The question this week is from someone asking how to minimize the impact of GPO on his wife’s non-covered pension and his Social Security benefits. “My wife is a schoolteacher in the 401(a) Defined Contribution Plan within the Ohio State Teachers Retirement System (STRS). In addition to her teacher’s retirement account, I have a defined-benefit pension from work.  We plan to retire at age 62 and defer taking my Social Security benefit until age 67, possibly 70. My projected monthly SS income will be roughly $3,000 per month. One of my concerns has been that her retirement plan will subject her to the GPO and reduce her spousal benefit by 2/3 of her pension amount. I am projecting her account balance would be about $400,000 by age 62, 100% vested in both employee and employer contributions. Would it be a good strategy to roll over her account balance into another qualified account (IRA) at age 62, as I understand is possible? We would use this money first, to fund our ‘minimum dignity floor’ expenses during our first five years of retirement, taking advantage of our tax planning window. Also, if these funds were then completely drawn out by age 67, would that eliminate the potential GPO reduction on her spousal SS benefit? Is this a legitimate way to avoid the GPO reduction? Are there any pitfalls that would argue against this strategy? I’d love to hear your thoughts on this.” GPO – What It Is It would be a grand strategy to minimize the impact of GPO if it worked. It doesn’t work because that’s exactly what people would do to avoid the GPO. First, let’s clarify what the GPO is. GPO stands for Government Pension Offset. It’s the cousin to the WEP – Windfall Elimination Provision. Both are related to rules in place that apply to people who have what are called non-covered pensions. Some government agencies are allowed to supply an alternative to Social Security, so you don’t pay into Social Security but participate in this pension instead. This is going to affect public-sector employees, for the most part. In your wife’s case, a 401(a), which is very similar to a 401(k), is being used essentially as an alternative system to Social Security. Both the Ohio-based system and your wife are putting money into this 401(a), instead of putting money into Social Security. Your concern is that she will be subject to the GPO, which states that her spousal benefits will be reduced by $2 for every $3 of her non-covered pension if she claims spousal benefits based on your Social Security. And, if you were to pass away, her survivor benefits would be affected the same way. How to Know the Offset What gets a little confusing is that your wife doesn’t have a traditional pension where it’s a monthly payment amount. She has what is essentially a 401(k), a lump of money of about $400,000. That’s replacing Social Security, and they do treat it just like it’s a monthly pension. To know how much the 2/3 offset will be because of WEP, you have to know the monthly benefit. But because it is a lump sum, you will only know exactly how much the offset will be in one of two ways:  Either the Ohio State pension system itself will tell you what the equivalent monthly benefit is – which some pension funds do – and that’s the number you use; or If they never provide that, the IRS and Social Security have their own table where you look up that value ($400,000) and your age at your entitlement date and do the conversion to know what the monthly equivalent value of that is.  One or the other is going to happen, no matter what you do with the money. You cannot hide it. You cannot roll it out and spend it. You cannot do anything to avoid this. This is going to happen. The only thing you can do is delay taking any money out of that account (which includes rolling it over). During the time you’re collecting Social Security and you’re not touching one penny of that money, WEP and GPO don’t apply. However, when you become ‘entitled’ to that money, WEP and GPO do apply. According to the rules, you become entitled the moment you start taking that money out, including rolling it over, even if you roll it over and don’t touch it. If you leave it in the 401(a) untouched, it is not considered in force, and you can be collecting some Social Security before that. Minimize the Impact of GPO? You mentioned you are both 62 and want to retire at 62, living on the funds in the 401(a) for five years until you reach your full retirement age at 67. When you turn on your Social Security at 67, your wife will be allowed to collect a spousal benefit. However, you mentioned you have ample other assets, so you may be able to minimize the impact of GPO. If your wife does not move her 401(a) fund and you live off your other assets instead, she will be able to collect the spousal benefit without a GPO offset. When RMDs from that 401(a) begin at her age 70½, Ohio State will report that to the Social Security Administration, who will start to apply GPO to her spousal benefit. Remember, though, that you can delay starting payment of RMDs until April 1 of the year following the year you turn 70½, so she might be able to buy an extra year. That way, by living off your other assets, she could get a few years of spousal Social Security without having GPO applied to it. The pension amount from the lump sum will be imputed using either Ohio State’s calculation or Social Security’s. When they come up with their estimate, which has been calculated actuarily, it cannot be appealed. They’re going to impute the pension, take 2/3 of that pension amount, and reduce your wife’s Social Security spousal or survivor benefit by that amount. Whatever strategy you choose, you’d have to really crunch those numbers to know what makes the most sense.         The post Can You Minimize the Impact of GPO? appeared first on Help with My Social Security.com.

The question this week is from someone asking how to minimize the impact of GPO on his wife’s non-covered pension and his Social Security benefits. “My wife is a schoolteacher in the 401(a) Defined Contribution Plan within the Ohio State Teachers Retirement System (STRS). In addition to her teacher’s retirement account, I have a defined-benefit pension from work.  We plan to retire at age 62 and defer taking my Social Security benefit until age 67, possibly 70. My projected monthly SS income will be roughly $3,000 per month. One of my concerns has been that her retirement plan will subject her to the GPO and reduce her spousal benefit by 2/3 of her pension amount. I am projecting her account balance would be about $400,000 by age 62, 100% vested in both employee and employer contributions. Would it be a good strategy to roll over her account balance into another qualified account (IRA) at age 62, as I understand is possible? We would use this money first, to fund our ‘minimum dignity floor’ expenses during our first five years of retirement, taking advantage of our tax planning window. Also, if these funds were then completely drawn out by age 67, would that eliminate the potential GPO reduction on her spousal SS benefit? Is this a legitimate way to avoid the GPO reduction? Are there any pitfalls that would argue against this strategy? I’d love to hear your thoughts on this.” <h4>GPO – What It Is</h4> It would be a grand strategy to minimize the impact of GPO if it worked. It doesn’t work because that’s exactly what people would do to avoid the GPO. First, let’s clarify what the GPO is. GPO stands for Government Pension Offset. It’s the cousin to the WEP – Windfall Elimination Provision. Both are related to rules in place that apply to people who have what are called non-covered pensions. Some government agencies are allowed to supply an alternative to Social Security, so you don’t pay into Social Security but participate in this pension instead. This is going to affect public-sector employees, for the most part. In your wife’s case, a 401(a), which is very similar to a 401(k), is being used essentially as an alternative system to Social Security. Both the Ohio-based system and your wife are putting money into this 401(a), instead of putting money into Social Security. Your concern is that she will be subject to the GPO, which states that her spousal benefits will be reduced by $2 for every $3 of her non-covered pension if she claims spousal benefits based on your Social Security. And, if you were to pass away, her survivor benefits would be affected the same way. <h4>How to Know the Offset</h4> What gets a little confusing is that your wife doesn’t have a traditional pension where it’s a monthly payment amount. She has what is essentially a 401(k), a lump of money of about $400,000. That’s replacing Social Security, and they do treat it just like it’s a monthly pension. To know how much the 2/3 offset will be because of WEP, you have to know the monthly benefit. But because it is a lump sum, you will only know exactly how much the offset will be in one of two ways: <ul> <li>Either the Ohio State pension system itself will tell you what the equivalent monthly benefit is – which some pension funds do – and that’s the number you use; or</li> <li>If they never provide that, the IRS and Social Security have their own table where you look up that value ($400,000) and your age at your entitlement date and do the conversion to know what the monthly equivalent value of that is.</li> </ul> One or the other is going to happen, no matter what you do with the money. You cannot hide it. You cannot roll it out and spend it. You cannot do anything to avoid this. This is going to happen. The only thing you can do is delay taking any money out of that account (which includes rolling it over). During the time you’re collecting Social Security and you’re not touching one penny of that money, WEP and GPO don’t apply. However, when you become ‘entitled’ to that money, WEP and GPO do apply. According to the rules, you become entitled the moment you start taking that money out, including rolling it over, even if you roll it over and don’t touch it. If you leave it in the 401(a) untouched, it is not considered in force, and you can be collecting some Social Security before that. <h4>Minimize the Impact of GPO?</h4> You mentioned you are both 62 and want to retire at 62, living on the funds in the 401(a) for five years until you reach your full retirement age at 67. When you turn on your Social Security at 67, your wife will be allowed to collect a spousal benefit. However, you mentioned you have ample other assets, so you may be able to minimize the impact of GPO. If your wife does not move her 401(a) fund and you live off your other assets instead, she will be able to collect the spousal benefit without a GPO offset. When RMDs from that 401(a) begin at her age 70½, Ohio State will report that to the Social Security Administration, who will start to apply GPO to her spousal benefit. Remember, though, that you can delay starting payment of RMDs until April 1 of the year following the year you turn 70½, so she might be able to buy an extra year. That way, by living off your other assets, she could get a few years of spousal Social Security without having GPO applied to it. The pension amount from the lump sum will be imputed using either Ohio State’s calculation or Social Security’s. When they come up with their estimate, which has been calculated actuarily, it cannot be appealed. They’re going to impute the pension, take 2/3 of that pension amount, and reduce your wife’s Social Security spousal or survivor benefit by that amount. Whatever strategy you choose, you’d have to really crunch those numbers to know what makes the most sense. The post <a href="http://www.helpwithmysocialsecurity.com/minimize-impact-gpo/" rel="nofollow" target="_blank">Can You Minimize the Impact of GPO?</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Can You Minimize the Impact of GPO?

This week we have a question from someone curious about the timing of the transition from Social Security Disability to Full Retirement Age (FRA) benefits. “My Social Security Disability will be converting over to FRA, and I would like to know if I have a wait time before it turns into FRA.” From Disability to Full Retirement Age If you’re collecting disability, when you reach Full Retirement Age, your disability benefit will cease, and Social Security will begin paying you your retirement benefit. Here is the logic: the system is designed so that disability payments are paid to you because you were forced to retire early as the result of a disability. You couldn’t work to your FRA, so Social Security pays your full retirement benefit even though you might be 35 or 45 or 55 years old. But once you do get to your FRA, you will have earned a retirement benefit, so there is no reason for them to pay you disability anymore. They start paying you out of the retirement benefit bucket instead. The system is more complicated than that, but that’s basically how it works. It Should be Seamless You are asking how long the wait time will be when that happens. My understanding – and I haven’t heard anything to the contrary – is that it’s seamless. One month you’ll get your last disability payment. Then the next month, you’ll start getting your retirement benefit payment, which should be nearly the identical amount. And, since both are paid on the same schedule (either that second, third, or fourth Wednesday of the month, based on your day of birth), there should be no noticeable interruption if things are working correctly. For people who are reliant upon disability payments, imagine the hardship they’d be put through if Social Security shut off disability benefits, and there was a 2-month waiting period before their retirement benefits started showing up. Luckily, there should be no delay or wait time. The source of your payments will convert automatically. Since Social Security is electronically depositing both these payments into your bank account or onto your debit card – two of the options you have for receiving the benefits – you probably won’t even notice a difference. All you might see is a small change in the dollar amount in those two payments. For some strange reason, your disability benefit is often just a few dollars different than your Full Retirement Age benefit. The post Transitioning from Disability to Full Retirement Age appeared first on Help with My Social Security.com.

This week we have a question from someone curious about the timing of the transition from Social Security Disability to Full Retirement Age (FRA) benefits. “My Social Security Disability will be converting over to FRA, and I would like to know if I have a wait time before it turns into FRA.” <h4>From Disability to Full Retirement Age</h4> If you’re collecting disability, when you reach Full Retirement Age, your disability benefit will cease, and Social Security will begin paying you your retirement benefit. Here is the logic: the system is designed so that disability payments are paid to you because you were forced to retire early as the result of a disability. You couldn’t work to your FRA, so Social Security pays your full retirement benefit even though you might be 35 or 45 or 55 years old. But once you do get to your FRA, you will have earned a retirement benefit, so there is no reason for them to pay you disability anymore. They start paying you out of the retirement benefit bucket instead. The system is more complicated than that, but that’s basically how it works. <h4>It Should be Seamless</h4> You are asking how long the wait time will be when that happens. My understanding – and I haven’t heard anything to the contrary – is that it’s seamless. One month you’ll get your last disability payment. Then the next month, you’ll start getting your retirement benefit payment, which should be nearly the identical amount. And, since both are paid on the same schedule (either that second, third, or fourth Wednesday of the month, based on your day of birth), there should be no noticeable interruption if things are working correctly. For people who are reliant upon disability payments, imagine the hardship they’d be put through if Social Security shut off disability benefits, and there was a 2-month waiting period before their retirement benefits started showing up. Luckily, there should be no delay or wait time. The source of your payments will convert automatically. Since Social Security is electronically depositing both these payments into your bank account or onto your debit card – two of the options you have for receiving the benefits – you probably won’t even notice a difference. All you might see is a small change in the dollar amount in those two payments. For some strange reason, your disability benefit is often just a few dollars different than your Full Retirement Age benefit. The post <a href="http://www.helpwithmysocialsecurity.com/disability-full-retirement-age/" rel="nofollow" target="_blank">Transitioning from Disability to Full Retirement Age</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Transitioning from Disability to Full Retirement Age

Many people wonder, “Should I file retroactively for Social Security Benefits?”. The question this week is from someone considering taking retroactive benefits on Social Security at age 70. “I’m ready to file for my Social Security benefits when I reach age 70 in 18 months. I’ve researched the retroactive benefit option. Even though exercising it will reduce my monthly amount, I believe the accessibility of a lump sum would outweigh the reduction. It would take about 16 years to make up the difference, not considering inflation. My primary question is ‘How long will I live?’” It’s a gamble, to say the least. What stories have you heard, good or bad, about the retroactive draw? All in all, has it worked out one way or the other?”   The good news is that the situation is less complicated than you think. As you say, if you need that cash, one way to get the six months’ worth of benefits between 69½ and 70 is to file at age 70 – and file retroactively. About Filing Retroactively Social Security allows you to file retroactively up to six months before your application date, or back to your full retirement age, whichever is less. You have to be past your full retirement age, which you clearly are (you said you’d be 70 in a year and a half) so you can go into Social Security now or at age 70 and say, “You know what, instead of applying as of today, I would like to backdate – or make retroactive – my application.” And they will happily do so. In fact, when you have delayed as you have (well past your full retirement age), Social Security’s default filing is to process your request as if you wanted to backdate it six months. In the past, we’ve warned people who don’t want this to state very clearly when claiming their benefits that they absolutely do not want the retroactive benefits. How This Applies One way you can get that six months’ worth of benefits is to wait to age 70 and backdate your application, applying retroactively. Social Security will start your monthly benefits then and send you a lump sum to cover the six months they had not paid you. However, if you want the money between 69½ and 70, you don’t have to wait until age 70. You can claim your benefit at 69½. That would be better than waiting until 70 because you start getting your money right away. You will get the same dollar amount either way, but you won’t be forced to wait. Besides, they don’t give you any interest on what they’re paying you retroactively for those prior six months. You earn 8% more in your benefits for every year you wait past your full retirement age. (Waiting an extra six months will increase your benefits by 4%.) If you take the 6-month retroactive filing option at age 70, your start date for benefits also goes back six months, so you forgo that last 4% of growth. If having the money in hand is more important than the slightly higher benefit every month from age 70 on, simply claim at age 69½ instead. What About Those Stories? As far as stories go, it’s totally mixed. Plenty of people have lived longer than their life expectancy (which according to Social Security is the mid-80s), and they are happy they delayed until 70. Other people have delayed until age 70 and then been diagnosed with cancer at 75; in those cases, in hindsight, it was a bad idea to delay until 70. That’s why this is a very personal decision. But, as a purely financial decision, there is a very attractive reason to delay until 70 if you can afford to do so. The fact that Social Security is a lifetime income source that also has an inflation adjustment is very, very powerful over long periods. That’s why we recommend people at least consider it. We’re not saying that waiting until age 70 is right for everyone. In hindsight, it may turn out to be the wrong decision. But, sorry to sound morbid, you’ll be gone, so does it really matter? Yet, if you live extra long, you will greatly appreciate having the higher Social Security benefit that does not go away, until you do. It’s something to think about. The post Should I File Retroactively? appeared first on Help with My Social Security.com.

Many people wonder, “Should I file retroactively for Social Security Benefits?”. The question this week is from someone considering taking retroactive benefits on Social Security at age 70. “I’m ready to file for my Social Security benefits when I reach age 70 in 18 months. I’ve researched the retroactive benefit option. Even though exercising it will reduce my monthly amount, I believe the accessibility of a lump sum would outweigh the reduction. It would take about 16 years to make up the difference, not considering inflation. My primary question is ‘How long will I live?’” It’s a gamble, to say the least. What stories have you heard, good or bad, about the retroactive draw? All in all, has it worked out one way or the other?” The good news is that the situation is less complicated than you think. As you say, if you need that cash, one way to get the six months’ worth of benefits between 69½ and 70 is to file at age 70 – and file retroactively. <h4>About Filing Retroactively</h4> Social Security allows you to file retroactively up to six months before your application date, or back to your full retirement age, whichever is less. You have to be past your full retirement age, which you clearly are (you said you’d be 70 in a year and a half) so you can go into Social Security now or at age 70 and say, “You know what, instead of applying as of today, I would like to backdate – or make retroactive – my application.” And they will happily do so. In fact, when you have delayed as you have (well past your full retirement age), Social Security’s default filing is to process your request as if you wanted to backdate it six months. In the past, we’ve warned people who don’t want this to state very clearly when claiming their benefits that they absolutely do not want the retroactive benefits. <h4>How This Applies</h4> One way you can get that six months’ worth of benefits is to wait to age 70 and backdate your application, applying retroactively. Social Security will start your monthly benefits then and send you a lump sum to cover the six months they had not paid you. However, if you want the money between 69½ and 70, you don’t have to wait until age 70. You can claim your benefit at 69½. That would be better than waiting until 70 because you start getting your money right away. You will get the same dollar amount either way, but you won’t be forced to wait. Besides, they don’t give you any interest on what they’re paying you retroactively for those prior six months. You earn 8% more in your benefits for every year you wait past your full retirement age. (Waiting an extra six months will increase your benefits by 4%.) If you take the 6-month retroactive filing option at age 70, your start date for benefits also goes back six months, so you forgo that last 4% of growth. If having the money in hand is more important than the slightly higher benefit every month from age 70 on, simply claim at age 69½ instead. <h4>What About Those Stories?</h4> As far as stories go, it’s totally mixed. Plenty of people have lived longer than their life expectancy (which according to Social Security is the mid-80s), and they are happy they delayed until 70. Other people have delayed until age 70 and then been diagnosed with cancer at 75; in those cases, in hindsight, it was a bad idea to delay until 70. That’s why this is a very personal decision. But, as a purely financial decision, there is a very attractive reason to delay until 70 if you can afford to do so. The fact that Social Security is a lifetime income source that also has an inflation adjustment is very, very powerful over long periods. That’s why we recommend people at least consider it. We’re not saying that waiting until age 70 is right for everyone. In hindsight, it may turn out to be the wrong decision. But, sorry to sound morbid, you’ll be gone, so does it really matter? Yet, if you live extra long, you will greatly appreciate having the higher Social Security benefit that does not go away, until you do. It’s something to think about. The post <a href="http://www.helpwithmysocialsecurity.com/should-i-file-retroactively/" rel="nofollow" target="_blank">Should I File Retroactively?</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Should I File Retroactively?

This week the question is from a young widow wondering how remarrying affects Survivor Benefits from her deceased husband’s Social Security: I was married to my spouse for just 4½ years, and he recently passed away. I’m only 36, so I may remarry down the road, but I’m wondering how that will affect my claiming my first spouse’s Social Security benefits. I have heard conflicting things from Social Security as to whether I can remarry or not. I have heard as long as I am not married by age 57 or 58 (I can’t remember which), I can still collect his benefits. But I’ve also heard that I cannot remarry anytime, period, if I want to collect on my deceased spouse’s benefits.  So, here’s my question: can I remarry, as long as I divorce by age 57 or 58, whichever it is? Or do I need to remain single until then, so I can collect my deceased spouse’s benefits?   So, there are two parts to your question: first, what benefits you qualify for and, second, how marriage affects those qualifications. Qualifying for Survivor Benefits In terms of qualifying, two different types of benefits can be at play here: a Survivor Benefit, which is when your spouse has passed, and a Spousal Benefit, which is when your spouse is still alive. In this case, you qualify for a Survivor Benefit once you’ve been married to that person for nine months. You would also be eligible immediately if your spouse were killed in an accident. (Not many people realize that you can qualify even if you haven’t been married for nine months). Once you’ve been married for nine months, you become eligible to receive a deceased spouse’s Survivor Benefit once you reach age 60, or at age 50 if you’re disabled. With 4½ years of marriage, you definitely qualify to receive a Survivor Benefit on your deceased spouse’s record. How Remarrying Affects Survivor Benefits However, we need to clarify the requirements around remarriage. You qualify for a Survivor Benefit as long as you do not remarry before age 60. (I don’t know where age 57 or 58 comes from; it’s age 60.) So, a day or week after you turn 60, you can remarry, and it will not affect your ability to file a Survivor Benefit on the husband who passed away back when you were 36. But then you asked, “Well, maybe I don’t want to wait until I’m 60; I’m only 36 years old. What if I want to marry before 60 without jeopardizing that benefit?” Actually, there is a slight out: if you were to marry now, and get divorced before age 60, you would retain the option of filing a Survivor Benefit on your first husband. In fact, if your second husband were to pass away, you could pick and choose between Survivor Benefits, which is surprising to many people. However, if you were to marry a second husband, and divorce him before you turn 60, then proceed to marry him again, that could trigger some rules on multiple marriages to the same person. It could be problematic, as there are some ‘continuation of marriage’ timing issues in some instances, but we won’t address that here. Spousal Benefits Add an Option You wouldn’t necessarily have to get divorced because, once you’re past age 60, you’ll be eligible for a Spousal Benefit from your second husband while he is still alive. And once that person passes away, you’ll have the ability to claim a Survivor Benefit on either record, whichever one is better. The only thing you won’t be able to do is to be married to a spouse who is living, whom you married before 60, and then suddenly go back and claim a Survivor Benefit from the original spouse. Being remarried would shut that off. That’s why people are choosing to remain unmarried until age 60. One other thought: you are assuming you’re not going to marry someone with a more attractive Social Security benefit 24 years from now. You might be worrying about nothing. You could find that you have a better Social Security benefit from your next spouse than from your first spouse. To restate the rules: technically, you cannot be remarried before age 60 if you want to be able to claim the Survivor Benefit on the spouse that passed away when you were 36. But once you reach 60, you can remarry immediately and say, “No, I don’t want the Spousal Benefit from my new spouse, I still want to claim the Survivor Benefit from my deceased spouse from 25 years ago.” All that matters is that you have waited until after age 60 to remarry. The post How Remarrying Affects Survivor Benefits appeared first on Help with My Social Security.com.

This week the question is from a young widow wondering how remarrying affects Survivor Benefits from her deceased husband’s Social Security: I was married to my spouse for just 4½ years, and he recently passed away. I’m only 36, so I may remarry down the road, but I’m wondering how that will affect my claiming my first spouse’s Social Security benefits. I have heard conflicting things from Social Security as to whether I can remarry or not. I have heard as long as I am not married by age 57 or 58 (I can’t remember which), I can still collect his benefits. But I’ve also heard that I cannot remarry anytime, period, if I want to collect on my deceased spouse’s benefits. So, here’s my question: can I remarry, as long as I divorce by age 57 or 58, whichever it is? Or do I need to remain single until then, so I can collect my deceased spouse’s benefits? So, there are two parts to your question: first, what benefits you qualify for and, second, how marriage affects those qualifications. <h4>Qualifying for Survivor Benefits</h4> In terms of qualifying, two different types of benefits can be at play here: a Survivor Benefit, which is when your spouse has passed, and a Spousal Benefit, which is when your spouse is still alive. In this case, you qualify for a Survivor Benefit once you’ve been married to that person for nine months. You would also be eligible immediately if your spouse were killed in an accident. (Not many people realize that you can qualify even if you haven’t been married for nine months). Once you’ve been married for nine months, you become eligible to receive a deceased spouse’s Survivor Benefit once you reach age 60, or at age 50 if you’re disabled. With 4½ years of marriage, you definitely qualify to receive a Survivor Benefit on your deceased spouse’s record. <h4>How Remarrying Affects Survivor Benefits</h4> However, we need to clarify the requirements around remarriage. You qualify for a Survivor Benefit as long as you do not remarry before age 60. (I don’t know where age 57 or 58 comes from; it’s age 60.) So, a day or week after you turn 60, you can remarry, and it will not affect your ability to file a Survivor Benefit on the husband who passed away back when you were 36. But then you asked, “Well, maybe I don’t want to wait until I’m 60; I’m only 36 years old. What if I want to marry before 60 without jeopardizing that benefit?” Actually, there is a slight out: if you were to marry now, and get divorced before age 60, you would retain the option of filing a Survivor Benefit on your first husband. In fact, if your second husband were to pass away, you could pick and choose between Survivor Benefits, which is surprising to many people. However, if you were to marry a second husband, and divorce him before you turn 60, then proceed to marry him again, that could trigger some rules on multiple marriages to the same person. It could be problematic, as there are some ‘continuation of marriage’ timing issues in some instances, but we won’t address that here. <h4>Spousal Benefits Add an Option</h4> You wouldn’t necessarily have to get divorced because, once you’re past age 60, you’ll be eligible for a Spousal Benefit from your second husband while he is still alive. And once that person passes away, you’ll have the ability to claim a Survivor Benefit on either record, whichever one is better. The only thing you won’t be able to do is to be married to a spouse who is living, whom you married before 60, and then suddenly go back and claim a Survivor Benefit from the original spouse. Being remarried would shut that off. That’s why people are choosing to remain unmarried until age 60. One other thought: you are assuming you’re not going to marry someone with a more attractive Social Security benefit 24 years from now. You might be worrying about nothing. You could find that you have a better Social Security benefit from your next spouse than from your first spouse. To restate the rules: technically, you cannot be remarried before age 60 if you want to be able to claim the Survivor Benefit on the spouse that passed away when you were 36. But once you reach 60, you can remarry immediately and say, “No, I don’t want the Spousal Benefit from my new spouse, I still want to claim the Survivor Benefit from my deceased spouse from 25 years ago.” All that matters is that you have waited until after age 60 to remarry. The post <a href="http://www.helpwithmysocialsecurity.com/remarrying-survivor-benefits/" rel="nofollow" target="_blank">How Remarrying Affects Survivor Benefits</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

How Remarrying Affects Survivor Benefits

The question this week is about two different Social Security concepts: filing a restricted application and employing the file-and-suspend strategy: I need clarification on filing a restricted application for Social Security. My wife was born in October 1953, and I was born in March 1955. She is considering applying this year, at 66, for her Social Security benefit. I haven’t decided when to apply, but we had originally planned to have her take hers at age 66, and let mine grow until I hit age 70. Her full retirement PIA is around $2,400 per month, and mine is closer to $3,000. Would she be eligible to submit a restricted application to obtain a spousal benefit from my earnings record? Or is that no longer allowed because of the 2015 changes? That is, am I even eligible to request the ‘file and suspend’ and allow her to file a restricted application to collect spousal benefits while her benefit grows? Or has that window closed?    You mentioned two separate Social Security-related concepts, which we will look at here: a restricted application for claiming Social Security benefits, and ‘file and suspend.’ How do Restricted Applications Work? A restricted application is where you specify to Social Security when you file that you want just a spousal benefit, instead of claiming your own benefit. That’s allowed for people who have reached their full retirement age and were born before January 2, 1954. Your wife falls into that category, so she is allowed to file a restricted application. You are not, as you were born in 1955 and didn’t meet the cutoff. Remember that, to claim a spousal benefit, the other spouse on whose record you want to claim has to have filed for their own benefit, as that unlocks the door to the spousal benefit. So, on the one hand, your wife has the right to file a restricted application for only spousal benefits, but she can only do that if you, as her spouse, have filed. Is ‘File and Suspend’ Still Available? The second thing you mentioned is ‘file and suspend.’ You used to be able to unlock the door to a spousal benefit by filing for your own benefits, then immediately suspending them so yours could continue to grow to age 70. This strategy would have left the door unlocked so your wife could file a restricted application for a spousal benefit while letting her benefit grow in the background. While that was a glorious strategy, that aspect of file and suspend is no longer available. The only people who got grandfathered in were those who had already filed and suspended before April 29, 2016. File and suspend is still available to anyone after their full retirement age. However, now when you suspend, it suspends not only your benefits but all auxiliary benefits under you. In your case, it would suspend the spousal benefit, and that undermines the entire strategy. Why would someone want to suspend their benefit claims? There are several reasons. Maybe you went back to work, or you decided you claimed too early, and you’d like to have your benefit grow, earning delayed retirement credits. Say you claimed early and, after an analysis, realized you needed additional secure (lifetime) income. You could suspend your benefits at your full retirement age, earn the 8% annual increase to your Social Security benefits, then turn them back on at 70. As soon as you suspend, the delayed retirement credit starts accumulating at that point, up until the age of 70. The post Filing a Restricted Application appeared first on Help with My Social Security.com.

The question this week is about two different Social Security concepts: filing a restricted application and employing the file-and-suspend strategy: I need clarification on filing a restricted application for Social Security. My wife was born in October 1953, and I was born in March 1955. She is considering applying this year, at 66, for her Social Security benefit. I haven’t decided when to apply, but we had originally planned to have her take hers at age 66, and let mine grow until I hit age 70. Her full retirement PIA is around $2,400 per month, and mine is closer to $3,000. Would she be eligible to submit a restricted application to obtain a spousal benefit from my earnings record? Or is that no longer allowed because of the 2015 changes? That is, am I even eligible to request the ‘file and suspend’ and allow her to file a restricted application to collect spousal benefits while her benefit grows? Or has that window closed? You mentioned two separate Social Security-related concepts, which we will look at here: a restricted application for claiming Social Security benefits, and ‘file and suspend.’ <h3>How do Restricted Applications Work?</h3> A restricted application is where you specify to Social Security when you file that you want just a spousal benefit, instead of claiming your own benefit. That’s allowed for people who have reached their full retirement age and were born before January 2, 1954. Your wife falls into that category, so she is allowed to file a restricted application. You are not, as you were born in 1955 and didn’t meet the cutoff. Remember that, to claim a spousal benefit, the other spouse on whose record you want to claim has to have filed for their own benefit, as that unlocks the door to the spousal benefit. So, on the one hand, your wife has the right to file a restricted application for only spousal benefits, but she can only do that if you, as her spouse, have filed. <h4>Is ‘File and Suspend’ Still Available?</h4> The second thing you mentioned is ‘file and suspend.’ You used to be able to unlock the door to a spousal benefit by filing for your own benefits, then immediately suspending them so yours could continue to grow to age 70. This strategy would have left the door unlocked so your wife could file a restricted application for a spousal benefit while letting her benefit grow in the background. While that was a glorious strategy, that aspect of file and suspend is no longer available. The only people who got grandfathered in were those who had already filed and suspended before April 29, 2016. File and suspend is still available to anyone after their full retirement age. However, now when you suspend, it suspends not only your benefits but all auxiliary benefits under you. In your case, it would suspend the spousal benefit, and that undermines the entire strategy. Why would someone want to suspend their benefit claims? There are several reasons. Maybe you went back to work, or you decided you claimed too early, and you’d like to have your benefit grow, earning delayed retirement credits. Say you claimed early and, after an analysis, realized you needed additional secure (lifetime) income. You could suspend your benefits at your full retirement age, earn the 8% annual increase to your Social Security benefits, then turn them back on at 70. As soon as you suspend, the delayed retirement credit starts accumulating at that point, up until the age of 70. The post <a href="http://www.helpwithmysocialsecurity.com/filing-restricted-application/" rel="nofollow" target="_blank">Filing a Restricted Application</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Filing a Restricted Application

This week, a question from a husband who is almost 68 years old and is wondering if he can claim spousal benefits from his wife’s Social Security benefit, which she will claim early at age 62. This brings into play the Spousal Benefit Rule of Deeming: My wife will be 62 in August 2019, and I would like to know if I can claim spousal benefits if I have not yet filed a claim for my own Social Security benefits. I will be 68 this October (2019). Is this strategy still available for me and, if so, will I be able to collect 50% of the benefit amount that she will receive at age 62? If not, how would the amount of spousal benefit be figured? Surprising Spousal Benefits I have some good news for you. Here’s why: In August of 2019, your wife is turning 62, the first age at which she can file for her own retirement benefit. Since you are 67 years old, you are well past that age. You are asking if you can apply the strategy of filing for the spousal benefit even though you haven’t filed for your own benefit and your wife is filing early. Lastly, you’d like to know how much you could expect to receive under those circumstances. By my calculations, your wife was born in August 1957. She will not receive the full retirement age benefit she has earned unless she waits to age 66 and 6 months to file. She is one of the people who has fallen into the transitional period between 1955 and 1959 where, if you were born in those years, Social Security has slowly raised the full retirement age from 66 to 67. So, she will be filing early and receiving a reduced benefit because of that early filing status. Year of Birth Full (Normal) Retirement Age1943-195466195566 and 2 months195666 and 4 months195766 and 6 months195866 and 8 months195966 and 10 months1960 and later67Source: https://www.ssa.gov/planners/retire/agereduction.html   What Is the Spousal Benefit Rule of Deeming? Under current law, if you file for a spousal benefit, you are ‘deemed’ to be filing for your own benefit first and then you would only receive a spousal benefit if it helps you. That is, the spousal benefit would have to exceed what your own benefit might be. That’s called ‘deeming.’ The Spousal Benefit Rule of Deeming used to only apply to you before your full retirement age, but now it happens even after you reach your full retirement age. The exception is if you were born before January 2nd of 1954. So, January 1st of 1954 you’re okay, all years before that, you’re okay: you are not subject to the deeming rule. Because you will be 68 years old this October, you have a little over a year worth of delayed retirement credit you can still potentially earn if you delay claiming your own benefit until age 70. It sounds like that is what you plan to do. Luckily, you were grandfathered into access to spousal benefits because you were born in 1951 (which is before January 2nd, 1954, as required by the new law). So, when your wife files at age 62, it unlocks your ability to file what’s called a “restricted application.” It allows you to go into Social Security and say, “I’m eligible for my own benefit, and I’m eligible for my spousal benefit, but I’d like to restrict my application today to only the spousal benefit, leaving my own benefit to continue to grow in the background earning delayed retirement credits.” You can file a spousal application – and only spousal – based on her record, letting your own benefit grow for that final ‘year plus a little bit’ and get to your full retirement benefit. Not many people can still do that because the clock keeps ticking forward, and more and more people are becoming subject to this ‘deeming’ rule that went into effect a few years ago. How Much Will You Collect? Here I have another bit of good news. You mentioned that you might “be able to collect 50% of the benefit amount that she will receive at age 62.” Better yet, you’re going to be able to collect half of what she would have collected had she waited until her full retirement age to file. You will be due the full spousal benefit, which is one half of your wife’s ‘PIA’ (or Primary Insurance Amount, the amount earned by full retirement age). The fact that your wife is claiming early does not reduce your spousal benefit. It is not determined by the age of the working spouse and when they file; it’s the age of the recipient spouse and when they file. So, the good news is that, yes, you are grandfathered in and, yes, you can file for just a spousal benefit – and you are going to collect even more than what you expected.   The post Spousal Benefit Rule of Deeming appeared first on Help with My Social Security.com.

This week, a question from a husband who is almost 68 years old and is wondering if he can claim spousal benefits from his wife’s Social Security benefit, which she will claim early at age 62. This brings into play the Spousal Benefit Rule of Deeming: My wife will be 62 in August 2019, and I would like to know if I can claim spousal benefits if I have not yet filed a claim for my own Social Security benefits. I will be 68 this October (2019). Is this strategy still available for me and, if so, will I be able to collect 50% of the benefit amount that she will receive at age 62? If not, how would the amount of spousal benefit be figured? <h3>Surprising Spousal Benefits</h3> I have some good news for you. Here’s why: In August of 2019, your wife is turning 62, the first age at which she can file for her own retirement benefit. Since you are 67 years old, you are well past that age. You are asking if you can apply the strategy of filing for the spousal benefit even though you haven’t filed for your own benefit and your wife is filing early. Lastly, you’d like to know how much you could expect to receive under those circumstances. By my calculations, your wife was born in August 1957. She will not receive the full retirement age benefit she has earned unless she waits to age 66 and 6 months to file. She is one of the people who has fallen into the transitional period between 1955 and 1959 where, if you were born in those years, Social Security has slowly raised the full retirement age from 66 to 67. So, she will be filing early and receiving a reduced benefit because of that early filing status. Year of Birth Full (Normal) Retirement Age 1943-1954 66 1955 66 and 2 months 1956 66 and 4 months 1957 66 and 6 months 1958 66 and 8 months 1959 66 and 10 months 1960 and later 67 Source: <a href="https://www.ssa.gov/planners/retire/agereduction.html" rel="nofollow" target="_blank">https://www.ssa.gov/planners/retire/agereduction.html</a> <h4>What Is the Spousal Benefit Rule of Deeming?</h4> Under current law, if you file for a spousal benefit, you are ‘deemed’ to be filing for your own benefit first and then you would only receive a spousal benefit if it helps you. That is, the spousal benefit would have to exceed what your own benefit might be. That’s called ‘deeming.’ The Spousal Benefit Rule of Deeming used to only apply to you before your full retirement age, but now it happens even after you reach your full retirement age. The exception is if you were born before January 2nd of 1954. So, January 1st of 1954 you’re okay, all years before that, you’re okay: you are not subject to the deeming rule. Because you will be 68 years old this October, you have a little over a year worth of delayed retirement credit you can still potentially earn if you delay claiming your own benefit until age 70. It sounds like that is what you plan to do. Luckily, you were grandfathered into access to spousal benefits because you were born in 1951 (which is before January 2nd, 1954, as required by the new law). So, when your wife files at age 62, it unlocks your ability to file what’s called a “restricted application.” It allows you to go into Social Security and say, “I’m eligible for my own benefit, and I’m eligible for my spousal benefit, but I’d like to restrict my application today to only the spousal benefit, leaving my own benefit to continue to grow in the background earning delayed retirement credits.” You can file a spousal application – and only spousal – based on her record, letting your own benefit grow for that final ‘year plus a little bit’ and get to your full retirement benefit. Not many people can still do that because the clock keeps ticking forward, and more and more people are becoming subject to this ‘deeming’ rule that went into effect a few years ago. <h4>How Much Will You Collect?</h4> Here I have another bit of good news. You mentioned that you might “be able to collect 50% of the benefit amount that she will receive at age 62.” Better yet, you’re going to be able to collect half of what she would have collected had she waited until her full retirement age to file. You will be due the full spousal benefit, which is one half of your wife’s ‘PIA’ (or Primary Insurance Amount, the amount earned by full retirement age). The fact that your wife is claiming early does not reduce your spousal benefit. It is not determined by the age of the working spouse and when they file; it’s the age of the recipient spouse and when they file. So, the good news is that, yes, you are grandfathered in and, yes, you can file for just a spousal benefit – and you are going to collect even more than what you expected. The post <a href="http://www.helpwithmysocialsecurity.com/spousal-benefit-rule-deeming/" rel="nofollow" target="_blank">Spousal Benefit Rule of Deeming</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Spousal Benefit Rule of Deeming

This week, a question from a retired U.S. Marine who wants clarification on a Social Security earnings credit for military members: I retired from the USMC in 2002. I recently ran across an old email in our financial files, dated 2001. It was about a potential increase in Social Security retirement benefits specifically for veterans. I’m not sure of the email’s accuracy or validity, but would like your take on any such benefits that might have dated from that time. Is there such a thing, and what has to be done to get the benefit?  Special Extra Earnings Credit for Military Service The benefit you are referring to is called “Special Extra Earnings for Military Service.” For more information, you can Google that exact phrase and a link pops up to a page on the Social Security website in its “Benefits Planner: Retirement” section. Since 1957, if you had military service earnings for active duty – including any active duty for training – you would have paid Social Security taxes on those earnings. Since 1988, Social Security also covered any inactive duty service in the Armed Forces reserves. From the email you found, you are asking about some special extra earnings for military service under certain circumstances – from 1957 through 2001 – that can be credited to your record for Social Security purposes. Such extra earnings credits could help qualify you for Social Security or raise the amount of your Social Security benefit. However, those special earnings credits were granted for periods of active duty or active duty for training, but not for inactive duty training. One more condition exists for being credited with special extra earnings: if your enlistment was after September 7, 1980, and you completed less than 24 months of active duty or a full tour, those additional earnings credits may not be available. You would have to check with Social Security. How Credits Are Added If and how those credits are added is broken into three ‘categories,’ or bands of years in which your active military service occurred: From 1957 through 1967, they will add the extra credits to your record when you apply for Social Security benefits, but it will have to be done manually. From 1968 through 2001, you don’t have to do anything to receive the extra credits, as they were automatically added to your record. They actually went back with their own software, for any active duty between 1968 and 2001, and updated the Social Security records. After 2001, starting in the calendar year 2002, the rule went away, and there were no more credits for Special Extra Earnings for Military Service. Because we don’t know how many years you served in the USMC, we don’t know which of those categories would affect you. However, the email from 2001 didn’t indicate that Social Security has now figured out how to give veterans some of the credits automatically, so you figured you had to ask for them. (And, if you served before 1968 – which is unlikely – that would be your case.) How Credits Were Calculated Essentially the way it worked was that, for service between 1957 and 1977, each quarter they added an extra $300 in earnings to your basic pay according to your Social Security record. They didn’t send you $300, but they added it to your Social Security earnings record as if you had earned it, possibly bolstering your Social Security benefit in the future. For service between 1978 and 2001, for every $300 in active duty basic pay, they added an extra $100 in earnings, up to a maximum of $1,200 per year, to your Social Security record. (They didn’t change the amounts credited; they just changed how they applied the same $1,200 they had credited between 1957 and 1977.) So, to answer your question: yes, there is such a thing as a Social Security earnings credit for military members that can increase retirement benefits for those who served active duty from 1957 through 2001. But, unless you have service before 1968, there’s nothing you need to do. It’s been added automatically to your Social Security record already.  Listen for More Information For more information you can listen to the attached audio clip from the Retirement and IRA Show episode where we (Jim Saulnier and I) discuss this question. The post Military Earnings Credit appeared first on Help with My Social Security.com.

This week, a question from a retired U.S. Marine who wants clarification on a Social Security earnings credit for military members: I retired from the USMC in 2002. I recently ran across an old email in our financial files, dated 2001. It was about a potential increase in Social Security retirement benefits specifically for veterans. I’m not sure of the email’s accuracy or validity, but would like your take on any such benefits that might have dated from that time. Is there such a thing, and what has to be done to get the benefit? <h3>Special Extra Earnings Credit for Military Service</h3> The benefit you are referring to is called “Special Extra Earnings for Military Service.” For more information, you can Google that exact phrase and a link pops up to a page on the Social Security website in its “Benefits Planner: Retirement” section. Since 1957, if you had military service earnings for active duty – including any active duty for training – you would have paid Social Security taxes on those earnings. Since 1988, Social Security also covered any inactive duty service in the Armed Forces reserves. From the email you found, you are asking about some special extra earnings for military service under certain circumstances – from 1957 through 2001 – that can be credited to your record for Social Security purposes. Such extra earnings credits could help qualify you for Social Security or raise the amount of your Social Security benefit. However, those special earnings credits were granted for periods of active duty or active duty for training, but not for inactive duty training. One more condition exists for being credited with special extra earnings: if your enlistment was after September 7, 1980, and you completed less than 24 months of active duty or a full tour, those additional earnings credits may not be available. You would have to check with Social Security. <h4>How Credits Are Added</h4> If and how those credits are added is broken into three ‘categories,’ or bands of years in which your active military service occurred: From 1957 through 1967, they will add the extra credits to your record when you apply for Social Security benefits, but it will have to be done manually. From 1968 through 2001, you don’t have to do anything to receive the extra credits, as they were automatically added to your record. They actually went back with their own software, for any active duty between 1968 and 2001, and updated the Social Security records. After 2001, starting in the calendar year 2002, the rule went away, and there were no more credits for Special Extra Earnings for Military Service. Because we don’t know how many years you served in the USMC, we don’t know which of those categories would affect you. However, the email from 2001 didn’t indicate that Social Security has now figured out how to give veterans some of the credits automatically, so you figured you had to ask for them. (And, if you served before 1968 – which is unlikely – that would be your case.) <h4>How Credits Were Calculated</h4> Essentially the way it worked was that, for service between 1957 and 1977, each quarter they added an extra $300 in earnings to your basic pay according to your Social Security record. They didn’t send you $300, but they added it to your Social Security earnings record as if you had earned it, possibly bolstering your Social Security benefit in the future. For service between 1978 and 2001, for every $300 in active duty basic pay, they added an extra $100 in earnings, up to a maximum of $1,200 per year, to your Social Security record. (They didn’t change the amounts credited; they just changed how they applied the same $1,200 they had credited between 1957 and 1977.) So, to answer your question: yes, there is such a thing as a Social Security earnings credit for military members that can increase retirement benefits for those who served active duty from 1957 through 2001. But, unless you have service before 1968, there’s nothing you need to do. It’s been added automatically to your Social Security record already. <h3></h3> <h3>Listen for More Information</h3> For more information you can listen to the attached audio clip from the <a href="http://www.theretirementandirashow.com/podcast/social-security-veterans-disability-benefits/" rel="nofollow" target="_blank">Retirement and IRA Show episode</a> where we (Jim Saulnier and I) discuss this question. The post <a href="http://www.helpwithmysocialsecurity.com/military-earnings-credit/" rel="nofollow" target="_blank">Military Earnings Credit</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Military Earnings Credit

In the complex world of Social Security and Taxes, there are always little “issues” floating around that could come back to harm you if you make decisions while being unaware of all the consequences.  I am talking about legally reducing your taxes today and what effect you may see later on in your Social Security benefits.  Although this can sometimes include employees, this issue mostly arises with self-employed individuals. Consequences of Reducing Your Taxes Today The full complexities of the tax code and the rules for small businesses are beyond the scope of this blog, but let me simply say that at times it is possible to LEGALLY reduce your income taxes AND/OR your FICA taxes by choosing how to pay yourself as a business owner, and by taking advantage of legal expense write-offs when doing your taxes.  The popular train of thought is to do whatever is possible within a legal context to minimize your taxes today.  Sounds good on the surface, but let’s consider some consequences in a few possible hypothetical cases…  You have not yet earned 40 “credits” – Elsewhere on this blog you will see that to qualify for Social Security retirement benefits you must earn “40 credits” in the system.  If you are reducing your taxable income to below the threshold to earn credits you may rob yourself of qualifying for benefits at all.  This issue affects very few people, but if you haven’t gotten your 40 credits and are approaching retirement you will want to watch this one closely.   You have many years of low reported earnings – Since your SS benefits are based on your 35 best indexed earnings years the earnings reported to SS matter. Since everyone’s earnings record is different it is hard to state the exact impact of your choice to reduce taxable income in any given year, but it is certainly worth looking at.  It may very well be worth it to report higher earnings in order to push up your retirement benefit since that benefit will continue for the rest of your life with inflation adjustments.  It is complicated to calculate exactly what a single year’s change in income will do to your benefit but definitely a conversation to be had with your CPA or Financial Planner.   You are subject to WEP – For those self-employed who were previously in a job that did not pay into Social Security (think government employees), they could be affected by WEP. This benefit reduction can be eliminated with enough years of what SS calls “substantial earnings”.  If you can generate at least 30 years of these “substantial earnings” on your record you will completely avoid the WEP reduction, even if you have a government pension benefit that would normally cause the reduction.  Again, your specific earnings history will determine if you can avoid this reduction by reporting slightly higher earnings than you may otherwise.  Your competent CPA or Financial Planner can help make this determination.  I know this article did not include any numbers to show the trade-off I am describing, but that is due to the complexity of each individual case.  The basic message here is to make sure you are not saving a few hundred or thousand dollars today while giving up tens of thousands in future lifetime Social Security benefits for you and your family.  Please contact us if you think you may be exposed to this possibility and we can help you determine the trade offs. For more information, please use the play button below to listen to the audio post. The post Social Security Reduction for the Self-Employed appeared first on Help with My Social Security.com.

In the complex world of Social Security and Taxes, there are always little “issues” floating around that could come back to harm you if you make decisions while being unaware of all the consequences.  I am talking about legally reducing your taxes today and what effect you may see later on in your Social Security benefits.  Although this can sometimes include employees, this issue mostly arises with self-employed individuals. <h3>Consequences of Reducing Your Taxes Today</h3> The full complexities of the tax code and the rules for small businesses are beyond the scope of this blog, but let me simply say that at times it is possible to LEGALLY reduce your income taxes AND/OR your FICA taxes by choosing how to pay yourself as a business owner, and by taking advantage of legal expense write-offs when doing your taxes.  The popular train of thought is to do whatever is possible within a legal context to minimize your taxes today.  Sounds good on the surface, but let’s consider some consequences in a few possible hypothetical cases… <ol> <li>You have not yet earned 40 “credits” – Elsewhere on this blog you will see that to qualify for Social Security retirement benefits you must earn “40 credits” in the system.  If you are reducing your taxable income to below the threshold to earn credits you may rob yourself of qualifying for benefits at all.  This issue affects very few people, but if you haven’t gotten your 40 credits and are approaching retirement you will want to watch this one closely.</li> </ol> <ol> <li>You have many years of low reported earnings – Since your SS benefits are based on your 35 best indexed earnings years the earnings reported to SS matter. Since everyone’s earnings record is different it is hard to state the exact impact of your choice to reduce taxable income in any given year, but it is certainly worth looking at.  It may very well be worth it to report higher earnings in order to push up your retirement benefit since that benefit will continue for the rest of your life with inflation adjustments.  It is complicated to calculate exactly what a single year’s change in income will do to your benefit but definitely a conversation to be had with your CPA or Financial Planner.</li> </ol> <ol> <li>You are subject to WEP – For those self-employed who were previously in a job that did not pay into Social Security (think government employees), they could be affected by WEP. This benefit reduction can be eliminated with enough years of what SS calls “substantial earnings”.  If you can generate at least 30 years of these “substantial earnings” on your record you will completely avoid the WEP reduction, even if you have a government pension benefit that would normally cause the reduction.  Again, your specific earnings history will determine if you can avoid this reduction by reporting slightly higher earnings than you may otherwise.  Your competent CPA or Financial Planner can help make this determination.</li> </ol> I know this article did not include any numbers to show the trade-off I am describing, but that is due to the complexity of each individual case.  The basic message here is to make sure you are not saving a few hundred or thousand dollars today while giving up tens of thousands in future lifetime Social Security benefits for you and your family.  Please contact us if you think you may be exposed to this possibility and we can help you determine the trade offs. For more information, please use the play button below to listen to the audio post. The post <a href="http://www.helpwithmysocialsecurity.com/reduction-for-self-employed/" rel="nofollow" target="_blank">Social Security Reduction for the Self-Employed</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Social Security Reduction for the Self-Employed

We had the following simple, yet interesting new question come in recently: “I often read on your blog about suspending your own retirement benefits in order to receive delayed retirement credits, but can you also suspend your spousal benefits?” You Can Suspend Spousal, But… The reason we never talk about suspending spousal benefits is that there is no benefit to doing so.  Let me explain… When people suspend their own retirement benefit, which can only be done after reaching Full Retirement Age (FRA), they will benefit from their benefit growing by Delayed Retirement Credits (DRC).  These credits accrue when you either refrain from claiming your benefits at FRA, or if you suspend your benefits.  The benefit increase is the equivalent of 8% for each year you delay, up to reaching age 70 when these credits cease. Spousal Benefits Do Not Accrue DRC Spousal benefits can actually be suspended, but they will NOT accrue Delayed Retirement Credits.  For this reason, we never recommend people do this.  The only reason to do this with your own benefit is to receive a future increase in benefits, but since that is not the case with spousal benefits, suspending is not advised. Despite this being very straightforward, we have never discussed on the blog before, so thanks for a new question! The post Suspending Spousal Benefits appeared first on Help with My Social Security.com.

We had the following simple, yet interesting new question come in recently: “I often read on your blog about suspending your own retirement benefits in order to receive delayed retirement credits, but can you also suspend your spousal benefits?” <h4>You Can Suspend Spousal, But…</h4> The reason we never talk about suspending spousal benefits is that there is no benefit to doing so.  Let me explain… When people suspend their own retirement benefit, which can only be done after reaching Full Retirement Age (FRA), they will benefit from their benefit growing by Delayed Retirement Credits (DRC).  These credits accrue when you either refrain from claiming your benefits at FRA, or if you suspend your benefits.  The benefit increase is the equivalent of 8% for each year you delay, up to reaching age 70 when these credits cease. <h4>Spousal Benefits Do Not Accrue DRC</h4> Spousal benefits can actually be suspended, but they will NOT accrue Delayed Retirement Credits.  For this reason, we never recommend people do this.  The only reason to do this with your own benefit is to receive a future increase in benefits, but since that is not the case with spousal benefits, suspending is not advised. Despite this being very straightforward, we have never discussed on the blog before, so thanks for a new question! The post <a href="http://www.helpwithmysocialsecurity.com/suspending-spousal-benefits/" rel="nofollow" target="_blank">Suspending Spousal Benefits</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Suspending Spousal Benefits

I received the following question: My wife and I have full legal and physical custody of our granddaughter. She is 16 months old and my wife and I have been taking care of her since she was 1 month old. To care for her my wife had to close her business. My wife is 59 years of age and I am 64; neither of us is collecting SS now. Our question is, can my wife file for spousal benefits? I am still working. If she filed, can I file as well to collect and never get those benefits because I make too much? If I never collect my SS benefits do they still accrue and become available when I reach my FRA of 66 years, 2 months?   There are several issues here so I’ll go through them point by point.  Your wife can only file for Spousal In-Care Benefits once you have filed for your benefits. Once you file for your benefits, Dependent Benefits also become available to your dependent child (your granddaughter, in this case). All benefits would be subject to the Family Maximum. If you file now, you are subject to the Earnings Test, and so are your wife’s Spousal Benefits and granddaughter’s Dependent Benefits. If you don’t anticipate receiving benefits due to the Earnings Test, your wife and granddaughter’s benefits would likely be affected as well. Once you reach Full Retirement Age (FRA) your earnings would no longer affect any of the three benefits.  The Conclusion Unfortunately, it may not be worth filing now if you know the Earnings Test would remove any benefits income. If that is the case, it may be in your best interest to wait the two years until you reach your FRA to file for your benefits.   For more details please use the play button below. The post Spousal and Dependent Benefits appeared first on Help with My Social Security.com.

I received the following question: My wife and I have full legal and physical custody of our granddaughter. She is 16 months old and my wife and I have been taking care of her since she was 1 month old. To care for her my wife had to close her business. My wife is 59 years of age and I am 64; neither of us is collecting SS now. Our question is, can my wife file for spousal benefits? I am still working. If she filed, can I file as well to collect and never get those benefits because I make too much? If I never collect my SS benefits do they still accrue and become available when I reach my FRA of 66 years, 2 months? There are several issues here so I’ll go through them point by point. <ol> <li>Your wife can only file for Spousal In-Care Benefits once you have filed for your benefits.</li> <li>Once you file for your benefits, Dependent Benefits also become available to your dependent child (your granddaughter, in this case). All benefits would be subject to the Family Maximum.</li> <li>If you file now, you are subject to the Earnings Test, and so are your wife’s Spousal Benefits and granddaughter’s Dependent Benefits.</li> <li>If you don’t anticipate receiving benefits due to the Earnings Test, your wife and granddaughter’s benefits would likely be affected as well.</li> <li>Once you reach Full Retirement Age (FRA) your earnings would no longer affect any of the three benefits.</li> </ol> <h3>The Conclusion</h3> Unfortunately, it may not be worth filing now if you know the Earnings Test would remove any benefits income. If that is the case, it may be in your best interest to wait the two years until you reach your FRA to file for your benefits. For more details please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/spousal-dependent-benefits/" rel="nofollow" target="_blank">Spousal and Dependent Benefits</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Spousal and Dependent Benefits

Help With My Social Security is hosted by Jim Saulnier and Chris Stein, CERTIFIED FINANCIAL PLANNER™ Professionals in Fort Collins, Colorado, specializing in retirement planning. They developed these unique podcasts to teach people little known tips and strategies of Social Security planning.  If you like the information presented here, please visit our blog, HelpWithMySocialSecurity.com   Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, a Registered Investment Adviser. Jim Saulnier, LLC and Cambridge are not affiliated.

Short sweet and to the point

This is by far the best podcast on social security. Thank you both for supplying me with some traffic-worthy listening!

Best

Help With My Social Security is hosted by Jim Saulnier and Chris Stein, CERTIFIED FINANCIAL PLANNER™ Professionals in Fort Collins, Colorado, specializing in retirement planning. They developed these unique podcasts to teach people little known tips and strategies of Social Security planning. If you like the information presented here, please visit our blog, <a href="http://HelpWithMySocialSecurity.com" rel="nofollow" target="_blank">HelpWithMySocialSecurity.com</a> Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, a Registered Investment Adviser. Jim Saulnier, LLC and Cambridge are not affiliated.

Help with My Social Security.com

We received the following question regarding survivor benefits this week: “I am currently 62, born in 1956.  My retirement benefit if I claim today is right at $1,000 per month.  If I wait to my full retirement age (66 and 4 months) I will receive $1,500 per month.  My husband is very sick and will likely pass away in the next year. If I file for my own benefit now, will that affect my survivor benefit (he is receiving about $2,300 per month)?  If not, will I have to wait until I turn 66 and 4 months to receive his $2,300?” Survivor Benefit I am sorry to hear about your husband’s health.  If you were to start your retirement benefits today, it will have no effect on what you can collect as survivor benefits on his record.   What will affect the survivor benefit is when you choose to move from your own to his survivor benefit. You are eligible to receive 100% of his benefit once you reach your full retirement age (FRA) for survivor benefits.  Believe it or not, this age is different than your FRA for your own retirement benefits. You fall into a range of birth years where the FRA for survivor benefits and for retirement benefits is different. You are correct that your FRA for retirement benefits is 66 and 4 months.  However, your FRA for survivor benefits is age 66. You can see this on the Social Security table we have replicated on our resources page at this link: http://www.helpwithmysocialsecurity.com/wp-content/uploads/2016/03/2015-HwmSS-Full-Ret-Age-survivor.pdf The table for retirement benefits can be found here: http://www.helpwithmysocialsecurity.com/wp-content/uploads/2014/01/2014-SSFullRetAge.pdf So the bottom line answer is that you can file now for your benefits and collect them up until your husband passes away.  At that point you can choose to switch immediately, or wait until you turn 66. There is no reason to delay past your age 66 since survivor benefits will not grow past that point. For more information on this topic, please use the play button below.   The post Survivor Benefit Claiming Age appeared first on Help with My Social Security.com.

We received the following question regarding survivor benefits this week: “I am currently 62, born in 1956.  My retirement benefit if I claim today is right at $1,000 per month.  If I wait to my full retirement age (66 and 4 months) I will receive $1,500 per month.  My husband is very sick and will likely pass away in the next year. If I file for my own benefit now, will that affect my survivor benefit (he is receiving about $2,300 per month)?  If not, will I have to wait until I turn 66 and 4 months to receive his $2,300?” <h2>Survivor Benefit</h2> I am sorry to hear about your husband’s health.  If you were to start your retirement benefits today, it will have no effect on what you can collect as survivor benefits on his record.   What will affect the survivor benefit is when you choose to move from your own to his survivor benefit. You are eligible to receive 100% of his benefit once you reach your full retirement age (FRA) for survivor benefits.  Believe it or not, this age is different than your FRA for your own retirement benefits. You fall into a range of birth years where the FRA for survivor benefits and for retirement benefits is different. You are correct that your FRA for retirement benefits is 66 and 4 months.  However, your FRA for survivor benefits is age 66. You can see this on the Social Security table we have replicated on our resources page at this link: <a href="http://www.helpwithmysocialsecurity.com/wp-content/uploads/2016/03/2015-HwmSS-Full-Ret-Age-survivor.pdf" rel="nofollow" target="_blank">http://www.helpwithmysocialsecurity.com/wp-content/uploads/2016/03/2015-HwmSS-Full-Ret-Age-survivor.pdf</a> The table for retirement benefits can be found here: <a href="http://www.helpwithmysocialsecurity.com/wp-content/uploads/2014/01/2014-SSFullRetAge.pdf" rel="nofollow" target="_blank">http://www.helpwithmysocialsecurity.com/wp-content/uploads/2014/01/2014-SSFullRetAge.pdf</a> So the bottom line answer is that you can file now for your benefits and collect them up until your husband passes away.  At that point you can choose to switch immediately, or wait until you turn 66. There is no reason to delay past your age 66 since survivor benefits will not grow past that point. For more information on this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/survivor-benefit-claiming-age/" rel="nofollow" target="_blank">Survivor Benefit Claiming Age</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Survivor Benefit Claiming Age

This next question is something we have not really addressed directly before regarding spousal and survivor benefits, so I really appreciate the person submitting the following: “If someone began claiming a spousal benefit before their FRA and their spouse dies, can the surviving spouse continue to receive the spousal benefit and wait until their survivor FRA to claim the survivor benefit?” No Spousal Benefit The first, most direct issue is that no, one can no longer collect a spousal benefit on a deceased person’s Social Security record.  However, there are two ways a person could delay turning on the survivor benefit to their full retirement age (FRA).  The reason for doing this is to collect in the future, the highest survivor benefit possible.  If the benefit is claimed prior to your FRA the benefit is permanently reduced. Just Say No The first way a person could delay receiving the survivor benefit is to simply advise the Social Security office that you do NOT want to start the survivor benefit.  The down side is the spousal benefit will stop the month your spouse dies, potentially leaving you with no benefit at all until your reach FRA. Own Earned Retirement Benefit The second way is available if you have your own earned retirement benefit.  Upon the death of your spouse, you can advise the SSA to pay you your own retirement benefit for now, and then switch to the higher survivor benefit at your FRA.  Your own benefit may be higher or lower than the spousal benefit you were receiving, but it is available as a stand-alone benefit that does not impact your decision on when to claim the survivor benefit.  There is no requirement that you file for the survivor benefit immediately after your spouse’s death. For more information on this topic, please use the play button below. The post Converting Spousal Benefits to Survivor Benefits appeared first on Help with My Social Security.com.

This next question is something we have not really addressed directly before regarding spousal and survivor benefits, so I really appreciate the person submitting the following: “If someone began claiming a spousal benefit before their FRA and their spouse dies, can the surviving spouse continue to receive the spousal benefit and wait until their survivor FRA to claim the survivor benefit?” <h2>No Spousal Benefit</h2> The first, most direct issue is that no, one can no longer collect a spousal benefit on a deceased person’s Social Security record.  However, there are two ways a person could delay turning on the survivor benefit to their full retirement age (FRA).  The reason for doing this is to collect in the future, the highest survivor benefit possible.  If the benefit is claimed prior to your FRA the benefit is permanently reduced. <h2>Just Say No</h2> The first way a person could delay receiving the survivor benefit is to simply advise the Social Security office that you do NOT want to start the survivor benefit.  The down side is the spousal benefit will stop the month your spouse dies, potentially leaving you with no benefit at all until your reach FRA. <h2>Own Earned Retirement Benefit</h2> The second way is available if you have your own earned retirement benefit.  Upon the death of your spouse, you can advise the SSA to pay you your own retirement benefit for now, and then switch to the higher survivor benefit at your FRA.  Your own benefit may be higher or lower than the spousal benefit you were receiving, but it is available as a stand-alone benefit that does not impact your decision on when to claim the survivor benefit.  There is no requirement that you file for the survivor benefit immediately after your spouse’s death. For more information on this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/converting-spousal-benefits-to-survivor-benefits/" rel="nofollow" target="_blank">Converting Spousal Benefits to Survivor Benefits</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Converting Spousal Benefits to Survivor Benefits

The following question regarding divorced spouse benefits came in from a reader this week: “My mother is about to turn 66 and is ready to retire. She divorced many years ago after 11 years of marriage. I’ve told her that she can claim spousal benefits on her ex-husbands record, but she is worried that he will find out or that it will affect his benefits. Does he have to be involved and does it actually take away from him?” Good News I have several pieces of good news for you. You are correct that she is eligible for ex-spouse benefits since they were married at least 10 years. This assumes she is not re-married and that her ex-husband is at least 62 years old when she files. Technically there is also a requirement that either he is claiming his own benefit prior to her application OR that they have been divorced more than two years. Since you said it has been many years, I am assuming she meets this requirement. More Good News The next piece of good news is that he does not need to be notified of her application on his record, nor will it affect his benefits, or any benefits paid to others on his record (like a new spouse, if he remarried). Even More Good News There is even one more bit of good news that may help her. Since she was born prior to January 2nd, 1954, she can still file what is called a “restricted application” for benefits. This would allow her to claim her spousal benefit alone on his record, then wait for her own benefit to grow to age 70 by earning delayed retirement credits, where her own benefit may be larger than the spousal benefit. This assumes that she has her own earned retirement benefit. If her benefit will always be lower, then there is no need to consider this, but it is often the case that a person’s age 70 benefit will exceed a spousal benefit. You do not make it clear if she has a retirement benefit of her own, but if so it is worth looking into this strategy. For more information on this topic, please use the play button below. The post Divorced Spouse Benefits appeared first on Help with My Social Security.com.

The following question regarding divorced spouse benefits came in from a reader this week: “My mother is about to turn 66 and is ready to retire. She divorced many years ago after 11 years of marriage. I’ve told her that she can claim spousal benefits on her ex-husbands record, but she is worried that he will find out or that it will affect his benefits. Does he have to be involved and does it actually take away from him?” <h2>Good News</h2> I have several pieces of good news for you. You are correct that she is eligible for ex-spouse benefits since they were married at least 10 years. This assumes she is not re-married and that her ex-husband is at least 62 years old when she files. Technically there is also a requirement that either he is claiming his own benefit prior to her application OR that they have been divorced more than two years. Since you said it has been many years, I am assuming she meets this requirement. <h2>More Good News</h2> The next piece of good news is that he does not need to be notified of her application on his record, nor will it affect his benefits, or any benefits paid to others on his record (like a new spouse, if he remarried). <h2>Even More Good News</h2> There is even one more bit of good news that may help her. Since she was born prior to January 2nd, 1954, she can still file what is called a “restricted application” for benefits. This would allow her to claim her spousal benefit alone on his record, then wait for her own benefit to grow to age 70 by earning delayed retirement credits, where her own benefit may be larger than the spousal benefit. This assumes that she has her own earned retirement benefit. If her benefit will always be lower, then there is no need to consider this, but it is often the case that a person’s age 70 benefit will exceed a spousal benefit. You do not make it clear if she has a retirement benefit of her own, but if so it is worth looking into this strategy. For more information on this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/divorced-spouse-benefits/" rel="nofollow" target="_blank">Divorced Spouse Benefits</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Divorced Spouse Benefits

With over 59 Million Americans receiving some sort of Social Security benefits it is not surprising that occasional errors occur.  So what happens if Social Security makes a benefit error and pays you the incorrect amount? Overpayments: They’ll Notify You If Social Security discovers they have made a benefit error and paid you too much they will first notify you in writing where they will explain why you were overpaid, your options to repay, and your rights to appeal or waiver.  You have 60 days from the date you received the original notice to file the appeal.  If you choose to appeal you will use form SSA-561 on which you will explain in writing why you think you have not been overpaid or why you think the amount is incorrect.  If you believe you should not have to pay back the overpayment you can request the SSA waive collection.  There is no time limit to file form SSA-632 where you will request a waiver so you do not have to pay, but they will only grant this waiver if the overpayment was not your fault AND paying it back would cause financial hardship.  They will generally ask for more information about your situation or ask to meet in person before approving a waiver. Options for Repayment If the overpayment is valid and you are not applying for appeal or waiver you will have a few choices of repayment.  If you do not pay the full amount within 30 days they will begin to withhold ALL of your benefit payment until the overpayment is satisfied.  This is assuming you are NOT receiving SSI.  SSI overpayments are repaid in small amounts over longer periods instead.  If you are not receiving benefits you must either pay the full amount within 30 days or contact the SSA to set up a payment plan.  If you are not receiving benefits and do not pay back the debt, the SSA can recover from your federal income tax refund, from your wages if working or from future SSI or Social Security benefits.  They will also report the delinquency to the credit bureaus. Underpayments: You Need to Notify Them Sometimes Social Security will discover they have made a benefit error and under paid you.  More often you will have to be the one who determines there has been an underpayment and go to Social Security to request a remedy.  Underpayments generally occur if the SSA is not notified of some event that increases your benefit, there is an error setting up your initial claim, or when you later become eligible for a larger benefit after you earlier were claiming another, lesser benefit.  In a recent audit of SS records it was found that over 30,000 Americans have been underpaid benefits due to the third reason listed. Visit Your Local Social Security Office If you identify a SS underpayment you need to notify them.  There are specific forms for reporting specific errors so it is best to start by visiting your local SS office to discuss the error you have discovered.  If it is simple and obvious they may be able to fix the issue on the spot.  Other issues may require written explanation or even a hearing.  If the SSA agrees there is an underpayment they will pay most claims in a lump sum amount.  If you are unable to convince them you were underpaid you will probably want to enlist legal advice on how to combat them if the amount is substantial and you are confident you are correct. Errors do happen so it is important you review your Social Security records and benefit payments periodically to make sure you are getting what you deserve. For more information on this topic, please use the play button below. The post What You Should Know About Social Security Benefit Errors appeared first on Help with My Social Security.com.

With over 59 Million Americans receiving some sort of Social Security benefits it is not surprising that occasional errors occur.  So what happens if Social Security makes a benefit error and pays you the incorrect amount? <h2>Overpayments:</h2> <h4>They’ll Notify You</h4> If Social Security discovers they have made a benefit error and paid you too much they will first notify you in writing where they will explain why you were overpaid, your options to repay, and your rights to appeal or waiver.  You have 60 days from the date you received the original notice to file the appeal.  If you choose to appeal you will use form SSA-561 on which you will explain in writing why you think you have not been overpaid or why you think the amount is incorrect.  If you believe you should not have to pay back the overpayment you can request the SSA waive collection.  There is no time limit to file form SSA-632 where you will request a waiver so you do not have to pay, but they will only grant this waiver if the overpayment was not your fault AND paying it back would cause financial hardship.  They will generally ask for more information about your situation or ask to meet in person before approving a waiver. <h4>Options for Repayment</h4> If the overpayment is valid and you are not applying for appeal or waiver you will have a few choices of repayment.  If you do not pay the full amount within 30 days they will begin to withhold ALL of your benefit payment until the overpayment is satisfied.  This is assuming you are NOT receiving SSI.  SSI overpayments are repaid in small amounts over longer periods instead.  If you are not receiving benefits you must either pay the full amount within 30 days or contact the SSA to set up a payment plan.  If you are not receiving benefits and do not pay back the debt, the SSA can recover from your federal income tax refund, from your wages if working or from future SSI or Social Security benefits.  They will also report the delinquency to the credit bureaus. <h2>Underpayments:</h2> <h4>You Need to Notify Them</h4> Sometimes Social Security will discover they have made a benefit error and under paid you.  More often you will have to be the one who determines there has been an underpayment and go to Social Security to request a remedy.  Underpayments generally occur if the SSA is not notified of some event that increases your benefit, there is an error setting up your initial claim, or when you later become eligible for a larger benefit after you earlier were claiming another, lesser benefit.  In a recent audit of SS records it was found that over 30,000 Americans have been underpaid benefits due to the third reason listed. <h4>Visit Your Local Social Security Office</h4> If you identify a SS underpayment you need to notify them.  There are specific forms for reporting specific errors so it is best to start by visiting your local SS office to discuss the error you have discovered.  If it is simple and obvious they may be able to fix the issue on the spot.  Other issues may require written explanation or even a hearing.  If the SSA agrees there is an underpayment they will pay most claims in a lump sum amount.  If you are unable to convince them you were underpaid you will probably want to enlist legal advice on how to combat them if the amount is substantial and you are confident you are correct. Errors do happen so it is important you review your Social Security records and benefit payments periodically to make sure you are getting what you deserve. For more information on this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/what-you-should-know-about-social-security-benefit-errors/" rel="nofollow" target="_blank">What You Should Know About Social Security Benefit Errors</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

What You Should Know About Social Security Benefit Errors

Another good question regarding delayed claiming and retroactive benefits has come in from our listeners this week: “I am over 70, and still working. Because of the problems with Retroactive Benefits reducing your benefit, I am waiting until I’m six months past my 70th birthday to make it easier and not run the risk of them backdating my benefit and reducing the amount. My question is about my wife. She will be drawing off of my work record. She is a little younger than me, but past her full retirement age. Should she wait until she is 70.5 for the same reason I have waited? Or can she apply as soon as my benefit starts? In other words, if she starts drawing off of my benefit at age 68, will her benefit increase if she waits until 70.5?” Retroactive Benefits Let me first describe the listener’s concern about retroactive benefits.  A couple of years ago we found out that the default recommendation at the Social Security office was to process your application for benefits with a retroactive date if you qualified.  Once you are over your full retirement age you have the option of filing retroactively back to your full retirement age month, or 6 months, whichever is less. A number of people had filed retroactively when they did not intend to do so, so we warned everyone to make sure that wasn’t happening, unless it was your intent.  This listener is aware of that default action by the SS offices. I think the listener’s solution is a bit drastic in this case, since all you have to do is make it clear on the application that you do NOT want retroactive benefits. Waiting to 70.5, then filing retroactively to age 70 seems like a much more complicated path to get to the same destination. Spousal Benefit Regarding his wife’s spousal benefit, since she is over her full retirement age she should file as soon as he files.  There is no benefit to her waiting, and since she cannot file until he does, this bolsters my recommendation for him to go in and file immediately.  Spousal benefits do not get the benefit of delayed retirement credits so once the spouse reaches her full retirement age, her spousal benefits are maxed so should be claimed as soon as possible.  In this case it would be when her husband starts his benefit. For more information please use the play button below.   The post Delayed Claiming and Retroactive Benefits appeared first on Help with My Social Security.com.

Another good question regarding delayed claiming and retroactive benefits has come in from our listeners this week: “I am over 70, and still working. Because of the problems with Retroactive Benefits reducing your benefit, I am waiting until I’m six months past my 70th birthday to make it easier and not run the risk of them backdating my benefit and reducing the amount. My question is about my wife. She will be drawing off of my work record. She is a little younger than me, but past her full retirement age. Should she wait until she is 70.5 for the same reason I have waited? Or can she apply as soon as my benefit starts? In other words, if she starts drawing off of my benefit at age 68, will her benefit increase if she waits until 70.5?” <h2>Retroactive Benefits</h2> Let me first describe the listener’s concern about retroactive benefits.  A couple of years ago we found out that the default recommendation at the Social Security office was to process your application for benefits with a retroactive date if you qualified.  Once you are over your full retirement age you have the option of filing retroactively back to your full retirement age month, or 6 months, whichever is less. A number of people had filed retroactively when they did not intend to do so, so we warned everyone to make sure that wasn’t happening, unless it was your intent.  This listener is aware of that default action by the SS offices. I think the listener’s solution is a bit drastic in this case, since all you have to do is make it clear on the application that you do NOT want retroactive benefits. Waiting to 70.5, then filing retroactively to age 70 seems like a much more complicated path to get to the same destination. <h2>Spousal Benefit</h2> Regarding his wife’s spousal benefit, since she is over her full retirement age she should file as soon as he files.  There is no benefit to her waiting, and since she cannot file until he does, this bolsters my recommendation for him to go in and file immediately.  Spousal benefits do not get the benefit of delayed retirement credits so once the spouse reaches her full retirement age, her spousal benefits are maxed so should be claimed as soon as possible.  In this case it would be when her husband starts his benefit. For more information please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/delayed-claiming-retroactive-benefits/" rel="nofollow" target="_blank">Delayed Claiming and Retroactive Benefits</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Delayed Claiming and Retroactive Benefits

We received the following email this week… “I have a dear friend who at age 60 lost his wife. She was on SS disability while she was sick. When she passed away he went to SS (in DE) to get the $250 for funeral expenses. He sold his home and moved to Maine, then turned 62 and went to Maine SS office where he was asked why he was not collecting SS for survivor benefit, he said no one told me.  They said that mistake cost him around 19K. He will not fight for this money on his own, does he have a right to appeal?” In all likelihood, there is nothing he can do unless he has documentation where they erroneously told him he was NOT eligible for survivor benefits at the time he went into the office.  It is my understanding that the Social Security offices are under no legal obligation to proactively tell you about benefits for which you are eligible now or in the future.  They are allowed to answer any questions you have, so if he asked them and they incorrectly denied him benefits then an appeal may fix the issue. This is actually one of the more concerning deficiencies of the Social Security system.  There are way too many people who have benefits available, but they do not know about them or how to claim them.  Even when people know of the benefits there is no guarantee the person you speak to at the SS office will understand them and agree.  This is why it is critical to understand what you and your loved ones are eligible to receive and don’t take the first rejection if you have done your homework and know you are eligible.  The main purpose for this blog is to empower people to make the best SS decisions they can and to benefit as the system intended.  The challenge is that the system isn’t designed to be all that friendly. For information on this topic, please use the play button below. The post Social Security Didn’t Tell Him appeared first on Help with My Social Security.com.

We received the following email this week… “I have a dear friend who at age 60 lost his wife. She was on SS disability while she was sick. When she passed away he went to SS (in DE) to get the $250 for funeral expenses. He sold his home and moved to Maine, then turned 62 and went to Maine SS office where he was asked why he was not collecting SS for survivor benefit, he said no one told me.  They said that mistake cost him around 19K. He will not fight for this money on his own, does he have a right to appeal?” In all likelihood, there is nothing he can do unless he has documentation where they erroneously told him he was NOT eligible for survivor benefits at the time he went into the office.  It is my understanding that the Social Security offices are under no legal obligation to proactively tell you about benefits for which you are eligible now or in the future.  They are allowed to answer any questions you have, so if he asked them and they incorrectly denied him benefits then an appeal may fix the issue. This is actually one of the more concerning deficiencies of the Social Security system.  There are way too many people who have benefits available, but they do not know about them or how to claim them.  Even when people know of the benefits there is no guarantee the person you speak to at the SS office will understand them and agree.  This is why it is critical to understand what you and your loved ones are eligible to receive and don’t take the first rejection if you have done your homework and know you are eligible.  The main purpose for this blog is to empower people to make the best SS decisions they can and to benefit as the system intended.  The challenge is that the system isn’t designed to be all that friendly. For information on this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/social-security-didnt-tell-him/" rel="nofollow" target="_blank">Social Security Didn’t Tell Him</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Social Security Didn’t Tell Him

Student loan debt is usually thought of as a younger person’s issue, but a new report suggests that older Americans are also facing the challenge of paying back federal student loans. Several months ago the U.S. Government Accountability Office (GAO) released a report on the effects of student loan debt on Social Security recipients.  The study noted that an increasing number of older Americans are defaulting on their student loans. These older borrowers are jeopardizing part of their SS benefits because benefits can be garnished to pay back the loans. This can be a large problem for some because SS makes up a substantial portion of their income. GAO Report Among other things, the GAO report revealed the following:  The Dept. of Education can garnish up to 15% of your SS benefits to offset your defaulted student loan.  However they cannot leave you with less than a $750 SS benefit, so for lower wage workers there is a floor that protects at least $750 of benefit. Unfortunately, that $750 floor was put in place in 1998 and has not been adjusted for cost of living. This puts some SS recipients below the federal poverty line for an individual. The defaulted debt can belong to the retiree OR be a defaulted loan where the retiree has co-signed for a child or grandchild. Of the $1.1 Billion collected between 2001 and 2015 through SS offsets, 71% went to pay fees and interest. Many people subject to the offset saw their outstanding balances continue to increase despite the offset.  Particularly for lower wage earners, this potential reduction of their already small Social Security benefit should act as yet another warning about the dangers of taking on too much student loan debt.  And remember that it can be debt you have co-signed, not just your own. For more information on this topic, please use the play button below.   The post Student Loan Debt and Social Security appeared first on Help with My Social Security.com.

Student loan debt is usually thought of as a younger person’s issue, but a new report suggests that older Americans are also facing the challenge of paying back federal student loans. Several months ago the U.S. Government Accountability Office (GAO) <a href="http://www.gao.gov/assets/690/681722.pdf" rel="nofollow" target="_blank">released a report</a> on the effects of student loan debt on Social Security recipients.  The study noted that an increasing number of older Americans are defaulting on their student loans. These older borrowers are jeopardizing part of their SS benefits because benefits can be garnished to pay back the loans. This can be a large problem for some because SS makes up a substantial portion of their income. <h2>GAO Report</h2> Among other things, the GAO report revealed the following: <ol> <li>The Dept. of Education can garnish up to 15% of your SS benefits to offset your defaulted student loan.  However they cannot leave you with less than a $750 SS benefit, so for lower wage workers there is a floor that protects at least $750 of benefit. Unfortunately, that $750 floor was put in place in 1998 and has not been adjusted for cost of living. This puts some SS recipients below the federal poverty line for an individual.</li> <li>The defaulted debt can belong to the retiree OR be a defaulted loan where the retiree has co-signed for a child or grandchild.</li> <li>Of the $1.1 Billion collected between 2001 and 2015 through SS offsets, 71% went to pay fees and interest. Many people subject to the offset saw their outstanding balances continue to increase despite the offset.</li> </ol> Particularly for lower wage earners, this potential reduction of their already small Social Security benefit should act as yet another warning about the dangers of taking on too much student loan debt.  And remember that it can be debt you have co-signed, not just your own. For more information on this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/student-loan-debt-social-security/" rel="nofollow" target="_blank">Student Loan Debt and Social Security</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Student Loan Debt and Social Security

Looks like another Social Security office has confusion over the “Grace Year”.  Even though we have covered this recently I am choosing to post on it again since there is still a lot of confusion for not just the public, but for the Social Security offices themselves.  We received the following this week: “I’ll be 65 this June 2018, born 1953. Thinking of receiving SS benefits this July 2018. I currently work full time and have medical insurance through my employer. I understand that while collecting SS benefits, I’m allowed to make a gross amount of $1,420. Over that amount each month there’s a penalty which I understand. I keep getting conflicting info from my local SS office pertaining to what I will have already made the first 7 months of this year and how/if it effects my monthly SS benefit and whether I can continue to work part-time. Since I’ll have made $20K+ the first 7 months of this year, does that mean I cannot work the rest of this year? Does it also mean that my monthly benefit will be cut $1 for every $2 over the allowed monthly amount of $1,420? Do these first 7 months of 2018 go against me? It’s so frustrating when you can’t get a correct and same answer from anyone at the Social Security Office.” Earnings Test Normally the earnings test is applied on an annual basis, so any earnings in any month would count towards any benefit reduction due to earnings in a given year.  However, there is a provision that protects people in your circumstances from this in their first year of retirement.  This provision is called the “Grace Year” and is a way for you to elect to have the earnings test applied on a monthly basis, rather than annually.  You can elect this provision one time for one year. Earnings Limit The earnings limit for 2018 is $17,040.  You are correct that if the SSA counted all your earnings this year you would be subject to the offset due to the earnings test.  Your benefits would be reduced $1 for every $2 over the $17,040.  However, by electing to have the SSA apply the earnings test on a monthly basis, they look at every month you receive benefits and at the earnings from that month only.  If in any of those months you earn over $1,420 ($17,040 divided by 12), you will experience the same $1 for every $2 reduction as before.  By electing this method, you will see no reduction due to earnings that occurred in months prior to claiming your social security in July.  You will see a reduction if you earn more than $1,420 in any months from July to December. If your local office is having difficulty with this, ask to speak to a supervisor or a technical expert in the office. They will confirm what I am describing. For  more information on this topic, please use the play button below. The post Grace Year Confusion appeared first on Help with My Social Security.com.

Looks like another Social Security office has confusion over the “Grace Year”.  Even though we have covered this recently I am choosing to post on it again since there is still a lot of confusion for not just the public, but for the Social Security offices themselves.  We received the following this week: “I’ll be 65 this June 2018, born 1953. Thinking of receiving SS benefits this July 2018. I currently work full time and have medical insurance through my employer. I understand that while collecting SS benefits, I’m allowed to make a gross amount of $1,420. Over that amount each month there’s a penalty which I understand. I keep getting conflicting info from my local SS office pertaining to what I will have already made the first 7 months of this year and how/if it effects my monthly SS benefit and whether I can continue to work part-time. Since I’ll have made $20K+ the first 7 months of this year, does that mean I cannot work the rest of this year? Does it also mean that my monthly benefit will be cut $1 for every $2 over the allowed monthly amount of $1,420? Do these first 7 months of 2018 go against me? It’s so frustrating when you can’t get a correct and same answer from anyone at the Social Security Office.” <h2>Earnings Test</h2> Normally the earnings test is applied on an annual basis, so any earnings in any month would count towards any benefit reduction due to earnings in a given year.  However, there is a provision that protects people in your circumstances from this in their first year of retirement.  This provision is called the “Grace Year” and is a way for you to elect to have the earnings test applied on a monthly basis, rather than annually.  You can elect this provision one time for one year. <h2>Earnings Limit</h2> The earnings limit for 2018 is $17,040.  You are correct that if the SSA counted all your earnings this year you would be subject to the offset due to the earnings test.  Your benefits would be reduced $1 for every $2 over the $17,040.  However, by electing to have the SSA apply the earnings test on a monthly basis, they look at every month you receive benefits and at the earnings from that month only.  If in any of those months you earn over $1,420 ($17,040 divided by 12), you will experience the same $1 for every $2 reduction as before.  By electing this method, you will see no reduction due to earnings that occurred in months prior to claiming your social security in July.  You will see a reduction if you earn more than $1,420 in any months from July to December. If your local office is having difficulty with this, ask to speak to a supervisor or a technical expert in the office. They will confirm what I am describing. For  more information on this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/grace-year-confusion/" rel="nofollow" target="_blank">Grace Year Confusion</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Grace Year Confusion

Today we have a question from a reader about a past blog post.  Back in May, 2017 I posted an article describing exactly how the Delayed Retirement Credits are applied to your SS retirement benefit when you have delayed filing past your full retirement age. After reading that article, a reader sent me the following question: “Chris, I have a question about a Social Security claiming strategy. In your blog dated May 10, 2017, Delays in Your Delayed Retirement Credits, you explain how the delayed benefit is calculated each January. This impacts my plan. My birthday is in November, and I was planning to claim at age 68 (in November 2020) to get the 16% increase in benefit. The Social Security website calculator shows only a 9% benefit if I claim in that month, and your blog explains why. I had heard about the SSA retroactive benefits to give you a lump sum benefit for up to 6 months. If I wait until January, 2021 to claim benefits (after they have recalculated the delayed benefit), and have them backdate the application to November 2020, would I get a lump sum that reflects the full 16% increase for those backdated months?” Simple Answer The simple answer here is no, they will not give you the full 16% increase for delaying for the months of November and December of 2020.  When you file retroactively you will receive benefits as if you had filed on that earlier date.  As mentioned in the previous article, the SSA does not ever make up the shortfall of the delayed retirement credits.  They are simply lost, so filing later but retroactively will not cause them to pay out more than they would have if you filed on November 1st, 2020. Remember that you can file retroactively for up to 6 months, or back to your full retirement age, whichever is less.  This gives you the flexibility to fix a missed filing date, but will simply create a benefit as if you filed at that prior date.  You will receive those retroactive months in a lump sum, but they will not be any larger or smaller than if you had filed back on that previous date. The post Question on Delayed Retirement Credits appeared first on Help with My Social Security.com.

Today we have a question from a reader about a past blog post.  Back in May, 2017 I posted an article describing exactly how the <a href="http://www.helpwithmysocialsecurity.com/delays-delayed-retirement-credits/" rel="nofollow" target="_blank">Delayed Retirement Credits are applied to your SS retirement benefit</a> when you have delayed filing past your full retirement age. After reading that article, a reader sent me the following question: “Chris, I have a question about a Social Security claiming strategy. In your blog dated May 10, 2017, Delays in Your Delayed Retirement Credits, you explain how the delayed benefit is calculated each January. This impacts my plan. My birthday is in November, and I was planning to claim at age 68 (in November 2020) to get the 16% increase in benefit. The Social Security website calculator shows only a 9% benefit if I claim in that month, and your blog explains why. I had heard about the SSA retroactive benefits to give you a lump sum benefit for up to 6 months. If I wait until January, 2021 to claim benefits (after they have recalculated the delayed benefit), and have them backdate the application to November 2020, would I get a lump sum that reflects the full 16% increase for those backdated months?” <h2>Simple Answer</h2> The simple answer here is no, they will not give you the full 16% increase for delaying for the months of November and December of 2020.  When you file retroactively you will receive benefits as if you had filed on that earlier date.  As mentioned in the previous article, the SSA does not ever make up the shortfall of the delayed retirement credits.  They are simply lost, so filing later but retroactively will not cause them to pay out more than they would have if you filed on November 1st, 2020. Remember that you can file retroactively for up to 6 months, or back to your full retirement age, whichever is less.  This gives you the flexibility to fix a missed filing date, but will simply create a benefit as if you filed at that prior date.  You will receive those retroactive months in a lump sum, but they will not be any larger or smaller than if you had filed back on that previous date. The post <a href="http://www.helpwithmysocialsecurity.com/question-delayed-retirement-credits/" rel="nofollow" target="_blank">Question on Delayed Retirement Credits</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Question on Delayed Retirement Credits

Question from reader: “In one of your post you write; ‘You are exposed to the Earnings Test that will reduce your benefit if you earn more than a specific amount each year before your FRA. Once you reach FRA you can earn as much as you want without it affecting your benefit (it may cause a taxation issue, though).’ When you say ‘earn’, are you referring to regular income not retirement income? Often in articles they use ‘income’ but do not define which ‘income’ they mean. The IRS has differing categories of ‘income’.” Earnings Test “Earnings” Defined The good news with the earnings test is that Social Security only considers “earnings from work” in their calculation.  This basically means gross wages from an employer, or net earnings from self-employment.  No other “earnings” matter for this calculation.   For more information about this topic, please use the play button below. The post What Counts as Earnings appeared first on Help with My Social Security.com.

Question from reader: “In one of your post you write; ‘You are exposed to the Earnings Test that will reduce your benefit if you earn more than a specific amount each year before your FRA. Once you reach FRA you can earn as much as you want without it affecting your benefit (it may cause a taxation issue, though).’ When you say ‘earn’, are you referring to regular income not retirement income? Often in articles they use ‘income’ but do not define which ‘income’ they mean. The IRS has differing categories of ‘income’.” <h2>Earnings Test “Earnings” Defined</h2> The good news with the earnings test is that Social Security only considers “earnings from work” in their calculation.  This basically means gross wages from an employer, or net earnings from self-employment.  No other “earnings” matter for this calculation. For more information about this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/what-counts-as-earnings/" rel="nofollow" target="_blank">What Counts as Earnings</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

What Counts as Earnings

From the email bag this week, we have a question regarding spousal benefits: “My year of birth is 1953. My wife’s is 1956. I want to file for my spousal benefit on her next year when I turn 66. She will claim her main personal benefit next year when she turns 63. As I understand it, I can file for my spousal benefit on her and begin to collect 50% of her FRA number while letting my own personal benefit grow for 4 years until I’m 70. Is this correct thinking?” I can answer this in a few bullet points: Spousal Benefits Remember you can only file for spousal benefits if you are at least 62 and your spouse is collecting their own retirement benefit. Rules are relaxed in the case of divorce.  Because you will meet these requirements you will be able to file for a spousal benefit after she files for her own next year. Restricted Application In order to file for a spousal benefit ALONE and let your own benefit lay dormant and grow due to delayed retirement credits you must be allowed to file a restricted application. Under current law you are only allowed to file a restricted application if you are over your FRA and if you were age 62 by January 1, 2016 (born before January 2, 1954).  Next year you will turn 66, your full retirement age, and you make the cutoff for filing a restricted application.  Therefore you will be allowed to claim a spousal benefit alone as long as you wait to your FRA month to collect benefits. 50% of PIA A full spousal benefit is equal to 50% of the PIA (FRA benefit) of the person on whose record you are claiming. This can be reduced if you (not your spouse) are below your FRA and by the earnings test, which only applies before your FRA.  Since you are waiting to your FRA to claim the spousal benefit, you will be entitled to receive 50% of your spouse’s PIA, even though she is claiming her benefit early.  Her benefit will be reduced due to early filing, but yours will not since you are not filing early. Thanks for the great question.  Hope this helps! For more information on this topic, please use the play button below. The post Spousal Benefits appeared first on Help with My Social Security.com.

From the email bag this week, we have a question regarding spousal benefits: “My year of birth is 1953. My wife’s is 1956. I want to file for my spousal benefit on her next year when I turn 66. She will claim her main personal benefit next year when she turns 63. As I understand it, I can file for my spousal benefit on her and begin to collect 50% of her FRA number while letting my own personal benefit grow for 4 years until I’m 70. Is this correct thinking?” I can answer this in a few bullet points: <h2>Spousal Benefits</h2> Remember you can only file for spousal benefits if you are at least 62 and your spouse is collecting their own retirement benefit. Rules are relaxed in the case of divorce.  Because you will meet these requirements you will be able to file for a spousal benefit after she files for her own next year. <h2>Restricted Application</h2> In order to file for a spousal benefit ALONE and let your own benefit lay dormant and grow due to delayed retirement credits you must be allowed to file a restricted application. Under current law you are only allowed to file a restricted application if you are over your FRA and if you were age 62 by January 1, 2016 (born before January 2, 1954).  Next year you will turn 66, your full retirement age, and you make the cutoff for filing a restricted application.  Therefore you will be allowed to claim a spousal benefit alone as long as you wait to your FRA month to collect benefits. <h2>50% of PIA</h2> A full spousal benefit is equal to 50% of the PIA (FRA benefit) of the person on whose record you are claiming. This can be reduced if you (not your spouse) are below your FRA and by the earnings test, which only applies before your FRA.  Since you are waiting to your FRA to claim the spousal benefit, you will be entitled to receive 50% of your spouse’s PIA, even though she is claiming her benefit early.  Her benefit will be reduced due to early filing, but yours will not since you are not filing early. Thanks for the great question.  Hope this helps! For more information on this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/spousal-benefits/" rel="nofollow" target="_blank">Spousal Benefits</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Spousal Benefits

In the past we have discussed how you can create an online account with Social Security.  This will give you access to your earnings record, the ability to file certain benefit claims, get statements, etc.  We have also warned everyone that if they get blocked trying to create this online account that it may be due to someone else already creating the account via identity theft.  While this is still a concern, we were contacted this week by a reader letting us know that there is another possible explanation for why you may get blocked during account creation. Can’t Create a an Account During the process of creating your online profile, the Social Security Administration verifies your identity by various methods, including matching information to your credit report.  This is where the issue may arise.  If you have your credit report frozen or locked the verification process from SS cannot complete and you will be denied the ability to create your online account. How to Fix This Our reader advised us that they were offered the following three methods to resolve the issue:  Temporarily unfreeze your credit report. This may not be a great choice if you will be charged by the credit agencies to unfreeze, and then re-freeze your account. Go into the local SS office to complete a verification process. If you successfully complete this step, you will be given a code to use during account creation.  Our reader tried this one and the local office was not able to complete the process for some reason. Have the SSA send a letter to the address they have on file for you with the code needed to register online. This is probably the easiest and most practical option for most people.  With the popularity of people freezing their credit reports, this will become a more and more common problem as people register for online access to their Social Security account.  I just wish that the SSA website would make it more obvious that this may be an issue so people know before being denied access. I want to send a big “thank you” to our reader who shared this information with me.  The credit freeze issue did not occur to me until this reader shared their story. For more info on this topic, please use the play button below. The post MySocialSecurity Online Account Issues appeared first on Help with My Social Security.com.

In the past we have discussed how you can create an online account with Social Security.  This will give you access to your earnings record, the ability to file certain benefit claims, get statements, etc.  We have also warned everyone that if they get blocked trying to create this online account that it may be due to someone else already creating the account via identity theft.  While this is still a concern, we were contacted this week by a reader letting us know that there is another possible explanation for why you may get blocked during account creation. <h2>Can’t Create a an Account</h2> During the process of creating your online profile, the Social Security Administration verifies your identity by various methods, including matching information to your credit report.  This is where the issue may arise.  If you have your credit report frozen or locked the verification process from SS cannot complete and you will be denied the ability to create your online account. <h2>How to Fix This</h2> Our reader advised us that they were offered the following three methods to resolve the issue: <ol> <li>Temporarily unfreeze your credit report. This may not be a great choice if you will be charged by the credit agencies to unfreeze, and then re-freeze your account.</li> <li>Go into the local SS office to complete a verification process. If you successfully complete this step, you will be given a code to use during account creation.  Our reader tried this one and the local office was not able to complete the process for some reason.</li> <li>Have the SSA send a letter to the address they have on file for you with the code needed to register online. This is probably the easiest and most practical option for most people.</li> </ol> With the popularity of people freezing their credit reports, this will become a more and more common problem as people register for online access to their Social Security account.  I just wish that the SSA website would make it more obvious that this may be an issue so people know before being denied access. I want to send a big “thank you” to our reader who shared this information with me.  The credit freeze issue did not occur to me until this reader shared their story. For more info on this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/mysocialsecurity-online-account-issues/" rel="nofollow" target="_blank">MySocialSecurity Online Account Issues</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

MySocialSecurity Online Account Issues

For quite some time now there has been a movement afoot to “privatize” Social Security. The argument for privatization promotes the view that individuals would be able to generate far greater lifetime income if they did not have to contribute to Social Security. The premise is based on the belief that if workers were allowed to direct what would have been their Social Security contributions into their own investment account (perhaps a 401(k) or similar tax qualified retirement account) they could later use that money to buy a stream of guaranteed income through an income annuity and generate far greater lifetime income than currently offered through Social Security. Unfortunately, the privatization argument tends to ignore the critical difference in how Social Security calculates your lifetime stream of guaranteed income and how a private insurance company prices guaranteeing a retiree a lifetime stream of income. Sometimes Social Security is the better deal. Privatizing Social Security This movement to privatize Social Security seems to grow in popularity when equity returns are strong. Unfortunately, concentrating solely on equity returns ignores the other half of the equation. Once you retire, current investment returns are meaningless to your cost of a guaranteed income stream. Far more important to that cost are current interest rates (more on that later). Absent from the privatization argument is the critical difference of how Social Security calculates your lifetime stream of guaranteed income compared to how a private insurance company prices the cost of guaranteeing a retiree a lifetime stream of income. This dichotomy recently became abundantly clear when a new retiree asked us to help him calculate his retirement budget. Unique to his situation was a lack of any Social Security benefits or employer pension.  For the majority of his working years he did not contribute to the Social Security system because his employer had opted out of the program back when the government allowed certain employers to do so.  Instead, his employer allowed this person to direct what would have been contributed to Social Security into a retirement account. The employer matched the contributions and over his working years the account grew to an enviable value of more than a million dollars. In this article we will share with you the difficulty in generating a lifetime stream of guaranteed income in today’s low interest rate environment. Social Security VS Private Annuity – How Benefits Are Calculated We consider Social Security benefits and lifetime income payments from a Single Premium Immediate Annuity[1] to be “secure income.”[2]  Where they differ is how each payer determines the amount of income you will receive for the rest of your life. When you retire, the Social Security Administration bases your benefits on an index of your highest 35 years of earnings. Current interest rates have no bearing on how much your Social Security benefit will be. On the other hand, an insurance company providing a retiree a lifetime stream of guaranteed income via an income annuity couldn’t care less how much that retiree earned while working!  Instead the insurance company will base the majority of the cost of that retiree’s income benefit on how much they think they can earn in the bond market based on current interest rates. The lower interest rates are at the time of purchase the more it will cost to buy a lifetime stream of guaranteed income. Since 2008, interest rates have been at historic lows – and therein lies the problem for the retiree in this story. How Much Secure Income Do You Need? The cornerstone of our retirement planning philosophy revolves around a simple concept. Retirees should put in place an income plan that will cover 100% of their “required expenses”[3]  with a lifetime stream of inflation-adjusted guaranteed income.  The retiree in our story needs $55,000 a year of inflation-adjusted guaranteed income throughout his retirement. Normally such an amount isn’t difficult to generate because most working people have a modest amount of “secure income” such as Social Security benefits and/or employer sponsored pension income.  A retiree need only cover the difference (if any) between their secure income and their required expenses with an income annuity.  But as we mentioned before, the retiree in our story was not eligible for any Social Security or pension benefits. He now needs to use his retirement savings to buy an income annuity to cover his entire required expenses. Pricing a Lifetime Stream of Secure Income We helped the retiree in our story solicit quotes from insurance companies asking how much he would need to pay to buy a lifetime stream of guaranteed income for him and his wife (both are in their early 60s) beginning at $55,000 and increasing by CPI annually until mortality.  The results shocked us.  The quotes provide by various insurance companies varied between $1.3 to just over $1.5 million to secure this income stream! These quotes were more than the retiree had! The retiree in our story had fallen victim to the Federal Reserve’s efforts to stimulate economic growth by lowering interest rates to historic levels since 2008. Had interest rates been at levels last seen just a decade ago, the cost of purchasing his lifetime income would have been significantly less. In all likelihood, his Single Premium Immediate Annuity would have cost less than half of his total portfolio. How Much Social Security Could the Retiree Have Received? Adding to the retiree’s difficulty was his lack of any Social Security or pension income. We cannot calculate with complete certainty what the retiree in our story would have received in Social Security benefits had his employer not opted out of the system. Nonetheless, we can come close in an estimation based on his historical earnings.  At age 66 (Full Retirement Age) this retiree would have had Social Security Retirement benefits of approximately $30,888/year.  His wife (who remained at home caring for the family and therefore did not pay into the Social Security system) would have been eligible for a spousal benefit of $15,444 at her age 66. All total the retiree in our story most likely would have been eligible for a combined Social Security benefit of $46,332/year beginning at age 66. Furthermore, with a little planning they could have “optimized” their benefits via several claiming strategies and increased their annual Social Security benefit to $56,216 by age 70.  Whether the retiree claimed at age 66, or optimized his benefit at age 70, it is our contention that their Social Security income would have covered most, if not all, of their required expenses at the beginning of their retirement. This would have then allowed them to now use their retirement savings to fund their desired expenses[4]. So What’s Better? When we look at all this information we have to ask a pointed question. What’s better…?  Having an enviable 401(k) that is valued over a million dollars without any Social Security benefit and the option to buy a secure stream of income. Or, having a modest 401(k) with secure income provided by Social Security to cover required expenses.  Because our retirement planning philosophy centers on helping people cover 100% of required expenses with any combination of secure income (pension, Social Security, or income annuity) we are not biased on how the income is generated from as long as it is secure.  So the short answer to the question is – It depends where the secure income is coming from and what current interest rates are. To be able to secure sufficient guaranteed lifetime income for our retiree in the current low interest rate environment, we demonstrated that it would cost significantly more than our retiree had saved.  Had interest rates not been at historic lows, or had the retiree been a participant in the Social Security program this would have been a very different story. We have always liked Social Security. We specialize in helping people optimize their benefits and receive as much from the program as possible. Because Social Security bases your income benefit on your historic earnings and not current interest rates it can insulate you from the risk of retiring in a low interest rate environment. We admit Social Security is complex, it’s confusing, and it’s severely underfunded. But it remains a superb social insurance program and in our opinion a much better deal than many people realize.   [1] A Single Premium Immediate Annuity is often referred to as a “personal pension”. In exchange for a lump sum of money an insurance company will provide you a lifetime stream of guaranteed income. If you live long enough and receive all your money back payments will continue for the rest of your life. Structured properly, they will also pay your beneficiary any money not returned to you should you pass away before receiving all your money back. [2] Our definition of Secure Income is an income stream that (1) is predetermined and known; there is no ambiguity with how much income you will receive throughout your retirement; (2) your income can never be cut, it can only increase and (3) the income is not backed by your assets alone, it is backed by a third party [3] A Required Expenses is an expense if you don’t cover you will suffer an economic, financial or medical hardship. Required Expenses by their very definition are difficult to cut or reduce and must be fully covered until mortality with inflation adjusted guaranteed income. [4] A Desired Expenses is an expense if you don’t cover you will suffer an emotional hardship. Desired Expenses by their very definition are easy to cut or reduce and therefore can be covered during retirement from your investment and savings. When market conditions are good you an increase your desired expenditures when market conditions are bad you can cut them. If you’d like to hear more about this topic, please use the play button below. The post Social Security – A Better Deal Than You Think appeared first on Help with My Social Security.com.

For quite some time now there has been a movement afoot to “privatize” Social Security. The argument for privatization promotes the view that individuals would be able to generate far greater lifetime income if they did not have to contribute to Social Security. The premise is based on the belief that if workers were allowed to direct what would have been their Social Security contributions into their own investment account (perhaps a 401(k) or similar tax qualified retirement account) they could later use that money to buy a stream of guaranteed income through an income annuity and generate far greater lifetime income than currently offered through Social Security. Unfortunately, the privatization argument tends to ignore the critical difference in how Social Security calculates your lifetime stream of guaranteed income and how a private insurance company prices guaranteeing a retiree a lifetime stream of income. Sometimes Social Security is the better deal. <h2>Privatizing Social Security</h2> This movement to privatize Social Security seems to grow in popularity when equity returns are strong. Unfortunately, concentrating solely on equity returns ignores the other half of the equation. Once you retire, current investment returns are meaningless to your cost of a guaranteed income stream. Far more important to that cost are current interest rates (more on that later). Absent from the privatization argument is the critical difference of how Social Security calculates your lifetime stream of guaranteed income compared to how a private insurance company prices the cost of guaranteeing a retiree a lifetime stream of income. This dichotomy recently became abundantly clear when a new retiree asked us to help him calculate his retirement budget. Unique to his situation was a lack of any Social Security benefits or employer pension.  For the majority of his working years he did not contribute to the Social Security system because his employer had opted out of the program back when the government allowed certain employers to do so.  Instead, his employer allowed this person to direct what would have been contributed to Social Security into a retirement account. The employer matched the contributions and over his working years the account grew to an enviable value of more than a million dollars. In this article we will share with you the difficulty in generating a lifetime stream of guaranteed income in today’s low interest rate environment. <h2>Social Security VS Private Annuity – How Benefits Are Calculated</h2> We consider Social Security benefits and lifetime income payments from a Single Premium Immediate Annuity<a href="http://www.helpwithmysocialsecurity.com/social-security-better-deal-think/#_ftn1" rel="nofollow" target="_blank">[1]</a> to be “secure income.”<a href="http://www.helpwithmysocialsecurity.com/social-security-better-deal-think/#_ftn2" rel="nofollow" target="_blank">[2]</a>  Where they differ is how each payer determines the amount of income you will receive for the rest of your life. When you retire, the Social Security Administration bases your benefits on an index of your highest 35 years of earnings. Current interest rates have no bearing on how much your Social Security benefit will be. On the other hand, an insurance company providing a retiree a lifetime stream of guaranteed income via an income annuity couldn’t care less how much that retiree earned while working!  Instead the insurance company will base the majority of the cost of that retiree’s income benefit on how much they think they can earn in the bond market based on current interest rates. The lower interest rates are at the time of purchase the more it will cost to buy a lifetime stream of guaranteed income. Since 2008, interest rates have been at historic lows – and therein lies the problem for the retiree in this story. <h2>How Much Secure Income Do You Need?</h2> The cornerstone of our retirement planning philosophy revolves around a simple concept. Retirees should put in place an income plan that will cover 100% of their “required expenses”<a href="http://www.helpwithmysocialsecurity.com/social-security-better-deal-think/#_ftn3" rel="nofollow" target="_blank">[3]</a>  with a lifetime stream of inflation-adjusted guaranteed income.  The retiree in our story needs $55,000 a year of inflation-adjusted guaranteed income throughout his retirement. Normally such an amount isn’t difficult to generate because most working people have a modest amount of “secure income” such as Social Security benefits and/or employer sponsored pension income.  A retiree need only cover the difference (if any) between their secure income and their required expenses with an income annuity.  But as we mentioned before, the retiree in our story was not eligible for any Social Security or pension benefits. He now needs to use his retirement savings to buy an income annuity to cover his entire required expenses. <h2>Pricing a Lifetime Stream of Secure Income</h2> We helped the retiree in our story solicit quotes from insurance companies asking how much he would need to pay to buy a lifetime stream of guaranteed income for him and his wife (both are in their early 60s) beginning at $55,000 and increasing by CPI annually until mortality.  The results shocked us.  The quotes provide by various insurance companies varied between $1.3 to just over $1.5 million to secure this income stream! These quotes were more than the retiree had! The retiree in our story had fallen victim to the Federal Reserve’s efforts to stimulate economic growth by lowering interest rates to historic levels since 2008. Had interest rates been at levels last seen just a decade ago, the cost of purchasing his lifetime income would have been significantly less. In all likelihood, his Single Premium Immediate Annuity would have cost less than half of his total portfolio. <h2>How Much Social Security Could the Retiree Have Received?</h2> Adding to the retiree’s difficulty was his lack of any Social Security or pension income. We cannot calculate with complete certainty what the retiree in our story would have received in Social Security benefits had his employer not opted out of the system. Nonetheless, we can come close in an estimation based on his historical earnings.  At age 66 (Full Retirement Age) this retiree would have had Social Security Retirement benefits of approximately $30,888/year.  His wife (who remained at home caring for the family and therefore did not pay into the Social Security system) would have been eligible for a spousal benefit of $15,444 at her age 66. All total the retiree in our story most likely would have been eligible for a combined Social Security benefit of $46,332/year beginning at age 66. Furthermore, with a little planning they could have “optimized” their benefits via several claiming strategies and increased their annual Social Security benefit to $56,216 by age 70.  Whether the retiree claimed at age 66, or optimized his benefit at age 70, it is our contention that their Social Security income would have covered most, if not all, of their required expenses at the beginning of their retirement. This would have then allowed them to now use their retirement savings to fund their desired expenses<a href="http://www.helpwithmysocialsecurity.com/social-security-better-deal-think/#_ftn4" rel="nofollow" target="_blank">[4]</a>. <h2>So What’s Better?</h2> When we look at all this information we have to ask a pointed question. What’s better…? <ul> <li>Having an enviable 401(k) that is valued over a million dollars without any Social Security benefit and the option to buy a secure stream of income.</li> <li>Or, having a modest 401(k) with secure income provided by Social Security to cover required expenses.</li> </ul> Because our retirement planning philosophy centers on helping people cover 100% of required expenses with any combination of secure income (pension, Social Security, or income annuity) we are not biased on how the income is generated from as long as it is secure.  So the short answer to the question is – It depends where the secure income is coming from and what current interest rates are. To be able to secure sufficient guaranteed lifetime income for our retiree in the current low interest rate environment, we demonstrated that it would cost significantly more than our retiree had saved.  Had interest rates not been at historic lows, or had the retiree been a participant in the Social Security program this would have been a very different story. We have always liked Social Security. We specialize in helping people optimize their benefits and receive as much from the program as possible. Because Social Security bases your income benefit on your historic earnings and not current interest rates it can insulate you from the risk of retiring in a low interest rate environment. We admit Social Security is complex, it’s confusing, and it’s severely underfunded. But it remains a superb social insurance program and in our opinion a much better deal than many people realize. <a href="http://www.helpwithmysocialsecurity.com/social-security-better-deal-think/#_ftnref1" rel="nofollow" target="_blank">[1]</a> A Single Premium Immediate Annuity is often referred to as a “personal pension”. In exchange for a lump sum of money an insurance company will provide you a lifetime stream of guaranteed income. If you live long enough and receive all your money back payments will continue for the rest of your life. Structured properly, they will also pay your beneficiary any money not returned to you should you pass away before receiving all your money back. <a href="http://www.helpwithmysocialsecurity.com/social-security-better-deal-think/#_ftnref2" rel="nofollow" target="_blank">[2]</a> Our definition of Secure Income is an income stream that (1) is predetermined and known; there is no ambiguity with how much income you will receive throughout your retirement; (2) your income can never be cut, it can only increase and (3) the income is not backed by your assets alone, it is backed by a third party <a href="http://www.helpwithmysocialsecurity.com/social-security-better-deal-think/#_ftnref3" rel="nofollow" target="_blank">[3]</a> A Required Expenses is an expense if you don’t cover you will suffer an economic, financial or medical hardship. Required Expenses by their very definition are difficult to cut or reduce and must be fully covered until mortality with inflation adjusted guaranteed income. <a href="http://www.helpwithmysocialsecurity.com/social-security-better-deal-think/#_ftnref4" rel="nofollow" target="_blank">[4]</a> A Desired Expenses is an expense if you don’t cover you will suffer an emotional hardship. Desired Expenses by their very definition are easy to cut or reduce and therefore can be covered during retirement from your investment and savings. When market conditions are good you an increase your desired expenditures when market conditions are bad you can cut them. If you’d like to hear more about this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/social-security-a-better-deal-than-you-think/" rel="nofollow" target="_blank">Social Security – A Better Deal Than You Think</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Social Security – A Better Deal Than You Think

A little issue has come to our attention with regard to the way Social Security offices process your application for benefits once you reach your Full Retirement Age (FRA).  This regulation/rule they follow may jeopardize your plan to increase your monthly benefit by taking advantage of Delayed Retirement Credits.  Most of you know that for every year past your FRA you wait to claim your retirement benefit you will receive an 8% increase in the monthly amount.  These credits for delaying are effective up to age 70 when they no longer reward you for waiting.  Many people who do not need the benefits earlier try to wait to age 70 to maximize their monthly benefit as well as the survivor benefit that would be left to their spouse.  This is where the Social Security office may derail your plans. Retroactive Benefits is the Default It turns out that the system defaults to awarding you retroactive benefits.  We have discussed retroactive benefits in detail previously, but in a nut shell Social Security allows you to back-date your application and claim up to 6 months of benefits in a lump sum.  This retroactive claiming is limited to those people who have reached their FRA and the retroactive application can only go back 6 months or back to your FRA month, whichever is less. Disclaim the Retroactive Benefits Since the default is to file your claim retroactively you must expressly disclaim these retroactive benefits if you instead want to take full advantage of your Delayed Retirement Credits.  If you claim retroactively it is just as if you had gone into the SS office 6 months ago and started your claim.  This will reduce your monthly benefit by about 4%; every month, year after year, each year until you pass away.  It also permanently reduces the survivor benefit for your spouse; every month, year after year, each year until they pass away. Understand the Tradeoff This is where our warning bells sound.  Make sure you understand the tradeoff between the monthly benefit and the lump sum retroactive payment.  You can’t have your cake and eat it, too.  It may make perfect sense to file retroactively, but make sure you are doing it intentionally and not just because that is the default in the SS system.  In the long run it may not be the right path. To hear more about this topic, please use the play button below. The post Beware of Retroactive Benefits appeared first on Help with My Social Security.com.

A little issue has come to our attention with regard to the way Social Security offices process your application for benefits once you reach your <a href="http://www.helpwithmysocialsecurity.com/wp-content/uploads/2014/01/2014-SSFullRetAge.pdf" rel="nofollow" target="_blank">Full Retirement Age (FRA)</a>.  This regulation/rule they follow may jeopardize your plan to increase your monthly benefit by taking advantage of Delayed Retirement Credits.  Most of you know that for every year past your FRA you wait to claim your retirement benefit you will receive an 8% increase in the monthly amount.  These credits for delaying are effective up to age 70 when they no longer reward you for waiting.  Many people who do not need the benefits earlier try to wait to age 70 to maximize their monthly benefit as well as the survivor benefit that would be left to their spouse.  This is where the Social Security office may derail your plans. <h3>Retroactive Benefits is the Default</h3> It turns out that the system defaults to awarding you retroactive benefits.  We have discussed <a href="http://www.helpwithmysocialsecurity.com/retroactive-benefits/" rel="nofollow" target="_blank">retroactive benefits</a> in detail previously, but in a nut shell Social Security allows you to back-date your application and claim up to 6 months of benefits in a lump sum.  This retroactive claiming is limited to those people who have reached their FRA and the retroactive application can only go back 6 months or back to your FRA month, whichever is less. <h3>Disclaim the Retroactive Benefits</h3> Since the default is to file your claim retroactively you must expressly disclaim these retroactive benefits if you instead want to take full advantage of your Delayed Retirement Credits.  If you claim retroactively it is just as if you had gone into the SS office 6 months ago and started your claim.  This will reduce your monthly benefit by about 4%; every month, year after year, each year until you pass away.  It also permanently reduces the survivor benefit for your spouse; every month, year after year, each year until they pass away. <h3>Understand the Tradeoff</h3> This is where our warning bells sound.  Make sure you understand the tradeoff between the monthly benefit and the lump sum retroactive payment.  You can’t have your cake and eat it, too.  It may make perfect sense to file retroactively, but make sure you are doing it intentionally and not just because that is the default in the SS system.  In the long run it may not be the right path. To hear more about this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/beware-of-retroactive-benefits-2/" rel="nofollow" target="_blank">Beware of Retroactive Benefits</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Beware of Retroactive Benefits

Working in a job that participates in the SS system prior to claiming Social Security (SS) Retirement Benefits generally will increase your benefit as you first accumulate your 40 credits of coverage and then as you amass your 35 computational years of earnings history. But how does work after “retirement” affect your benefits?  These days it is quite common for people to either return temporarily to the work force or even remain working, but at a reduced load, after they “retire” from their full time career.  We have previously discussed the effects of the Earnings Test on benefits if you earn above certain limits while collecting benefits prior to your Full Retirement Age (FRA).  Today I would like to address working after your FRA and also the effect that any work after your age 62 will have on your retirement benefit. Increase Your PIA? As I’ve mentioned previously in our blog, your FRA benefit is actually calculated initially by the SS Administration when you reach age 62.  At that time they consider your highest 35 years of indexed earnings to determine your PIA, which is your benefit at your FRA.  However, if you continue to work after you reach 62, regardless if you have begun collecting SS retirement benefits, those years of additional work MAY increase your PIA.  If any earnings year after age 62 is a greater amount than one of your previously used 35 indexed years, SS will recalculate your benefit and apply the adjustment the following year.  If you have low or even zero earnings after 62, those years CANNOT be used to reduce your benefit.  Once you pass 62 your PIA can only increase due to work, it will never decrease. Taxing Your Benefit Remember that if you begin receiving benefits prior to your FRA you will be subject to the Earnings Test and possibly taxation of your benefits which may very well reduce your effective current benefit, even as your PIA is being increased due to possibly high earnings years after age 62.  Once you reach your FRA you will no longer be subject to the Earnings Test, but taxation will still be an issue to consider.  As always, things are pretty straight forward in life until we try to adjust for the tax issue. Be Sure To Get Something For Your Effort One other caveat I need to mention is that if you continue to work after age 62 with the intention of growing your PIA, you need to be aware that if you do not earn enough to replace one of your previously used 35 years of earnings you will be working and paying SS taxes into the system and get no additional SS benefit whatsoever.  So make sure you are actually going to receive the benefits you are seeking before deciding to go back to work.  There are certainly many reasons to continue working after age 62, but make sure you are going to get the benefits you desire.  Sometimes additional work will benefit you in the SS system, and sometimes it will not.  If it won’t, just make sure you are getting something else you value in exchange. For more info on this topic, please use the play button below. The post Working After Age 62 appeared first on Help with My Social Security.com.

Working in a job that participates in the SS system prior to claiming Social Security (SS) Retirement Benefits generally will increase your benefit as you first accumulate your 40 credits of coverage and then as you amass your 35 computational years of earnings history. But how does work after “retirement” affect your benefits?  These days it is quite common for people to either return temporarily to the work force or even remain working, but at a reduced load, after they “retire” from their full time career.  We have previously discussed the effects of the <a href="http://www.helpwithmysocialsecurity.com/social-security-earnings-test/" rel="nofollow" target="_blank">Earnings Test</a> on benefits if you earn above certain limits while collecting benefits prior to your <a href="http://www.helpwithmysocialsecurity.com/wp-content/uploads/2014/01/2014-SSFullRetAge.pdf" rel="nofollow" target="_blank">Full Retirement Age (FRA)</a>.  Today I would like to address working after your FRA and also the effect that any work after your age 62 will have on your retirement benefit. <h2>Increase Your PIA?</h2> As I’ve mentioned previously in our blog, your FRA benefit is actually calculated initially by the SS Administration when you reach age 62.  At that time they consider your highest 35 years of indexed earnings to determine your<a href="http://www.helpwithmysocialsecurity.com/your-social-security-primary-insurance-amount/" rel="nofollow" target="_blank"> PIA</a>, which is your benefit at your FRA.  However, if you continue to work after you reach 62, regardless if you have begun collecting SS retirement benefits, those years of additional work MAY increase your PIA.  If any earnings year after age 62 is a greater amount than one of your previously used 35 indexed years, SS will recalculate your benefit and apply the adjustment the following year.  If you have low or even zero earnings after 62, those years CANNOT be used to reduce your benefit.  Once you pass 62 your PIA can only increase due to work, it will never decrease. <h2>Taxing Your Benefit</h2> Remember that if you begin receiving benefits prior to your FRA you will be subject to the Earnings Test and possibly taxation of your benefits which may very well reduce your effective current benefit, even as your PIA is being increased due to possibly high earnings years after age 62.  Once you reach your FRA you will no longer be subject to the Earnings Test, but taxation will still be an issue to consider.  As always, things are pretty straight forward in life until we try to adjust for the tax issue. <h2>Be Sure To Get Something For Your Effort</h2> One other caveat I need to mention is that if you continue to work after age 62 with the intention of growing your PIA, you need to be aware that if you do not earn enough to replace one of your previously used 35 years of earnings you will be working and paying SS taxes into the system and get no additional SS benefit whatsoever.  So make sure you are actually going to receive the benefits you are seeking before deciding to go back to work.  There are certainly many reasons to continue working after age 62, but make sure you are going to get the benefits you desire.  Sometimes additional work will benefit you in the SS system, and sometimes it will not.  If it won’t, just make sure you are getting something else you value in exchange. For more info on this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/working-after-age-62/" rel="nofollow" target="_blank">Working After Age 62</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Working After Age 62

You’ve saved well, invested responsibly and accumulated more assets that you’ll need in your retirement.  When you pass away, there will be something left over for you to leave to your beneficiaries.  Leaving your Social Security benefit to someone else really isn’t an option though, so if leaving assets to others is something you’d like to do, optimizing your Social Security benefit may not be your best course of action. Delaying your Social Security Benefit In this blog we often praise the merits of delaying your Social Security claim in order to optimize your lifetime benefits.  One pitfall of this strategy is that you must often wait several years before collecting your Social Security benefits. This may require you to supplement your monthly income from other retirement assets, thereby depleting these assets; assets where you can choose the beneficiary. If you choose to deplete other assets in favor of optimizing your Social Security benefit, remember that you can’t leave your SS benefit to someone else.  Some of your survivors may be elligible for Survivor Benefits, but you do not get to choose who these survivors are.  The individuals who are entitled to survivor benefits are predetermined by law. Who can receive survivor benefits?  Your widow or widower- Can receive full benefits at their full retirement age or reduced benefits as early as age 60. Can receive benefits as early as age 50 if they are disabled. Can receive benefits at any age if he or she is taking care of your child who under the age of 16 or disabled, and receiving Social Security benefits.   Your children who are unmarried – Can receive a reduced benefit if they are younger than age 18 (or 19 if they are still in High School) Can receive a reduced benefit at any age if they were disabled before age 22 and continue to be disabled.   Your parents who were dependent on you – Can receive benefits if they are at least age 62 and you provided at least half of their support.   Your divorced spouse – Can receive benefits if you were married to them for at least 10 years, they are at least age 60. Can receive benefits at any age regardless of marriage length if they are caring for your child who entitled to your benefits and is younger than age 16 or disabled.    So, if you want to leave your assets to someone other than whom the Social Security Administration has predetermined, like a neice, a friend or a charity, optimizing your Social Security benefit by delaying your payments may not be the best thing. For more information on this topic, please use the play  button below to hear the audio post. The post Leaving Your Social Security Benefit to Someone Else? appeared first on Help with My Social Security.com.

You’ve saved well, invested responsibly and accumulated more assets that you’ll need in your retirement.  When you pass away, there will be something left over for you to leave to your beneficiaries.  Leaving your Social Security benefit to someone else really isn’t an option though, so if leaving assets to others is something you’d like to do, optimizing your Social Security benefit may not be your best course of action. <h2>Delaying your Social Security Benefit</h2> In this blog we often praise the merits of delaying your Social Security claim in order to optimize your lifetime benefits.  One pitfall of this strategy is that you must often wait several years before collecting your Social Security benefits. This may require you to supplement your monthly income from other retirement assets, thereby depleting these assets; assets where you can choose the beneficiary. If you choose to deplete other assets in favor of optimizing your Social Security benefit, remember that you can’t leave your SS benefit to someone else.  Some of your survivors may be elligible for <a href="http://www.helpwithmysocialsecurity.com/basics-survivor-benefits/" rel="nofollow" target="_blank">Survivor Benefits</a>, but you do not get to choose who these survivors are.  The individuals who are entitled to survivor benefits are predetermined by law. <h2>Who can receive survivor benefits?</h2> <ol> <li>Your widow or widower- <ol> <li>Can receive full benefits at their full retirement age or reduced benefits as early as age 60.</li> <li>Can receive benefits as early as age 50 if they are disabled.</li> <li>Can receive benefits at any age if he or she is taking care of your child who under the age of 16 or disabled, and receiving Social Security benefits.</li> </ol> </li> <li>Your children who are unmarried – <ol> <li>Can receive a reduced benefit if they are younger than age 18 (or 19 if they are still in High School)</li> <li>Can receive a reduced benefit at any age if they were disabled before age 22 and continue to be disabled.</li> </ol> </li> <li>Your parents who were dependent on you – <ol> <li>Can receive benefits if they are at least age 62 and you provided at least half of their support.</li> </ol> </li> <li>Your divorced spouse – <ol> <li>Can receive benefits if you were married to them for at least 10 years, they are at least age 60.</li> <li>Can receive benefits at any age regardless of marriage length if they are caring for your child who entitled to your benefits and is younger than age 16 or disabled.</li> </ol> </li> </ol> So, if you want to leave your assets to someone other than whom the Social Security Administration has predetermined, like a neice, a friend or a charity, optimizing your Social Security benefit by delaying your payments may not be the best thing. For more information on this topic, please use the play  button below to hear the audio post. The post <a href="http://www.helpwithmysocialsecurity.com/survivor-benefits/" rel="nofollow" target="_blank">Leaving Your Social Security Benefit to Someone Else?</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Leaving Your Social Security Benefit to Someone Else?

Question from reader: “I’ve been reading your blog and enjoy how far reaching on SSA it covers. That said I’m confused on one area and that is WEP. I’m 61. My non-SSA pension is $1298 a month. I have 28 years of substantial earnings. My age 62 SSA estimate is $1627 a month. Should I expect a reduction of $440 plus or $85 plus (estimate of 2019 amounts)?” WEP is Complicated The Windfall Elimination Provision (WEP) is very complicated, so I understand your confusion.  For those unfamiliar with the basics of WEP, you can review our previous posts on WEP here: http://www.helpwithmysocialsecurity.com/you-may-weep-because-of-wep/ http://www.helpwithmysocialsecurity.com/question-regarding-wep/   Years of Substantial Earnings is Important In this reader’s case, they are subject to the Windfall Elimination Provision, which will reduce the social security benefit.  The maximum reduction that can occur in 2018 is $447.50 per month.  This reduction will apply to all those receiving social security and are subject to WEP and have 20 or fewer years of substantial earnings in the SS system.  This is where the 28 years of substantial earnings for this reader will help.  Once a person has 30 years of substantial SS earnings, WEP goes away completely.  At 28 years the WEP is reduced from $447.50 to $89.50 per month (again, in 2018 numbers).  The chart for determining the reduction that applies based on the number of substantial earnings years one has accumulated can be found here: https://www.ssa.gov/planners/retire/wep-chart.html   For more information on this topic, please use the play button below. The post Calculation of WEP appeared first on Help with My Social Security.com.

Question from reader: “I’ve been reading your blog and enjoy how far reaching on SSA it covers. That said I’m confused on one area and that is WEP. I’m 61. My non-SSA pension is $1298 a month. I have 28 years of substantial earnings. My age 62 SSA estimate is $1627 a month. Should I expect a reduction of $440 plus or $85 plus (estimate of 2019 amounts)?” <h2>WEP is Complicated</h2> The Windfall Elimination Provision (WEP) is very complicated, so I understand your confusion.  For those unfamiliar with the basics of WEP, you can review our previous posts on WEP here: <a href="http://www.helpwithmysocialsecurity.com/you-may-weep-because-of-wep/" rel="nofollow" target="_blank">http://www.helpwithmysocialsecurity.com/you-may-weep-because-of-wep/</a> <a href="http://www.helpwithmysocialsecurity.com/question-regarding-wep/" rel="nofollow" target="_blank">http://www.helpwithmysocialsecurity.com/question-regarding-wep/</a> <h2>Years of Substantial Earnings is Important</h2> In this reader’s case, they are subject to the Windfall Elimination Provision, which will reduce the social security benefit.  The maximum reduction that can occur in 2018 is $447.50 per month.  This reduction will apply to all those receiving social security and are subject to WEP and have 20 or fewer years of substantial earnings in the SS system.  This is where the 28 years of substantial earnings for this reader will help.  Once a person has 30 years of substantial SS earnings, WEP goes away completely.  At 28 years the WEP is reduced from $447.50 to $89.50 per month (again, in 2018 numbers).  The chart for determining the reduction that applies based on the number of substantial earnings years one has accumulated can be found here: <a href="https://www.ssa.gov/planners/retire/wep-chart.html" rel="nofollow" target="_blank">https://www.ssa.gov/planners/retire/wep-chart.html</a> For more information on this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/wep-calculation/" rel="nofollow" target="_blank">Calculation of WEP</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Calculation of WEP

We had a great question regarding the earnings test and spousal benefits from our email box this week: “I am 66 (FRA), the higher earner, and plan to delay taking my benefit until 70. We think my wife, age 64, should file so that I can take spousal benefits. At my age 70, I’d switch to my own benefit.  My wife’s reduction for early claiming, and her salary between now and age 66 (her FRA), will reduce the payout she receives to virtually zero.  So, when SSA recalculates her benefit at FRA, because she had received zero months of benefits, SSA will reset the benefit to what it would have been at FRA anyway.  The upshot is that I’d get to take a spousal benefit for four years that I wouldn’t get otherwise.   Is that right?” Valuable Strategy This is a very common and valuable strategy for those who are grandfathered in to filing a restricted application.  A restricted application is when you are allowed to claim only a spousal benefit, while leaving your own benefit untouched to grow in the background.  To file a restricted application you must be at least your FRA and must be born before January 2, 1954.  This reader meets both of those requirements. The Bad News The news is not as good from here…  He mentions that his wife will continue to work and earn enough to “reduce the payout she receives to virtually zero.”  He is referring to the Earnings Test.  In 2018 the earnings limit for those under FRA is $17,040.  This means that if you are under your FRA and earn more than the limit, your benefit will be reduced $1 for every $2 over the limit.  What this reader is missing is that the earnings test applies to her benefit and any other benefits paid on her record.  So the spousal benefit for which he will apply will be subject to the earnings test from her earnings. Couldn’t Hurt This does not mean they should not pursue this strategy.  Depending on the amount of her earnings and the amount of the SS benefits, it may make perfect sense to claim as he described.  However, the amount received may, or may not justify the approach.   If you’d like more information on this topic, please use the play button below. The post Earnings Test and Spousal Benefits appeared first on Help with My Social Security.com.

We had a great question regarding the earnings test and spousal benefits from our email box this week: “I am 66 (FRA), the higher earner, and plan to delay taking my benefit until 70. We think my wife, age 64, should file so that I can take spousal benefits. At my age 70, I’d switch to my own benefit.  My wife’s reduction for early claiming, and her salary between now and age 66 (her FRA), will reduce the payout she receives to virtually zero.  So, when SSA recalculates her benefit at FRA, because she had received zero months of benefits, SSA will reset the benefit to what it would have been at FRA anyway.  The upshot is that I’d get to take a spousal benefit for four years that I wouldn’t get otherwise.   Is that right?” <h2>Valuable Strategy</h2> This is a very common and valuable strategy for those who are grandfathered in to filing a restricted application.  A restricted application is when you are allowed to claim only a spousal benefit, while leaving your own benefit untouched to grow in the background.  To file a restricted application you must be at least your FRA and must be born before January 2, 1954.  This reader meets both of those requirements. <h2>The Bad News</h2> The news is not as good from here…  He mentions that his wife will continue to work and earn enough to “reduce the payout she receives to virtually zero.”  He is referring to the Earnings Test.  In 2018 the earnings limit for those under FRA is $17,040.  This means that if you are under your FRA and earn more than the limit, your benefit will be reduced $1 for every $2 over the limit.  What this reader is missing is that the earnings test applies to her benefit and any other benefits paid on her record.  So the spousal benefit for which he will apply will be subject to the earnings test from her earnings. <h2>Couldn’t Hurt</h2> This does not mean they should not pursue this strategy.  Depending on the amount of her earnings and the amount of the SS benefits, it may make perfect sense to claim as he described.  However, the amount received may, or may not justify the approach. If you’d like more information on this topic, please use the play button below. The post <a href="http://www.helpwithmysocialsecurity.com/earnings-test-spousal-benefits/" rel="nofollow" target="_blank">Earnings Test and Spousal Benefits</a> appeared first on <a href="http://www.helpwithmysocialsecurity.com" rel="nofollow" target="_blank">Help with My Social Security.com</a>.

Earnings Test and Spousal Benefits

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