Forecasting Social Security Benefits

[LCP]

Say your client, a high paid exec, is thinking of semi-retiring. He's either going to consult with his current company or maybe start up a whole new business.

You explain to him that he can save SE tax as an S-Corp. but he's a bright guy and asks how that's going to affect his future social security benefit.

Does anybody have a rule-of-thumb or a spreadsheet ..... basically a simple way to answer that question?

[sea-tax]

I have financial planning software that I use . But unfortunately it is a thing whereby you have to be licensed with Hd Vest to use. It is called Vest Plan Solutions.

[ChEAr$]

Forget about the social security

If you recommend an S corp, you had better advise him as to the ramifications
of adequate salary subject to FICA! And here there IS no rule of thumb. it
just has to be "reasonable". But that's another story.

[Black Bart]

Don't have anything quick 'n' dirty, but

Does anybody have a rule-of-thumb or a spreadsheet ..... basically a simple way to answer that question?

looks like nobody else has either, so if you've got the time (4 to 6 weeks) and patience, you can get the info from the horse's mouth (like this): It's slow, but it works (I did it about five years ago).

(a) Call SSA at 800-772-1213
(b) Have them send you a dozen of this form -- "Request for Earnings and Benefit Estimate Statement"
(c) This form asks you to list: Last year's actual earnings/ This year's estimated earnings/ The age at which you plan to stop working/ The average amount you expect to earn each year between now and when you retire.
(d) Use as many forms as you want and fill in different amounts of expected average earning using your various projected earning scenarios.
(3) They'll process as many as you send, but I wouldn't send them all at once. Space the mailing of each one 3 or 4 days apart so the same bureaucrat won't get ahold of all of them and decide you're overworking the government.
(4) They'll figure the expected monthly benefits for each set of figures and send you a statement to that effect.

One psychological advantage: If the client's SS benefits don't later work out as projected, you can always say "the government did the figuring" and he can't blame you and your software.

[ChEAr$]

one easier way

Social Security website has a quick and dirty benefits calculation thereon.