Monday, December 30, 2013

Social Security

The second post I made to this blog concerned Social Security.  I recently was a bit startled to learn that while the general thrust of the post was correct I had misunderstood a significant detail.  For some reason (perhaps because I had over generalized an example for someone who retired at age 62) I was under the erroneous impression that only earnings before age 62 count in determining your benefit.  However as this example clearly shows such is not the case.  Your highest earning 35 years (which determine the amount of your benefit) can include years in which you are 62 or older.

This means it will be possible for me to earn a maximum benefit (one based on 35 years of maximum earnings).  Through 2009 I had 26 such years from my job with IBM.  Through 2013 I have 4 more from my new job.  And if I continue to work through 2018 (when I will be 64) I will have 5 more for a total of 35.  So by continuing to work (after being laid off from IBM) I can potentially be credited with as many as 9 additional years of maximum earnings (instead of the limit of 6 I had assumed in my earlier post) and increase my benefit by about 15% (instead of 10%).  However it remains the case that the increase in the benefit is considerably less than the increase (35% for 9 additional years) in years worked.       

While looking into this I noticed I hadn't gotten my annual Social Security Statement since 2010.  This is because the government (in a somewhat dubious effort to save money) stopped sending them out in 2011.  I found this a bit annoying but it turned out to be fairly easy (for me at least) to create an online account with Social Security and print out my current (based on my earnings through 2012) statement.

1 comment:

  1. Thank you for this post. I had also noticed that I hadn't received the annual Social Security Statement but I didn't realize it was because the government stopped sending it. At least they should have sent a letter informing people that they were going to stop sending the statement. The information you provided was valuable as I immediately created an online account and printed the statement.