Correct Entry Amount for Social Security

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Old Mike
Posts: 17
Joined: Wed Aug 19, 2020 2:52 pm

Correct Entry Amount for Social Security

Post by Old Mike »

Let's say I'm 52 and my most recent SS statement says that if I retire at 52 and collect SS at 62, then my monthly payment will be $1,493. I think this amount in today's dollars (not dollars 10 years from now).

For FRP, I am guessing that I should just enter $17,916 (12 x $1,493) into the Annual Retirement Income box and set the start age at 62?

Will FRP automatically increase that amount by inflation to account for the next 10 years before I collect SS?
Last edited by Old Mike on Thu Jul 15, 2021 2:00 pm, edited 1 time in total.
jimr
Posts: 821
Joined: Thu Feb 28, 2008 6:48 pm

Re: Correct Entry Amount for Social Security

Post by jimr »

That sounds right to me and yes, FRP will automatically adjust the cash flow amount between now and when the cash flow starts.

As I understand it, the SS estimates are shown in today's value dollars and the payment amount will be COLA'd between now and when you start receiving it. So entering the cash flow as you suggested by multiplying by 12 and entering as a "Tracks Inflation" cash flow should be right, assuming you're comfortable that future payouts will continue to track inflation and will be funded as we expect/hope.
Old Mike
Posts: 17
Joined: Wed Aug 19, 2020 2:52 pm

Re: Correct Entry Amount for Social Security

Post by Old Mike »

Thanks Jim. I'm actually going to reduce the SS cash flow by 25% which seems to be a decent fail-safe percentage based on what I've read. Not sure how SS will handle future COLA's though.

You wrote "and entering as a "Tracks Inflation" cash flow should be right"...
I'm entering this value on the main FRP window in the Annual Retirement Income field and not the Additional Inputs window. Am I correct to assume that the input in the Annual Retirement Income field is bumped up by the Inflation field each year (even prior to retirement)?
jimr
Posts: 821
Joined: Thu Feb 28, 2008 6:48 pm

Re: Correct Entry Amount for Social Security

Post by jimr »

Yes. That's corret. The Retirement Income input uses an implicit cola type of tracks inflation and also is assumed to be 100% taxable. You can verify this in the detailed view tab by checking the after tax income column. Assuming that's the only income cash flow, you should see this staying steady from year to year, meaning that it is exactly tracking inflation from year to year.
Old Mike
Posts: 17
Joined: Wed Aug 19, 2020 2:52 pm

Re: Correct Entry Amount for Social Security

Post by Old Mike »

Yeah... I ran it both ways. I like running it better through the Additional Inputs window since it gives the ability to tweak it the taxes.

Thank you Jim for the great support and incredible software.
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