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What is the formula for paiyment into social security taxes…

Customer Question
What is the formula...

What is the formula for paiyment into social security taxes and raise benefits over the next five years?

Accountant's Assistant: These retirement benefits are supposed to help us but they can be so complicated! The Retirement Expert will help you get the most benefits propertly. Please tell me more, so we can help you best.

Am due to receive 280.00 per month now if I work the next five years how much can I add to that amount?

Submitted: 4 months ago.Category: Social Security
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Answered in 4 minutes by:
3/12/2018
Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 4 months ago
Lane
Lane, JD,CFP, MBA, CRPS
Category: Social Security
Satisfied Customers: 14,656
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial, Social Security & Tax advice since 1986
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Hi. My name’s Lane …

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, to clients on three continents, since 1986.

I’m reading your question now.

Bear with me a moment while I type up my response.

….

Then if you have further questions we can go from there.

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Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 4 months ago

That's a VERY complicated question ton answer. SSA uses Actuaries to calculate these amounts .... As a form of social insurance it's heavily weighted toward lower income workers.

...

As an overview, they take your highest 35 years of earnings and average that snd index it to current dollars, using the average wage base. (this is called AIME - Average Indexed Monthly Earnings)

...

The then factor that with three different percentages (called bend points): https://www.ssa.gov/oact/cola/bendpoints.html

...

(a) 90 percent of the first $895 of his/her average indexed monthly earnings, plus(b) 32 percent of his/her average indexed monthly earnings over $895 and through $5,397, plus(c) 15 percent of his/her average indexed monthly earnings over $5,397....You can read more about that (and use the worksheet to calculate (page two) here:...https://www.ssa.gov/pubs/EN-05-10070.pdf
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Customer reply replied 3 months ago
I am sorry, but I still haven’t received a specific answer on my question: how much tax’s should I pay in order to receive about $1000 SS , being self- employed
Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago

There is no direct relationship between how much tax you pay and the benefit. I've given you an overview of how the benefit works above.

...

You'd have to give me your earnings history and Date of Birth (as you can see if your read any of my answer above) before I could BEGIN to calculate your AIME ... and even then the answer would have to come in the for of self-employment earnings AND for a given number of years.

...

'You've asked a question that can not be answered with the limited amount of data you've provided.

...

If you can provide me with your earnings record I can get you there

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Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago

It might help to understand that Social Security is a form of Social Insurance that benefits those that are at the lower end of the earnings spectrum you can see if if you look at those bend point weighting (90% factor being against the first $895 of AIME.

...

But, the way you asked, the question, it can't be answered. You've assumed that there is some direct connection between taxes paid and the benefit ... It's not that simple.

...

Get me your earnings record an I can get you closer

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Customer reply replied 3 months ago
Hi Lane, 1)I don’t want you to think that I am critiquing anybody, but the answer that it’s “ complicated” wouldn’t help me, and I have already payed $38 for this answer. I do know that it’s complicated. That’s why I need a professional help. My life has dramatically changed that’s why I have to take care of my problems by myself somehow. I need to know how much should I make in order to pay tax enough to earn decent SS. I would gladly call you, if you could give me very specific numbers : how to earn $1000, $2000 or $3000 SS. But to call me n order to hear that it’s still complicated , I just can’t afford it. I hope you understand me. I am ready to find some jobs to make it work. I have had no chance to work during the last a few years, and my SS will be only $200-300/ month. 2) I heard that if I will be able to work a lot during 5 years, I can take them as the best years for my SS calculation. I’d it truth?
Customer reply replied 3 months ago
If you could get all this numbers together and give me an answer, I could call you. I am not able to get all this calculations ( that you sent)by myself. Even the tax guy couldn’t understand how that works looking st them, He actually recommended me to ask you how SS works...
Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago

I'm sorry but the calculation IS complicated ... and I've explained how it works already.

...

But I think you're not hearing me.

...

he ONLY way I can run that calculation ... the only way ANYone can run that calculation is to start with your earnings history.

...

The only way I can calculate your Average Indexed Monthly Earnings is to know hoe much you've earned since you stared working.

...

I know this information intuitively ... but again NO ONE can calculate this without knowing your earnings history ... how much you earn in the future is only one part of the calculation.

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Customer reply replied 3 months ago
I think I understand that you need to see my earthing during all the years. If you would send you a picture , would it help?
Customer reply replied 3 months ago
I just open the SSA site.
Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago

Yes ... can't calculate without it.

...

Before you send, black out any personally identifiable information (Social Security number, last name, etc) Leave everything else, such as date of Birth

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Customer reply replied 3 months ago
I have made a picture only my numbers , without any other information. Only a year and how much I made. Would it work?
Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago

No. I need every yearly amount earned since you began working ... along with Date of birth

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Customer reply replied 3 months ago
there are years and amounts. I can give you my day of birth.
Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago

Perfect

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Customer reply replied 3 months ago
DOB is 06/04/1960
Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago

OK, you'll have to give me until tomorrow afternoon ... (in the middle of family obligations this evening) ... and it's already quarter to 10:00 here.

...

But this IS what I need to answer your question. I'll have to build a spreadsheet so that I can back into the number, the way you've asked it.

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Customer reply replied 3 months ago
Thank you so much, Lane. I really appreciate it. Take your time. Have a good night.
Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago

You're very welcome ... Talk to you tomorrrow

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Customer reply replied 3 months ago
Hello, Lane. I haven’t heard anything from you.
Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago

Hi there! ... Just leaving my office to go home. Most of the work is done ... If you read what I typed above you understand that one can't simply back into how much you need to ear to get a certain payout ... SO I have to generate a random number generator into the spreadsheet,

...

So not QUITE there yet.

...

But in the mean time ... have you seen this? https://www.ssa.gov/oact/quickcalc/index.html

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Customer reply replied 3 months ago
1.I have opened the link to it. Honestly speaking, it’s still looks like a Greek Gramar to me. I understand that you can just generalize some numbers that could help me to have an idea about the matter. 2. I already asked you s question: will be my SS culculated according to some 5 best years of my earning?
Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago

No. It's your highest 35 year of hearnings - a very specific formula. (I've already tried telling you this, but let me present it differently)

1. first, it's your highest 35 years of earnings (That's why working a few more year does very little to the benefit)

...

2. Another reason for that is that they index (inflate older earnings up to today's dollars before calculating the average

...

(I'll make an exception to number 1.- if you don't HAVE 35 years under the system working another year makes a bigger difference becasue you're replacing zeros in that 35 year average)

...

3. once they get that AIME (Average Indexed Monthly earnings for those 35 years they weight it - Giving the FAR biggest weight to the first $800 or so of earnings in that average - This is how they favor the very low earners (becascue social security is a form of social insurance and intended to serve those that were east able to save for themselves)

...

4 then then fact the next $4000 or so in that average by 32%

...

5 then, finally factor any average earnings over that by 15%

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Customer reply replied 3 months ago
Hello Lane. Just wondering if the sheet that you was willing to do is ready?
Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago

No, sorry ... the problem lies in that future income scenario ... which the SSA formula doesn't really deal with.

...

AND in this being tax season and just being covered up

...

Part of the solution is to unbundle the dob of dirth data that is linked so that we can assume you are older than you are and use supposed numbers in those last few year of earnings

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Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago

If you'll go here and download the calculator, you can make this work by changing the date of birth and then substitution estimated future earnings for the last X years of eaarnings.

...

What I'm trying to do is put together something that can actually back into that by using real DOB and estimated earnings

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Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago
Ask Your Own Social Security Question
Customer reply replied 3 months ago
I am sorry, Lane. But I still can’t understand : will you be able to give me anyanswer on my question, even aprocimetly? We started our communication 3 weeks ago, and I still haven’t received any answer . Tell me, please, can you do that or not?
Social Security Expert: Lane, JD,CFP, MBA, CRPS replied 3 months ago

Listen ... I tried to explain to you up front that you're asking for a herculean task to put together a calculator tat even Social Security has not (and will not) do.

...

This is something that I have an interest in or I wouldn't DARE be doing this as an answer ion this simple Q&A site.

...

I bill out at 150 to 250/hr depending on the complexity of the task and the deliverable

..

This is something I wold charge clients over 2,000 to do. And it would take the use of both the SSA calculation AND a financial planning projection package.

...

Even this package https://www.ssanalyzer.com/site/index.php (which I pay for and use) doesn't do a good job of handling the future earnings aspect of this.

...

If you'd like to wait, I've have some real time to work on this after tax season (another two weeks) but again I don't think you realize what you're asking.

...

If you don't want to wait, that's fine ... the fact that no other expert has picked this up shows you what an unrealistic question this is for THIS FORUM at this cost.

...

Uf you can wait I WILL be completing this - for my own use whether you want the results or not.

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Customer reply replied 3 months ago
Lane, how can I get refund and resign? I don’t believe that I can get any answer here. You give me just different reasons not to answer, and I am paying monthly here.
Customer reply replied 3 months ago
You send me to bunch of different useless links which even my tax guy can’t figure out how to use. Yhr only answers I got from you : THUS IS CONPLWCAYED AND YOU DONT REALIZE WHAT YOU ASK ME ABOUT...
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