When the Consumer Financial Protection Bureau released its Social Security planning tool in November, some took issue with the estimates it provided.
The tool allows users to enter their birthdate and highest annual income to estimate their monthly and annual Social Security benefits whe retiring at various ages. The Bureau's Office for Older Americans worked with the Social Security Administration to develop and promote the tool, according to Richard Cordray, director of the CFPB, and the estimate is based on the current formulas used by SSA.
NAPA reported that in December, two senators, Richard Shelby, R-Ala., chairman of the Senate Banking, Housing and Urban Affairs Committee, and Mike Enzi, R-Wyo., chairman of the Senate Budget Committee, identified several problems with the way the tool calculates users' retirement benefits.
One issue related to retroactive benefits was the result of a coding error and has since been corrected, but the senators were unsatisfied with the response to other issues.
The big issue for Shelby and Enzi was the difference in estimates for consumers who used both the CFPB tool and the SSA tool in their planning. Responding to concerns in February, Cordray acknowledged that the methodology used to design the tool would lead to differences in estimates, but felt they "did not undermine the intended purpose of the tool."
CFPB's tool uses the SSA Quick Calculator to estimate retirement benefits at a user's full retirement age, and to generate its own estimates for other ages between 62 and 70. Those estimates are based on "standard actuarial increases and reductions in monthly benefits without making additional adjustments for working longer," according to Cordray.
"This led to differences between the estimates shown in SSA's Calculator and the Bureau's tool for early and delayed benefits," Cordray wrote.
SSA's Quick Calculator does not take users' earnings history into account; the Retirement Estimator does.
