sorry.

The 2 main goals over the next few years will be shelter and sustenance. The game has changed. For only 20 cents. Pair of dimes, shifted.

You get in on that deal or still rubbing two nickels together hoping to make more than ten cents?

Boomers will break system. Get ready for your change. The hope might be along later.

 

[KevinD]

Alevin, you have been doing everything right. Unfortunately things have gone way wrong. It sucks. Sorry.

The 2 main goals over the next few years will be shelter and sustenance. The game has changed. For only 20 cents. Pair of dimes, shifted.

You get in on that deal or still rubbing two nickels together hoping to make more than ten cents?

Boomers will break system. Get ready for your change. The hope might be along later.

I scare my wife to death when I talk like that to her...but I believe you're right.

 

[nnuut]

Don't blame me, I'm not a Baby Boomer!
​

 

[Buster]

I scare my wife to death when I talk like that to her...but I believe you're right.

I live by the Pygmalion Effect

 

[burrocrat]

Can't blame it all on the boomers, they dutifully bought into a system that made perfect sense (in a Madoff kind of way) as long as more folks paid in than took out. Too bad when the equation changed we didn't hire politicktians willing to deal with the numbers. Now that it's more profitable for younger folks to live on the printed money dole than contribute to society in a meaningful way, things no longer add up.

And everybody still wants theirs, even if it means at the expense of others. The forecast calls for pain.

 

[alevin]

The 2 main goals over the next few years will be shelter and sustenance. The game has changed. For only 20 cents. Pair of dimes, shifted.

Boomers will break system. Get ready for your change. The hope might be along later.

You're right about the 2 main goals for the next number of years, b. Been working to make the transition from future par-a-dise to pair-a-dimes for a few years now. reason the house is paid off, reason no debt, reason haven't taken a new job in community with higher cost of (housing) living past few years too, reason learning to grow some of my own food.

wasn't complaining (much). self-pity gets a body nowhere-good information and pro-active planning do. still somewhere between bargaining and acceptance on the grief cycle. was explaining to jimijr that not everybody makes decisions about retirement timing for the reasons he did. will say, as a very late-stage boomer economically-speaking, I am pretty unwilling to take any of the blame for state of SS, considering....

"Powers that were" in the early 80s supposedly "fixed" social security back then. the way they fixed it? http://www.econoclast.com/images/ibd-ss-05.pdf The way they fixed it.... they....

1) increased tax rates on workers-baby boomers (ME) so they (baby boomers-me) would have fewer disposable dollars to save, which resulted in hiking Social Security tax rates from a combined 9.35% in 1981-83 to 15.3% by 1990. This included Medicare

Funny, 1990 is the year I finally became employment-secure after my entire first decade of post-college (80s) was spent being employment and income-insecure.

In the 80s, I never even knew what SS was, much less why it needed the "fix", was still trying to get my foot in the door, not thinking of the exit door 30 years down the road. was just happy to have regular cash flow for basic living expenses. way under-employed the entire decade of the 80s temp jobs, part-time jobs, low-wage mostly, the entire decade. Only had one decade in 30 year work life where I wasn't job insecure. the 90s. Ever since 03, I've been job-insecure due to budget issues. been partly on soft money every year since 03.

pair a dimes? instead of pair-a-dice? been making the transition for the last several years, ever since learning agency budget issues in 03-05. Reason the house is paid off and got a garden going and cutting energy bills by passive means, reason have been planning on working to some extent til I'm 70 anyway-whether or not I retire early from fulltime .gov job (voluntarily or otherwise). I'm hoping I'm still around and in reasonable shape to appreciate the better times whenever they get here. As a reminder to self and all....keep on truckin' :nuts:

http://www.stat.pitt.edu/stoffer/mradvice2.html