Detailed Social Security Calculations

"We think in generalities, but we live in detail."

- Alfred North Whitehead

I've attempted to perform some very detailed calculations of my expected Social Security retirement benefits with the help of the Social Security Online Calculator from the Social Security Administration.

After entering my entire earnings record all the way back to 1988, I then experimented with various retirement ages. Note that "retirement age" simply means the age at which I stop working. I can't actually draw on Social Security retirement benefits until I'm at least 62. The amounts in the table assume withdrawal starting at full retirement age of 67. This makes planning a little tricky because there will be a long time period between retirement and 62/67 where I will have to depend on other sources of income. Also note that the calculator expresses everything in monthly amounts, but I've converted everything to yearly amounts because that is the way I plan and think about these things.

Here's what I calculate as my benefits:

Retirement Age	My Yearly Benefits In Today's Dollars	My Yearly Benefits In Future (Actual) Dollars	My Yearly Benefits Plus Spousal Benefits (Today's Dollars)	My Yearly Benefits Plus Spousal Benefits (Future Dollars)
67	$27,492	$70,512	$41,238	$105,768
62	$27,274	$69,953	$40,911	$104,930
60	$27,137	$69,601	$40,706	$104,402
55	$25,337	$64,985	$38,007	$97,478
50	$23,246	$59,622	$34,869	$89,433
47	$21,977	$56,367	$32,966	$84,551
46	$21,566	$55,313	$32,349	$82,970
45	$21,137	$54,213	$31,706	$81,320

Surprised? Yes, that is a lot of money. Even when assuming a retirement age of 45 and a potential reduction of 20% or 30% due to program cutbacks, it is a lot of money! And remember that these are just the initial retirement benefit levels at age 67. They are indexed upward for inflation every year after that.

This is why I mentioned in a previous post not to ignore Social Security retirement benefits if you are planning on early retirement. It's true that you will have to wait a long while for your benefits to start, but when they finally kick in, it may actually be a very significant amount of money. Effective planning for your future cash flow needs should consider your possible Social Security benefits, as they may loom large when you enter your 60's and 70's.

(Disclaimer: I do not work for the Social Security Administration, nor am I an authority on Social Security matters. This article is merely a brief description of my best understanding of how Social Security works and how it relates to my personal situation. For the purposes of making any real financial decisions, please make sure to get your Social Security information directly from the Social Security Administration.)