Question: I worked most of my life starting in 1976 and decided to retire in 2011 at age 52. I have been living comfortably since then with income from investments and rental properties. If I am able, I don’t plan to start collecting benefits until age 70. I download my yearly report from ssa.gov and am noticing that my “Estimated Benefits” are steadily decreasing. At what age will these estimates stop decreasing? Also, how could I calculate my eventual benefit amount at age 70 — given that I am no longer working?
Answer: I can’t understand why your annual benefit estimate would decrease since Social Security assumes zero future economy-wide wage growth and zero inflation in the future. You can contact me directly to discuss this.
Jerry Lutz, the former Social Security technical expert who reviews all the answers in my column, has this guess on the decreasing estimate:
The Social Security Administration assumes that the most recent year’s earnings will continue through retirement age, and projects those future earnings into their estimates. So, until the first year of zero earnings were posted to his record, Ben’s estimates would have included assumed future-year earnings.
If you have your earnings record, you can use a low-cost, highly accurate, Social Security maximization program to understand what your benefits will be at age 70. As I’ve indicated in responding to a prior question, I would not trust Social Security’s own benefit estimates because you are under age 60 and Social Security is assuming no economy-wide wage growth or inflation in any future year. For those under age 60, this can produce a serious downward bias in estimated future benefits even when expressed in today’s dollars.
You can also use the software I have in mind to figure out how much your lifetime benefits would increase were you to go back to work and contribute to the system. Those, like you, with short earnings histories experience the highest returns on additional contributions to the system. Indeed, I’ve run cases of workers with short work histories in which the increase in future benefits far exceeds the increase in current taxes associated with working more and making more FICA contributions.
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