How do I apply for benefits?
The most important advice is to access the Social Security website and get their most current official guidance on how to apply:
Note that you can apply online, by phone, or in person, and that you should apply for benefits no more than four months before the date you want your benefits to start.
Our software calculates the maximized filing strategy for you based on your earnings history and your status as married, single, widowed, disabled, etc.
As you apply for those benefits, be sure to use your entitlement month, i.e. the month you start earning Social Security benefits, on your application. These are the same as the filing dates, you enter on the What-If Dates screen. Since Social Security pays benefits one month in arrears, you will receive your check one month after the entitlement month. For example, if our software calculates that you file for retirement benefits in December 2020, you will receive your first retirement benefit check in January 2021.
Be careful to start your entitlement neither too early nor too late. Social Security encourages you to apply 3 to 4 months before you want to start your entitlement. So in the above example, if you apply in September 2020, be sure to establish your entitlement month as December 2020.
How do I ensure I'll actually file as intended?
Regardless of how you apply, make sure that the Remarks or Comments section of the application form, which appears at the end of the form, says in black and white exactly what you wish to do. Because the rules are so complicated, the advice you are getting at Social Security might or might not be correct. We cannot tell you for sure what will work when it comes to filing with Social Security. But here are some guidelines.
Once you have filed for your benefits, if you have not already set up an online Social Security account be sure to do so at www.socialsecurity.gov. You should find a confirming letter that will be posted on your account. If it is correct and reflects the benefits you filed for, print a copy and put it in a safe place as you may have need for it in the future.
First, if you are filing for your retirement benefit, but immediately suspending it, you might write in the Remarks or Comments section or make sure the staffer assisting you writes in that section: "I'm filing for my retirement benefit as of, date X, when I turn 66 and request that my retirement benefit be immediately suspended as of April 1, 2016."
Second, if you are filing for your retirement benefit at 70 and don't want to take 6 months of retroactive benefits, which will mean lower monthly payment checks, you might write: "I'm filing for my retirement benefit to begin on my 70th birthday and not a day sooner. I do not want to receive retroactive benefits if receiving such benefits will mean a permanently lower retirement benefit."
Third, if you are a widow(er) and filing for your widow(er)’s benefit before you will file for your retirement benefit, consider writing: "I am filing a restricted application just for my widow(er)’s benefit to begin on date X. I am not filing for my retirement benefit."
Fourth, if you are a widow(er) and filing for your retirement benefit before filing for your widow(er)’s benefit, you might write: "I am filing a restricted application for my retirement benefit to begin at date X. I am not filing for my widow(er)’s benefit."
How does the Bipartisan Budget Act of 2015 affect me?
The Bipartisan Budget Act of 2015 included significant changes to Social Security's rules. Our software is fully updated to account for these new rules.
The new rules dramatically change Social Security claiming options and effectively divide each individual into one of three groups:
- Those born on or before May 1, 1950 will be the least affected, although if they plan to suspend their retirement benefit in the future, they must request to do so before April 29, 2016. Those born on or before May 1, 1950 who will have requested suspension by April 29 will still receive auxiliary benefits, i.e. spousal and child benefits, during suspension.
- Those born between May 2, 1950 and January 1, 1954 will see mixed effects of the new rules on their optimal benefits filing strategy.
- Those born on or after January 2, 1954 will be the most affected in terms of the effects of filing and suspending as well as not being able to file a restricted application for either just a spousal benefit or just a retirement benefit even after their full retirement age. They will not receive auxiliary benefits during suspension.
Individuals in groups 2 and 3, as well as married couples with at least one spouse in group 2 or 3, should recalculate their maximized strategy now that our software is updated to reflect the new rules. Here's how the new rules can affect you:
- No one can collect a spousal or child benefit based on the covered earnings record of a worker who suspends retirement benefits on or after April 30, 2016, during the period that the worker's retirement benefit remains suspended. Those born after May 1, 1950 cannot file and suspend within this window and those born on or before May 1, 1950 must request to suspend on or before April 29, 2016 to allow auxiliary benefits to be claimed on his or her record while their retirement benefit is suspended.
- No one who requests to suspend his or her retirement benefit on or after April 30, 2016 can collect an excess spousal or excess widow(er)'s benefit while their retirement benefit is suspended
- For those born on or after January 2, 1954, deeming is extended through age 70. Deeming is the requirement that if you take your retirement benefit and are eligible for a spousal benefit or a divorced spouse's benefit, you need to also take your spousal benefit and vice versa. This leaves you with roughly the larger of the two benefits.
- Only those who suspend their retirement benefit on or before April 29, 2016 will be able to receive a lump sum payment of previously suspended benefits. Those who suspend their retirement benefits on or after April 30, 2016 can no longer receive their suspended retirement benefits in a lump sum payment.
- Those who are subject to deeming, but aren't deemed to be filing for their excess spousal benefits when they file for their retirement benefit because their spouse has not yet filed for his/her retirement benefit will be so deemed as of the date their spouse files for his/her retirement benefit.
What if I don't have access to my deceased or divorced spouse's past covered earnings?
Social Security will tell you your widow(er)'s benefit or your divorced spouse's benefit gross monthly estimate at your full retirement age. Be sure to ask for your benefit. Don't ask for your deceased spouse's or your ex-spouse's benefits. Social Security cannot, and will not, give you their benefit information because of privacy laws.
You can enter your gross monthly estimate and we can then use it to calculate any benefits you might be able to receive based on your deceased or ex spouse's record.
Why are there benefit amounts in both the retirement benefit and spousal (or survivor) column?
The first part is based on the recipient's own work record and is listed in the retirement benefit column while the second part, the excess spousal benefit or excess widow(er)'s benefit, is based on the recipient's spouse's record and is listed either in the spousal or survivor benefit column. This reflects the way Social Security accounts for the total spousal or total widow(er)'s benefits but more importantly we do this:
- so we can show separate reductions for both the retirement benefit and spousal or widow(er)'s benefit due to taking one or both before FRA; and
- to show separate earnings deductions due to either or both of the record holder's and the beneficiary’s earnings before their full retirement age.
Can I file a restricted application?
Filing a restricted application, also known as restricting an application, simply means filing for only one benefit when you're eligible for more than just that one benefit. A common example of this is when one spouse files for their spousal benefit only, often at their full retirement age (FRA), and delays filing for their retirement benefit, often until 70. Note that no one can restrict their application to their spousal benefit only before their full retirement age (FRA) and further, due to the Bipartisan Budget Act of 2015, no one born on or after 1/2/1954 can ever restrict their application to their spousal benefit only, even at or after their FRA. Also note that one one can file for a spousal benefit before their current spouse files for their retirement benefit. Divorced individuals can however file for a divorced spousal benefit regardless of whether their ex has filed or not filed for their retirement benefit as long as both are at least 62 and have been divorced for at least 2 years. The 2 year requirement does not apply if the ex has filed for their retirement benefit.
If you are eligible to file a restricted application for a spousal or divorced spousal benefit under Social Security's rules and provision, you can model doing so in the What-If Dates for Your Plan panel on the Report Set Up screen.
Can I really suspend?
While suspending receipt of a retirement benefit is still allowed under the Bipartisan Budget Act of 2015, the utility of doing so depends on specific birthdates.
If you were born on or before May 1, 1950, you can suspend receipt of your retirement benefit at or after your full retirement age (FRA) up to age 70 and still receive spousal and child's benefits off of you record during suspension, although the request to suspend must have been made by April 29, 2016.
If you were born after May 1, 1950, you can suspend receipt of your retirement benefit at or after your full retirement age (FRA) up to age 70 but no one can receive spousal or child's benefits based on your record during suspension.
GN 02409.110 Conditions for Voluntary Suspension
A. When voluntary suspension is possible
1. Requesting voluntary suspension
Any primary retirement insurance benefit (RIB) applicant or beneficiary, whether reduced or unreduced, who has reached full retirement age (FRA) may voluntarily ask that we suspend his or her benefits to earn voluntary delayed retirement credits (VOLDRC). This request may be either written or oral, and we do not need a signature. A representative payee can make the request on behalf of the beneficiary.
Note: The receipt of disability insurance benefits (DIB) prior to RIB has no effect on a beneficiary’s request to voluntarily suspend his or her RIB.
So there is no question whatsoever that you can suspend your retirement benefit at or after your FRA.
Full POMS URL: https://secure.ssa.gov/apps10/poms.nsf/lnx/0202409110
What's the difference between CDBs, SSDI benefits and SSI benefits?
Our software accounts for people currently receiving a Social Security Disability Insurance (SSDI) benefit based on their own record, which is distinct from a Supplemental Security Income (SSI) benefit. See here for more on these two programs. Our software does not currently account for SSI benefits so please confirm whether a current benefit is an SSI benefit or an SSDI benefit. If an individual is receiving an SSDI benefit, you can enter information about it in the initial set up or on their details screen. You cannot enter SSDI benefits for children based on their own record. After the first $20 per month of SSI benefits, there is a dollar-for-dollar reduction in the SSI benefit due to the SSDI benefit.
Our software will automatically calculate Childhood Disability Benefits CDBs, formerly known as Disabled Adult Child (DAC) benefits, for a child who became permanently disabled before age 22 if you select that the child is disabled. CDBs are based on the work record of a parent, not on the child's own record. This again makes CDBs distinct from both SSI due to income insecurity benefit and from SSDI benefits based on the child's own work record.
Should my military pension be entered as a non-covered pension?
Here's what Social Security says:
Earnings for active duty military service or active duty training have been covered under Social Security since 1957. Social Security has covered inactive duty service in the armed forces reserves (such as weekend drills) since 1988. If you served in the military before 1957, you didn’t pay Social Security taxes, but we gave you special credit for some of your service. You can get both Social Security benefits and military retirement. Generally, there is no reduction of Social Security benefits because of your military retirement benefits. You’ll get your full Social Security benefit based on your earnings.
So for most people claiming benefits now, military pensions are from employment covered by Social Security and so should not be entered on the Non-Covered Pensions screen. You can confirm this by referring to your Social Security statement and making sure that the earnings your military pension is based on were taxed by Social Security.
Is the software freezing or taking several minutes to calculate results?
Given certain conditions, the software can take some time to calculate results and is almost certainly not freezing. Age differences of more than 8 years or so, minor or disabled children, a long span of time between each spouse's maximum age of life, any combination of these and more factors can greatly increase the number of potential strategies the software will consider before determining your maximized strategy.
These conditions can sometimes mean the software take might, on rare occasions, take more than 5 minutes to find your optimal solution. It might be considering hundreds of thousands or even more than a million potential strategies in some cases. Be sure to give it enough time to do so.
Why don't the software's retirement benefits match my Social Security Statement?
Our software uses the intermediate assumptions from the latest Social Security Trustees' Report for future real National Average Wage growth and your assumed inflation rate on the Settings screen for future benefit increases. The National Average Wage is used to index your past covered earnings when determining your highest 35 years of earnings. It does not affect your estimated future covered earnings.
Social Security assumes no increases in the National Average Wage beyond the increase from two years ago and no benefit increase beginning with the current year increase. These assumptions are very unrealistic. There has never been an extended 30 year period of zero real wage growth and zero inflation in the history of the United States. If you are under age 62, then, in general, Social Security’s estimated benefit will be artificially low.
Our software allows you to specify your future covered earnings.
Social Security assumes that your covered earnings will remain constant at the level of your last reported earnings, generally last year’s, which can be zero, up through the year prior to taking retirement benefits. If you will not actually have any future covered earnings, then Social Security’s benefit estimate will be artificially high.
Benefits calculated by our software agree with Social Security's AnyPIA calculator within a dollar a month when we both use the same assumptions.
Can the software's estimates match AnyPIA's estimates if I'm under age 62?
The National Average Wage is used to index past covered earnings when determining your highest 35 years of earnings.
Our software compounds the intermediate real wage growth assumptions from the latest Social Security Trustees’ Report with your assumed inflation rate on the Settings screen to project future nominal National Average Wages.
The closest, but not exactly the same, AnyPIA assumptions are for no benefit increase beginning with the current year increase and the latest Trustees' Report Alternative II National Average Wage increase. These assumptions use the same real wage growth from the Trustees' report as our software, but compound it with the Trustees' intermediate inflation rate assumptions to project future nominal National Average Wages and they cause the Primary Insurance Amount (PIA) to be reported in real current year dollars.
Because our software and AnyPIA use different inflation assumptions they, in general, estimate different future nominal National Average Wages, which means that the indexed earnings differ, which, in turn, means the PIAs will also differ. Changing your assumed inflation rate changes the projected future nominal National Average Wages.
You can see your PIA in the Household Details – Annual What-If Benefits table by setting your what-if scenario retirement benefit filing date to your full retirement age.
Does the software account for foreign income and pensions?
Our software handles income earned by you or your spouse that is considered to be covered by Social Security due to Social Security totalization agreements. Here is more information about these international agreements.
You only enter income that is covered by Social Security into our software. The software also accounts for pensions that are considered to be non-covered by Social Security.
Please check with Social Security to determine whether any of your or your spouse's income or pensions are considered to be covered or non-covered by Social Security.
Does the software account for the Government Pension Offset and the Windfall Elimination Provision?
You can enter information about pensions based on work not taxed by Social Security on the Non-Covered Pensions panel. Be sure to read and understand the instructions so you can enter the correct information. Also be sure to mouse over all of the Information icons (I) for further instructions.
The effects of the non-covered pension are included in the results. You can explicitly see how the GPO and WEP affect the results by temporarily deleting the non-covered pension and comparing the results with and without the non-covered pension.
Why does the software show one spouse claiming before their FRA and suspending soon after?
This is due to how Adjustment of the Reduction Factor (ARF) and the Earnings Test are applied.
If excess earnings were charged against reduced early retirement, spouse's, or widow(er)'s benefits, then the original reduction factor is adjusted to exclude the months that benefits were not received due to the earnings test.
Partial months of benefit deductions (i.e., months for which you don't earn enough to lose all that month's benefits) due to the Earnings Test are treated as whole months when the Adjustment of the Reduction Factor (ARF) is applied at full retirement age. Because of this quirk in how the ARF is applied, the lifetime benefits for this filing strategy can be higher than if you file and suspend at your full retirement age or simply wait until age 70 to file for retirement benefits. You lose a portion of a month’s benefit due to the Earnings Test, but the ARF treats the deduction as if 100% of a month’s benefit had been lost.
Essentially, you can receive a free partial month benefit with no permanent reduction in your benefit!
There is an option on the Social Security application, Form SSA-1, Item 26.(b), to declare that you "want benefits beginning with the earliest possible month providing there is no permanent reduction in my ongoing monthly benefit." Since you don't know your future income with certainty, checking this option ensures that your benefits won't be permanently reduced.
For example, you could file for your retirement benefit a month before FRA and then lose your job the next day. In this case, you won't earn enough money to lose even a dollar of benefits under the Earnings Test. And if you don't check off this option, your retirement benefit would then be permanently reduced based on your having taken it one month early. That would be a bad thing as you would not have that reduction undone via a full month's crediting under the Adjustment of the Reduction Factor.
Please see our glossary for more on how the ARF is calculated.
Can I collect early spousal and delay my retirement benefit until 70?
No. If you are eligible for both reduced retirement and reduced spouse's benefits, then you cannot restrict your application to just one of these types of benefits. By filing for either benefit, you are deemed by law to have filed for both types of benefits
This deeming provision no longer applies once you attain FRA if you were born on or before January 1, 1954.
The Bipartisan Budget Act of 2015 extended deeming past FRA up to age 70 for those born on or after January 2, 1954. Those born after this date can no longer restrict their application to just one benefit even after their FRA.
Do you want the gross benefit amount before deductions?
We want the gross amount before any deductions for Medicare premiums, taxes, etc.
What do you mean by past covered earnings?
Covered earnings are employee wage earnings you have paid Social Security taxes on. On your Social Security statement, these are the amounts in the Taxed Social Security Earnings column.
Do not enter pension benefits, investment income, IRA or 401k withdraws or anything that is not associated with either a W-2 or a 1099 Misc. Only enter earned income.
Why does the software have me filing and suspending after my FRA?
The maximized results have you filing and suspending when it will be most beneficial for your spouse to take spousal benefits. You can file and suspend at your FRA or any time up to the date indicated in the maximized results but it will not change your lifetime benefits.
Can I use my benefit amount instead of my actual past covered earnings history?
You can enter your past covered earnings manually, import them from the Social Security website, or, if you are not currently working in employment covered by Social Security and will not do so in the future, you can enter the gross benefit amount before any taxes or other deductions if you’re currently collecting or enter your estimated retirement benefit at FRA provided by Social Security.
If you choose to use Social Security’s estimate or your current benefit amount, we account for the fact that Social Security purposefully lowballs benefit estimates by unrealistically assuming zero future wage growth and zero future inflation, counter to all our post-war history. This seems designed to encourage people so save more and not rely too much on Social Security, but astonishingly, some calculators use this deliberate underestimate without adjustment as their primary input.
Why can’t I use my benefit amount and enter current or future covered earnings?
If there are current or future covered earnings on a record, in order to accurately account for the ensuing re-computation of benefits, we must have the actual—rather than inferred—past covered earnings.
For this reason, each of these mutually exclusive options disallows the other. If you use your current or estimated retirement benefit, you will not be able to enter future covered earnings. And if you first enter future covered earnings, you will not then be able to use your benefit estimate or current amount.
What is the Grace Year and the Monthly Earnings Test?
A beneficiary's initial grace year is the first year that they have at least one Non Service Month (NSM), i.e. a month in which they do not earn more than the monthly exempt amount, in or after their month of entitlement to a retirement, survivor, or auxiliary benefit, and before the month of their FRA.
The Monthly Earnings Test (MET), which applies when an entitled beneficiary has one or more non-service months (NSM) in a grace year, allows payment of benefits to a beneficiary even if they have substantial earnings prior to the month of entitlement. Apply the MET only to months in the grace year in which earnings exceed the monthly exempt amount. For beneficiaries under FRA, use the entire year’s earnings to calculate the amount of excess earnings and deduct $1 for every $2 in excess earnings. In the year a beneficiary reaches FRA, use the earnings for all months up to but not including the month of FRA to calculate excess earnings and deduct $1 for every $3 in excess earnings.
For example in 2015 with the low exempt amount of $15,720:
- Joe earned $5,000 per month from Jan through Apr, he filed for retirement benefits of $2,000 per month, at age 63, in May, he will not have any earnings from May through Dec. This is his grace year and there will be no earnings deductions.
- Same as 1) except Joe earns $1,311 in Jul and $2,500 dollars in Aug. This is his grace year and he will have earnings deductions of $2,000 in both Jul and Aug since the monthly exempt amount is $1,310 = $15,720 / 12.
- Same as 1) except Joe earns $1,311 per month in every month from May through Nov. This is his grace year and he will have earnings deductions of $2,000 in May through Jul and of $728.50 in Aug since his earnings deduction is $6,728.50 = ($29,177 - $15,720) / 2.
See POMS Sections RS02501.021: https://secure.ssa.gov/apps10/poms.nsf/lnx/0302501021, and RS02501.030: https://secure.ssa.gov/apps10/poms.nsf/lnx/0302501030.
Why is the Earnings Test Applied in My Grace Year?
We don't ask for enough information, i.e. month by month earnings from your age 62 until your full retirement age, to determine if you have at least one non-service month –– a month in which your covered earnings are not more than the exempt amount –– and hence whether you are eligible for a grace year.
This is very unlikely to affect your maximized strategy. You can simply disregard the earnings deduction in the Household Details tables.
Do you provide break even analysis?
No because we do not think break even analysis is appropriate and don't include it in our results. Break even analysis determines how many years one needs to live under a patient strategy (that yields higher benefits but begins later) to make up for waiting to collect the benefits, i.e., for not collecting reduced benefits early. This immediately leads to a comparison of the break even age with one's life expectancy ––– when one will, on average die. If the break even age exceeds life expectancy, this analysis suggests that waiting to collect is inappropriate. Nothing could be further from the truth.
By delaying receipt of your retirement benefit after FRA up to age 70, you'll earn 8% increases, called Delayed Retirement Credits (DRCs), in your benefit per year. DRCs are calculated and applied on a monthly basis.
Social Security provides longevity insurance -- insurance against living not to one's life expectancy, but far beyond. None of us can count on dying on time exactly at our life expectancy. And from a financial perspective, living to our maximum, not our expected age of life, is the worse case scenario. Why? Because we need to pay for ourselves for many more years than were we to die at the age the actuaries predict.
Being patient when it comes to collecting higher Social Security benefits is a way to help us avoid running out of money before we run out of life. The years of low benefits that we forego yield much higher benefits when we begin collecting. The foregone benefits represent a form of insurance premium payment and the additional benefits we get from waiting represent an additional annuity we are buying from the Social Security system. The terms on which one can buy this additional inflation-protected longevity insurance are extremely favorable -- far better than anything available on the market.
An analogy may help convey our position. Consider homeowners insurance. No one analyzes buying homeowners insurance from a breakeven perspective because we don't have thousands of homes over which to pool the risk of small and worst case losses, such as our house burning to the ground. Because we only have one house, we can't play the odds. We can't decide whether buying a homeowners policy will break even on average. If we made such a calculation we'd never buy homeowners insurance. Why? Because the cost of homeowners insurance always exceeds the expected payout on the policy we buy due to the insurance company needing to charge its fee.
What holds for homeowners insurance holds for longevity insurance. We only have one life to lose, not thousands, so we can't pool risk over when we will die. We will die just once and it may well be at 100 or whatever is our maximum age of life. This is why our software values Social Security benefits through one's maximum, not one's expected age of life. This is not just our company's policy. This is also precisely what the economics and financial theory of longevity risk tells us to do.
Why don't I see increases in my yearly benefits due to COLAs?
We do incorporate COLAs into our calculations. However, we present all benefit amounts in today's dollars so you'll have an accurate notion of the value of those future benefits. Because the COLAs are calculated using your estimate for inflation, your benefits stay constant in 2017 real dollars.
Why does the software show benefits in today's dollars rather than future dollars?
We show everything in today's dollars to prevent users from thinking they will receive more real benefits than will actually be the case.
If inflation is, say, 3 percent each year and one's actual benefit is $10,000 this year and $10,300 next year, because it rises by inflation, in real terms, i.e., in terms of its purchasing power, it's not any higher. The benefit has just kept up with inflation.
To report the benefit in nominal (actual) dollars, i.e., to show the benefit as $10,000 this year, $10,300 the next year, $10,609 the following year etc., might give the impression the benefit amounts will have more purchasing power through time, when, in fact, their purchasing power from their benefit doesn't change.
Why does a what-if date you provide say I'm a year older than my actual age?
Most people are two different ages in a given year. We take your age in a given year to be the highest age you will attain during that year. So, even though a what-if date may be before your birthday, we still describe your age as the oldest age you will be that year, the age you attain in that year (i.e. your age after your birthday that year).
Can I enter different what-if scenarios in order to compare the results?
Yes, you can input any number of what-if scenarios with different choice combinations and run them through our highly developed and accurate comprehensive sequence of calculations. You can download and save each report you run.
Further, we compare each different what-if scenario you enter to your maximized results. We provide detailed year-by-year breakdowns of each scenario you enter so you can compare them to equally detailed breakdowns of your maximized suggestions. This allows you to compare an essentially unlimited number of choice combinations.
I add up the yearly numbers but they don't match the lifetime totals. Why?
Your total lifetime benefits are the discounted present value of your annual benefits and will always be less than the simple sum of all your undiscounted annual benefits.
"Discounting" means to make less of. And that's exactly what present value discounting does. It reduces the reported benefit amounts you will get in the future because getting money, say $1,000, in the future is not worth as much as having that $1,000 today. If you had the $1,000 today you could invest it and end up with more than $1,000 in the future. Hence, $1,000 today is worth more than $1,000 in the future. Or stated the other way around, getting $1,000 in the future is worth less than getting $1,000 today.
The need to discount future dollars arises even when there is no inflation. Again, getting $1,000, say, in 30 years is worth less than receiving the $1,000 today and being able to invest it.
The purpose of discounting is to enable an apples-to apples comparison of a series of future benefits that are received in different years. Neglecting to discount and simply adding up undiscounted dollar amounts is the same as assuming you can't earn a return on investing, which is clearly not the case.
For example, $1,000 today, in current year dollars can be invested and will grow to $1,338 current year dollars in 30 years if the real rate of return is 0.976% ($1000*1.00976^30=$1,338). So even though the purchasing power of a constant current year dollar is the same in 30 years as it is now, you will have 338 more dollars of current purchasing power 30 years in the future.
In our software you can modify our assumed values for the rate of inflation and the nominal rate of return. Our software calculates the real rate of return from these entries. For example, if inflation is 2.5% and the nominal rate of return is 3.5%, then the real rate of return is (1.035/1.025 - 1)*100% = 0.976%.
The present value of a benefit x years from now is the amount of the benefit /(1+r)^x, where r is [(1+i)/(1+p)-1] (r is the real rate of discount, i is the nominal rate of return you enter, and p is the inflation rate you enter).
See Time Value of Money on Wikipedia or any basic economic/finance website or book for more background.
What does file and suspend mean?
This is a strategy used to allow auxiliary benefits, e.g. spousal or child's benefits, based on a record to be collected while the retirement benefits based on the record are suspended. For example, when used by married couples, one spouse files for and suspends their retirement benefit and the other spouse files for their spousal benefit. This strategy allows families to maximize their benefits by receiving some benefits based on a record while the retirement benefit based on that record still increases.
The Bipartisan Budget Act of 2015 eliminates the ability for others to collect auxiliary benefits on a suspended record for those who suspend their retirement benefit after April 29, 2016. Because you can only suspend at or after your FRA, you must have been born on or before May 1, 1950 to suspend under the old rules. Auxiliary benefits cannot be collected on the record of anyone who suspends their retirement benefit after April 29, 2016.
When you reach full retirement age, you can file for, i.e. apply for, your Social Security retirement benefit, immediately suspend collection of that benefit, and then start collection of your retirement benefit anytime in the future before or on your 70th birthday. For people who suspend on or before April 29, 2016, this can, though with some restrictions based on your spouse's birthdates, permit your spouse or ex-spouse to file for, and start receiving a spousal benefit based on your earning history. If your spouse was born on or after January 2, 1954, they will not be able to file only for their spousal benefit but must also file for their retirement benefit even after their FRA.
Also, by delaying you retirement past your full retirement age, you will earn Delayed Retirement Credits (DRCs) at the rate of 8% per year that will increase your retirement benefit. Those who suspend after April 29, 2016 cannot collect a benefit on someone else's record while their retirement benefit is suspended and no one else can collect an auxiliary benefit on the record of the person who suspended while their retirement benefit is suspended. See our FAQ on the effects of the Bipartisan Budget Act of 2015 for more information on the new law.
How do I import my past covered earnings?
Please watch our earnings importing video here or read the text below for instructions on how to copy and paste your earnings history.
Make sure to follow these steps exactly:
- Go to the Social Security Administration website and create an account if you don't already have one
- Log in using your SSA user name and password
- Click on the Earnings Record tab at the top of your Social Security account page — do not click on the XML link or either of the PDF links (to either download or save the report)
- Select and copy the entire page — everything on the page needs to be highlighted in blue
- Paste it into the field on the Import screen
- Click the Import button
Make sure you click on the Earnings Record tab at the top of the screen and not on the XML link or one of the PDF links to download/save or print. Also make sure to highlight and copy the entire page — it won't work if everything on the page isn't highlighted in blue.
You can use these keys to:
- Select: Control-a on PCs or Command-a on Macs
Copy: Control-c on PCs or Command-c on Macs
Paste: Control-v on PCs or Command-v on Macs
If you've clicked on the Earnings Record tab on the top of the screen and not one of the other links, most problems result from not correctly selecting the data. Once you have copied your data into the box, you can scroll to the top of the text box and make sure you see your name near the top. You should see all the text from the SSA page in the box and near the top it should say something like:
Skip to Content
my Social Security
If you do not see this near the top of the text you pasted, make sure you're following the instructions exactly.
Also, be sure that any anti-virus or blocking software, plug-ins or add-ons you may be running are not interfering with either site.
Does your other software do everything that Maximize My Social Security does?
No. Maximize My Social Security is a separate, stand-alone program. It searches over thousands of benefit collection date options to find the one that produces the highest present value of lifetime earnings. ESPlanner, ESPlannerPLUS, and ESPlannerPRO let you enter you own selection dates, but they don't internally calculate which dates are best.
Why use your software when Social Security has free calculators?
The Social Security Administration (SSA) has four different calculators with varying degrees of accuracy from rough estimates to exact calculations of an individual's benefits. Their default assumptions include zero future inflation and zero future real wage growth. They calculate your benefits either on a specified date or give you three benefit estimates, at your earliest date of retirement, at full retirement age, or at your latest date of retirement. Some, but not all calculate surviving child's and surviving spouse's benefits and the Windfall Elimination Provision and the Government Pension Offset.
None of the SSA calculators identify the filing strategy that results in the maximum lifetime benefits. So the SSA calculators don't answer questions like these:
- For married couples, should one spouse file and suspend?
- Who should file for spouse's benefits?
- If you've already started collecting should you suspend collection and reinstate at a later date.
Our software calculates all benefits available to individuals and families except parents' benefits. We search across all filing date combinations to find the maximum lifetime benefit. This search typically looks at thousands, tens of thousands, and occasionally hundreds of thousands of possible date combinations to suggest the best strategy.
How do I know my data is secure?
We secure your information in the following ways:
- We don't require your real name, so you can run the program with any name you want, or even with no name
- We don't require your Social Security number
- We don't save or store your credit card number
- We encrypt all communication between your browser and our servers, protecting against any form of electronic wire-tapping
- We use strong passwords at the server level; while these are breakable by exhaustive search, any attempt to do so is detectable by our hosting service and would result in our server being shut off from that network
- We have no known back doors into the servers, e.g., no telnet or ftp access
Why does the software calculate retirement benefits when I don't have enough Social Security credits?
Prior to 1978 one credit was earned for each quarter in which you had at least $50 covered earnings. Our software only knows about annual earnings, not quarterly earnings. From 1978 on it doesn't matter how the earnings are distributed throughout the year.
So, our software potentially calculates too many credits by giving four credits for annual earnings over $200 prior to 1978. If all of the earnings were earned in a single quarter, then you'd actually earn only one credit. This can particularly occur when people had summer jobs during school years.
Short of requiring input that is not readily available even from the Social Security website, i.e. earnings by quarter for every year before 1978, this is the best we can do.
If our software finds you to be qualified for Social Security when Social Security says you don't have enough credits, just delete your past earnings.
Why does the maximum age of life default to 100?
Simply put, because you might not die on time. Actuarially determined average life expectancies work very well for insurance companies with thousands and thousands of customers who, on average, die on time. Individual deviations from average life expectancies are effectively canceled out by other deviations.
Individuals should not use actuarial life expectancies. They should plan for the contingencies of their own lives, which include living longer than the average life expectancy.
Social Security is annuitized insurance against longevity risk and as such should be judged against the possibility of living to your maximum age.
Our default maximum age of life is 100 but you can select any age you want. You can also run any number of scenarios comparing your selected and your maximized results assuming all possible maximum ages of life.