Do the Social Securtiy Benefit Estimates Assume That I Will Continue to Work?

Jul 1 2016 - 8:15am

I'm 60 this year and was wondering what would happen to my SSN pmts if I worked until 62, but did not apply for SSN benefits until I'm at FRA (66/4mos). However, In reviewing my SSN statement for 2015, I noticed under my estimated SSN payments for 62, FRA, and 70, there is a sentence that states: "Your estimates are based on the assumption that you will earn $XXXXXX a year from now until retirement." This sentence seems to infer, for example, that I must continue working and make at least my current annual income (max SSN income) each year until my FRA to get the estimated SSN pmt at 66/4 mos. Is that true?

The estimated benefits on your Social Security statement are not very realistic for two reasons.
First, as you point out, you'd have to continue working and make your last reported annual income each year from 2015 until age 62, FRA, or 70, respectively.
Second, Social Security assumes that there will be no real wage growth in the National Average Wage, which is used to index your past covered earning, in the future. This is extremely unrealistic, but Social Security purposefully underestimates the future real wage growth to ensure that they never over estimate your future benefits.
You can get a realistic estimate of your future benefits from MaximizeMySocialSecurity since we assume that future the real growth will be as estimated by the Social Security Trustees and you can input you actual expected future covered earnings, i.e. only working until age 62 while taking your retirement benefit at your FRA.