My motherinlaw started taking her full Social Security
when she turned 70 in 2013. She also
has continued to work since then and pay more into Social Security.
In 2013 I spent some time researching the question "If
I'm taking Social Security and working will my Social Security monthly payments
increase? And if so by how much? Here is the article I wrote up at the time http://offtopic.whiteboardcoder.com/2013/10/howmuchwillmymonthlybenefitgoup.html .
This article will be a redo of my calculations based on what
has actually happened. I was close in my
last article but wrong on a few points, like were to round down.
As a side note it takes some
time for the changes to take effect to your Social Security Payments. It
was not until December of the following year that my motherinlaw's Social
Security check changed. The check she received
from SS in December looks odd. They
increased her December check by $65.00 when by my 2014 calculations , which are not in
this document, it should have been $64.80.
They also gave her a credit of $650 which looks a lot like $65 multiplied by 10
months. It looks like they back paid her
for the 2014, like they should have, but they paid $65 X 11 rather than $64.80
X 12. If I am correct I believe SS
owes her $62.60.
So how much of an increase?
It's January 2015, as I write this. This year everyone who
was taking S.S. Last year will see a 1.7% bump in their benefit amount. Based on the COLA (Cost of Living
Adjustments) Listed on the S.S. page here http://www.ssa.gov/oact/cola/colaseries.html
[1].
If I take my motherinlaws monthly payment from SS from
last January of 2014 and multiply it by 1.017
(accounting for COLA increase) and then I subtract that from the amount she is actually getting this month I come up with $65.90. This is the increase she will get based on
her income in 2013. I just want to
prove that my calculations will come out with the same figure.
Here is the equation I came up with last time to figure out
the Increase in SS.
Here are the numbers for my Motherinlaw
(Income  Low) = $51,828.00
I won't show you here current
income but I can show you what her Income  Low equals. (round to the nearest
dollar)
ColaF = 1.265
RA =
1.32
Bracket =
0.32
This number is rounded down to the nearest $0.10
Now how did I come up with all the variables and calculate
their values?
Income:
The
income is the Taxed social Security Earnings.
If you log into your Social Security account at http://www.socialsecurity.gov
you can find this number.
Click on the earnings Records to get a list of your
earnings.
I blanked out my Motherinlaws amounts but you can see
where I got the number.
Low:
This
number is the lowest earning year out of the top 35 earning years that social
security has listed for you. But there
is a catch. Every year of income
reported on your Social Security report needs to be multiplied by an indexing
factor. This factor is to adjust
yesteryears dollars into today's dollars, to account for inflation. To get these indexing factors for you, head
over to this web site. http://www.ssa.gov/oact/cola/awifactors.html
[2]
If you have than 35, or fewer, earning years STOP and enter 0 for Low.
On this page enter the year you turned 62 and click on
Submit request. In the case of my
motherinlaw that was the year 2005
These are your indexing factors per year. Her list goes all the way to 2004 where the
index is 1.000000. Every year after 2004, if you turned 62 in 2005, has an index of 1.0 (no increase)
Get the list of Social Security Earning (per year) and
multiply each year's earnings by the Factor for that year, then round down to
the nearest dollar
Here is a short example.
Year

Factor

Earnings

Factored
Earnings

1951

12.1697

$ 4,000.00

$ 48,678

1952

11.4569

$ 2,000.00

$ 22,913

1953

10.8506

$ 3,500.00

$ 37,977

1954

10.7949

$ 4,400.00

$ 47,497

1955

10.3182

$ 4,200.00

$ 43,336

1956

9.64368

$ 3,300.00

$ 31,824

1957

9.35408

$ 5,200.00

$ 48,641

1958

9.2724

$ 5,700.00

$ 52,852

If she had earned $4,000 in 1951 she would multiply that by
12.167 and get $48,678 (bringing the amount she made in 1995 up to 2005
equivalent dollars).
Do this for every single year. Then order then from largest to smallest
amount and find the 36^{th} highest year. (If you are using Excel to help you out you
can use the RANK function check out this video for more information http://youtu.be/Pu32MJHL2nw
[3])
colaF:
COLA
(Cost of Living) factor. You can find
the cost of living adjustments at this social security web site https://www.ssa.gov/oact/cola/colaseries.html
[1]
The
cost of living adjustment is compounded annually by the next cost of living
adjustment. To simplify things I made
the following Chart which is accurate for the year 2015. Find the year you turned 62 and use the ColaF
listed. (You have to round to the closes .001)
Year you turned 62

ColaF

2014

1.017

2013

1.032

2012

1.049

2011

1.087

2010

1.087

2009

1.087

2008

1.15

2007

1.176

2006

1.215

2005

1.265

2004

1.299

2003

1.326

2002

1.345

2001

1.379

2000

1.428

My motherinlaw turned 62 in 2005 so her ColaF would be 1.265 (for the year 2015)
RA:
Retirement
Age. What age did you actually retire?
This page http://www.ssa.gov/retirement/1943.html
[4] will show the RA factor to use if you retire before age 66 and you were
born between 1943 and 1954. This page http://www.ssa.gov/retire2/1943.htm
[5] will show you the RA factor to use if you retire after age 66
and you were born between 1943 and 1954.
Here is a cheat sheet (for those born between 1943 and 1954)
Age started collecting Social Security

RA

62

0.750

63

0.800

64

0.867

65

0.933

66

1.000

67

1.080

68

1.160

69

1.240

70

1.320

70+

1.320

My motherinlaw did not start taking social security
until the age of 70 so her RA number is 1.320
Bracket:
Social
security has income brackets, also known as bend points, are points at which SS reduces how much they pay you based on your earnings. The first small bracket pays you 90% the
second pays 32% and the 3^{rd} bracket
pays 15%.
Again here is a cheat sheet
Year you turned 62

1^{st} bracket

2^{nd} bracket

2000

$531

$3,202

2001

$561

$3,381

2002

$592

$3,567

2003

$606

$3,653

2004

$612

$3,689

2005

$627

$3,779

2006

$656

$3,955

2007

$680

$4,100

2008

$711

$4,288

2009

$744

$4,483

2010

$761

$4,586

2011

$749

$4,517

2012

$767

$4,624

2013

$791

$4,768

2014

$816

$4,917

2015

$826

$4,980

Write down the number from the 1^{st} bracket and
the 2^{nd} bracket for the year you turned 62 from this table. My motherinlaw turned 62 in 2005 so I will
write down.
1st bracket = $627.00
2^{nd} bracket
= $3,779
The first bracket
needs to be multiplied by 0.90 (90%).
The second bracket needs to be multiplied by 0.32 (32%). Both numbers need to be multiplied by your
ColaF and RA numbers.
For my mother in law
her ColaF and RA numbers are
ColaF = 1.265
RA = 1.32
Calculated 1^{st} bracket = $627 * 0.9 * 1.265
* 1.32
= $942.27
Calculated 2^{nd} bracket = $3,779 * 0.32 * 1.265
* 1.32
= $2,019.26
Round down to the next multiple of $0.10
Calculated 1^{st} bracket = $ 942.20
Calculated 2^{nd} bracket = $2,019.20
What do these numbers mean?
If your monthly
Social Security payment is under the Calculated 1^{st} bracket your Bracket =
90%.
If your monthly Social
Security is more than Calculated 1^{st} bracket but under the (Calculated 1^{st} bracket + the Calculated 2^{nd} bracket) then
your
Bracket = 32%
If your monthly
Social Security is more than the Calculated 1^{st} bracket + the
Calculated 2^{nd} bracket then your
Bracket = 15%
For my motherinlaw
If her Social
Security were under $942.20 she
would use 90%
If her Social Security
where under ($942.20 + $2019.2) = $2961.40
she would use 32% and if it were over she would use 15%.
Her current SS
payments puts her in the middle so her bracket is 32%.
(for those accountants and math nerds in the crowd I did not
figure the case if your new income crosses a bracket I just assumed you would
stay in one bracket, even with new money)
Bracket = 32%
References
[1] CostOfLiving Adjustments
Visited 1/2015
[2] Indexing Factors For
earnings
Visited 1/2015
[3] Excel Rank function
Visited 1/2015
[4] RA factor if retire before
66 (Born 19431954)
Visited 1/2015
[5] RA factor if retire after 66
(Born 19431954)
Visited 1/2015
[6] Benefit Formula Bend Points
Visited 1/2015
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