Kevin Knauss: Health, History, Travel, Insurance
If we assume the individual collects Social Security for 20 years, they will receive $128,709 less with the lower income. The individual saved $64,230 on self-employment taxes with the lower income of 25 percent. However, in this scenario, the reduced income costs the individual over $60,000 in Social Security benefits if they retire at their full retirement age.
The Roadmap report generates the Maximum Social Security income scenario. We can also enter other age-based claiming scenarios that are detailed within the report. In the sample below, Mick was born in 1963, and his spouse Diana was born in 1977. Because Mick and Diana have children, the analysis concluded that Mick and Diana would receive the largest lifetime Social Security income benefit if Mick filed at age 63 and Diana claims Social Security when she turns 62 in 2039.
The next set of calculations are truly mind bending. The SSA has to bend your AIME into a Primary Insurance Amount (PIA.) The PIA is what you will receive at your Full Retirement Age, 67 if born in 1960 or later. The AIME is bent lower by a series of calculations using Bend Points. The specific Bend Points are from the year you turn 62.
The main takeaway is that the calculations for the ACA health insurance income estimates are separate from determining the tax on Social Security benefits. Specifically, all the Social Security income is included on the Covered California application as income, but only ½ is used for the combined income calculation of Social Security income taxes.
