Living Well in Retirement
The Social Security Catch-22
The dreaded earnings test can reduce Social Security benefits today, but you'll get beefed-up benefits tomorrow.
By Kevin McCormally, Editorial Director, Kiplinger.com
September 2009
Editor's note: This article is from the 2009 issue of Success With Your Money. Order your copy now.
It sounds like a cruel joke.
After a lifetime in the workforce, you call it quits at 62 to claim Social Security benefits and begin a long and satisfying retirement.
Then, the worst economic calamity since the Great Depression hits with the vengeance of Hurricane Katrina, decimating your nest egg and depleting the value of your home. Faced with the painful reality that you must go back to work, you count yourself lucky to find a job at a time of high unemployment.
And your reward? The federal government suspends your Social Security benefits.
Say hello to the confusing and controversial Social Security earnings test. This provision of the law says sure, you can claim your benefits as early as age 62, but you can't necessarily keep the cash if you work prior to reaching your normal retirement age (66 for workers born in 1943 through 1954).
The earnings test cost a quarter of a million working Social Security beneficiaries $757 million in forfeited benefits in just the first seven months of this year, according to a ballpark estimate Social Security officials made for Kiplinger's. That's up 14% from the $666 million lost in the same period in 2008.
No one knows how much of the increase is a result of retirees being forced by deteriorating finances to go back to work. But it's clear that anyone who claims Social Security benefits early -- or who's thinking about it -- needs to understand exactly what's going on here.
How the earnings test works. If you apply for Social Security benefits early, you'll be asked whether you plan to keep working and, if so, how much you expect to make-to determine whether you'll be stung by the earnings test.
For 2009, the test applies if you make more than $14,160. And for every $2 you earn over that limit, you'll lose $1 of benefits. Suppose you claim benefits at age 62 and your monthly benefit is $1,500 (and you estimate that you'll earn $30,000 during the year). Because $30,000 is $15,840 over the limit, you would lose half of the excess, or $7,920, in benefits.
The Social Security Administration (SSA) doesn't trim each check by a proportional amount. Your benefits are withheld completely until the squeeze is satisfied. In this example, you'd get no benefits for five months (covering $7,500 of the lost benefits), and your benefit in the sixth month would be $1,500 minus the final $420 claimed by the earnings test, or just $1,080.
In the year you first claim benefits, the test basically lets you ignore money you made before you applied and squeezes benefits based on monthly earnings for the rest of the year. In the year you reach normal retirement age, a more lenient earnings test applies: You lose $1 for every $3 in earnings over $37,680 before your birthday. Starting in the month you reach normal retirement age, there's no earnings test. You can earn as much as you want without losing a dime in benefits.
Note this: For purposes of the earnings test, only wages from a job or self-employment income count. Investment earnings, pension benefits, money drawn from an IRA or 401(k), even lottery winnings do not.
Not the honor system. Although you will be asked to estimate your earnings, your projection isn't the final word. When you file your tax return, the IRS lets the SSA know exactly how much wage and self-employment earnings you report. That figure is compared with your estimate, and the government reconciles the books by either sending you a check -- if your estimate of earnings was too high and the earnings test clawed back too much of your benefits -- or dunning you for a balance due.
This final point is particularly important if you unexpectedly return to work while you're subject to the earnings test. You should let the SSA know of the change in circumstances as soon as possible so that your benefits can be trimmed if you run afoul of the earnings test. Failing to do so could come back to haunt you later. If the tax return you file shows earnings that should have triggered reduced benefits, you'll be asked to pay back the excess in a lump sum or see future benefits reduced.
A silver lining in the earnings test. Although the earnings test is often derided as an unconscionable 50% surtax -- because $2 in earnings can cost you $1 in benefits -- it's not as evil as critics complain. Benefits lost to the test are not gone forever. Instead, the law is designed to ensure that you recover any forfeited amount via higher monthly benefits later.
Remember, if you claim benefits before your full retirement age -- and 43% of men and 48% of women claim them at age 62 -- your benefits will be permanently reduced (see the table below). But for any month you lose benefits to the earnings test, the SSA will ratchet up future benefits.
Say you retire at 62, happy to accept the 25% haircut in benefits in exchange for collecting four years early. Then you have to go back to work and wind up forfeiting 12 months' worth of benefits. Basically, when recalculating your benefits at your full retirement age, you'll be treated as though you claimed benefits three years early, not four. Instead of having your lifetime benefits reduced by 25%, in this example you'd suffer about a 20% reduction going forward.
And if your earnings during your period of forced re-employment are higher than one of the 35 years of earnings originally used by Social Security to compute your benefit, your monthly payments could rise even more.
SAY GOODBYE TO BENEFITS AT 65 | ||
| The age at which you can start collecting benefits without suffering a lifetime reduction -- or being threatened by the earnings test -- is increasing. | ||
| Birth year | Full retirement age | Cut in benefits if claimed at 62 |
| 1943-1954 | 66 | 25.00% |
| 1955 | 66 and 2 months | 25.83 |
| 1956 | 66 and 4 months | 26.67 |
| 1957 | 66 and 6 months | 27.50 |
| 1958 | 66 and 8 months | 28.33 |
| 1959 | 66 and 10 months | 29.17 |
| 1960 | 67 | 30.00 |
Reader Comments (103)
Posted by: jason at 09/21/2009 08:12:40 PM
Here is a website that provides free calculators to figure out when to collect and also determine how much of your social security benefits are taxable. www.socialsecuritymax.com/
Posted by: klash at 09/22/2009 03:31:00 PM
I can hardly wait until rules like this start showing up in my health care benefits.
Posted by: Confused Daughter at 09/22/2009 03:52:17 PM
This is very helpful (learned most of it the hard way for my Mom) but can you address this in relation to survivor's benefits. The $2 to $1 appplies but at full retirement age does she go back to max benefits with no penalty for taking early?
Posted by: Big Bill at 09/22/2009 07:59:16 PM
Does this also apply to disability benefits? When SSA converts disability recipients to SS benefits at 62 will they lose 1/2 the value of their other pension benefits above the $14,160 limit?
Posted by: teea at 09/22/2009 10:41:41 PM
geez....once again we are punished for getting older.
Posted by: Jim at 09/23/2009 12:11:36 AM
Wait till the Baby Boomers get to 65 and are eligible for Medicare. I guarantee the government will make us pay a large portion of our SS benefits to maintain our Medicare benefits. Just look at the income tax code over the past 20 years, the Baby Boomers always just missed getting included in most of the tax breaks.
Posted by: SR at 09/23/2009 03:13:25 PM
There was a very good article in the last AARP magazine. It explained different ways a dependent could claim benefits(using the 1/2 spouce and then changing to your own benefits at full retirment)Something to look into.
Posted by: Kevin McCormally at 09/23/2009 09:34:21 PM
Hi. This is Kevin McCormally of Kiplinger's with a response for Confused Daughter who asks if, at full retirement age, does benefit return to the max if the recipient has lost benefits to the earnings test. The answer, unfortunately, is it depends. It depends on how much in benefits was lost. The only way the benefit would return to full benefit would be if the earnings test denied 100% of the early benefits. Benefits are reduced for each month prior to full retirement age you claim benefits and, for each month of benefits you lose to the earnings test, that month's reduction is restored. I hope this helps.
Posted by: kevin mccormally at 09/24/2009 09:46:23 AM
Kevin McCormally of Kiplinger's here, with an answer for Big Bill about the conversion of disability benefits to retirement benefits. My understanding is that this happens not at 62 but at full retirement age, at which point there is no earnings test. See "What You Need To Know When You Get Social Security Disability Benefits" at http://www.ssa.gov/pubs/10153.html Hope this helps.
Posted by: Oldworker at 09/29/2009 04:31:52 PM
Went back to work full time at age 66. I have some control over how much I make. I'm wondering how to calculate the increase in my social security payments if I make more this year than in one of the previous 35 years for my earnings test. The devil is in the inflation adjustments.
Posted by: Jack in Dallas at 10/07/2009 05:34:59 PM
I'm in more of a Catch 44 situation. I am 63 and drawing Social Security benefits and I have a 12 year old son who also receives benefits (regular, not disability) based upon my earnings. He gets 67% of my benefit and pays no taxes since this is his only income. If I exceed the $14,160 threshold we lose $1.67 rather than just $1 for every $2 earned above the $14,160. It gets worse, though. Since I am in the 28% tax bracket (thanks to my wife's earnings and investment income), I pay 56 cents tax on the $2 earned and an additional 15 cents for Medicare and SS. Therefore, I net only $1.29 out of the $2 above the threshold. For the $1.67 I lose, I only pay 24 cents in tax (since only $.85 of my dollar is taxed and none of my son's income is taxed) and no SS or Medicare is deducted. Bottom line, I lose $1.43 to make $1.29 (net) if I exceed the threshold. Needless to say, this is a tremendous disincentive to working. OUCH!
Posted by: gk thompson at 10/10/2009 03:06:54 PM
If I take my social security at age 65 and 9 months, how much of a reduction will I see percentage wise in my monthly benefit. I know that each year you file prior to full retirement age is a 13% reduction, but what about mere months? I never see that discussed. My full retirement age is 66.
Posted by: Jean at 10/13/2009 02:28:59 PM
My normal retirement age is 66 but I plan to keep working until 70. Can I apply for and keep all SS if I do it after age 66?
Posted by: Mark in Wisconsin at 10/14/2009 02:59:34 PM
RE: Monthly reduction for taking early benefits. The reduction is 5/9 of one percent for each month that you take early retirement. Thus, a person who retired at age 62 with a retirement age of 65 would get 80% of their full retirement age benefit if they started taking benefits when they turned 62. Good Luck.
Posted by: Mariana at 11/03/2009 09:31:52 AM
I am over 66 years old, how much money can I earn not to shorten my SS benefits? What is the limit if my SSA is only about $12,500 annualy?
Posted by: Elaine Wickham at 11/28/2009 10:23:29 AM
2010 will bring no increases in social security. When will we receive the one time $250. to compensate for no increases?
Posted by: stephen brown at 11/28/2009 10:35:57 AM
i had to go on ssi at 47 it took me 17 mo's to get it and i will miss the raise this year my year earnings was 12'000 to 25'000 some years large amout of overtime working at a hospital is there any way i can raise the amout i am recieving please send me a email thank you stephen c brown
Posted by: Ursula Lenz at 11/28/2009 10:44:21 AM
I retired from the Broward County School System and receive a retirement check from the state iof Florida. Why was my Social Security check lessened because I alrerady receive a check from the state government? This doesn't happen to people who were in the military and receive military and social security checks.
Posted by: cwalker at 11/28/2009 10:45:33 AM
I took full benefit at age 66, but now am working part-time and SS is still being deducted from my check; how does this effect future benefits?
Posted by: deborah keys at 11/28/2009 10:46:00 AM
i want to know if i can receive my benefits at age 54 which i will be in ddec 18 and ny husband just died 3 months ago.... so can i receive his social security from his jobs, i am also trrying foir disability , let me know thanks, mrs al keys
Posted by: William at 11/28/2009 10:50:05 AM
How can I draw my wife Social Security after she have past away at age 63. Also how can I draw my Mother and step Dad Social Security after they have past away. Send me comments in my email on what I need to have and do to get the Social Security after a loveone have past away.
Posted by: i e thomas at 11/28/2009 10:56:30 AM
the only thing I can assure you all of is the higher incremental charges in payroll SS deductions, to include medicare deductions, as needed every 2 - 4 years from those lucky enough to remain in the workforce--- its just the way it is.
Posted by: Nena at 11/28/2009 10:59:15 AM
I am 63 and still working but plan to retire September 2010. My husband will be 65 in February 09 and he is still working as well. His health is not good and more than likely will have to retire about the same time as I do. How would we come out best? Who should claim SS and when? My health is OK and I may can work another year. What would the calculations be to our advantage?
Posted by: C.C at 11/28/2009 11:22:52 AM
WHEN I TURN 591/2 JANUARY I AM APPLIED FOR MY HUSBAND SOCIAL SECURITY HE'S BEEN DIED FOR 26 YEARS AND I WANT TO CUT MY DAYS DOWN TO PARTTIME I WILL BE 60 I BEAT JUST LIKE EVERYBODY ELSE YOU GO CAUSE U HAVE TO GO I BEEN HERE FOR 35 YEARS AND 4 MONTHS
Posted by: Mr Mattson at 11/28/2009 11:56:05 AM
I'm a retired military. When I reach 66 yrs old and apply for full SS benefits, will my SS payments or my military retirement pay be off set or reduced because I'm drawing military retirement pay and SS retirement pay? And if my SS retiremant benefits are affected how much is the off set ???
Posted by: Tom at 11/28/2009 12:15:29 PM
This is interesting. I did exactly as written here, claimed benefits at 62, then worked for the full year in which I turned 63 and took no Social Security benefits. Now I'm getting ready to claim them again and have been told that I will still be treated as having started at 62, UNLESS I give them back the entire amount.
Posted by: Joy Bellanger at 11/28/2009 12:31:32 PM
What if you were born in 1941 and opted to get benefits at age 62. Does Social Security have a deadline when you opt to take early retirement benefits or will I get my SS check until I die. Thanks!!
Posted by: Bruce at 11/28/2009 12:33:14 PM
The husband and spouse are receiving benefits now based on early retirement. The wifes benefits are based on the husband's wages. If the husband out lives the wife, will the husband's benefits increase by the amount the wife is receiving?
Posted by: Debbie at 11/28/2009 12:48:48 PM
Hi, Could you please help me understand about survior benifits and what the percentage is I will get? My husband was still working full time when he died and the SS dept told me I could collect his SS when I have my 60th birthday. he made more money than myself. would I collect more if I wait until my full retirement age or is it 100% when I turn 60 in 2011. and are there anyother options to increase the benifit. Thanks..
Posted by: B.Olinger at 11/28/2009 01:00:09 PM
And then if you live in a state like CA,OH,LA,CO,MA,IL and retire from as a teacher, police or other state employee and you are due SS benefits from other work in other states the WEP-GPO will reduce your benefits by 2/3. Only way to get one of these states out of this is to REPEAL and it takes an Act of U.S. Congress. H.R. Bill 235 or S. 484. Contact your representatives and encourage their support. There are 306 Representatives co-sponsoring H.R. 235. Help us to repeal with your support.
Posted by: Grace at 11/28/2009 01:04:07 PM
After retiring at 62, I kept working part-time. My full retirement age is 66; will I be receiving full benefits then?
Posted by: Lilian at 11/28/2009 01:24:47 PM
I'm divorced and understand I can claim reduced benefit at 62 (if he starts collecting his benefit). Can I file the spousal benefit at 62 and then at 70 switch and collect on my benefit? (We were married over 29 years).
Posted by: martha weber at 11/28/2009 01:30:05 PM
You don't mention Railroad Retirement Benefits. Are they the same as Social Security?
Posted by: richardcolonel at 11/28/2009 01:43:37 PM
I took early retirement at age 62. Have been receiving Social Security benefits since January of this year, 2009. Since I am being taken care of at Veteran's Administration clinic and hospital, will I be required to take medicare when I become eligible at age 65. I became 63 at the beginning of this month which means I will be eligible for Medicare in less than two years. And if I don't take medicare, what happens to the money that was taken out of my paychecks and deposited into medicare during my working years.
Posted by: Anne M Ianniciello at 11/28/2009 01:46:17 PM
I have been collecting SSDI since 1991. My 3rd husband died in 2002. I contacted Social security,and told I could collect benefits because I was disabled. I have been collecting on his SS about $200 average. I had remarried my 2nd husband, but had been married to my 2nd husband long enough to collect widows benefits from husband 2. My husband I remarried died in Aug. of 2007. I received the $255 death benefit, but SS told me to wait until I was at retirement age. SS tells me not to collect from his account because I receive more because my benefits are higher. this because I have been collecting from my earnings, and that I can only collect a partial benefit because of I collect on my earnings. A friend said that because I am collecting disability I should be collecting full benefits, and should have been collecting more all along. I was boorn in 1946 so will not be elegable for full surviorrs beneffits from my husband even when I am eligible because I am collecting on my own work record. SS says I will only collect up to my husband's benefits. i paid for his last expenses and the cemetery plot. My husband was a veteran, but did not even receive funds for any expenses, even the monument, as he was buried in a Muslim cemetery, and his monument had his name in Arabic to conform to the rules of the cemetery. I keep getting a different answer from SS each time i have talked to them. Please explain exactly what the SS laws are and if there is a difference because of my collecting SS disability? I have not been able to find an answer that I know is correct. where can I find out what I am eligible for? I would like to know for sure what I can collect. Thank you, Anne M Ianniciello Zeeland, ND 58581
Posted by: Roger at 11/28/2009 01:51:31 PM
You say when you reach full retirement age you can earn as much as you want without forfeiting benefits??? Remember you probably will have to pay taxes on your benefits. This can be substantial unless you intend to use tax deferred accounts, like IRA's or 401K's to shelter your benefits. Bottom line, you'll still have less to spend here and now.
Posted by: LORD JARAA at 11/28/2009 02:41:41 PM
Wow the FIRST article that was accurate about SSA!!! But probly the last! NOW will everyone PLEASE CALL SSA themselves to find out more info!! These articles are useless!!
Posted by: jimmie jenkins at 11/28/2009 03:19:41 PM
hello, i'm 65 now if i wait until i'm 66 how much money will i get a month thank u
Posted by: Wendy at 11/28/2009 05:58:25 PM
When the 40 somethings get to retirement age there will be no social security benefits anyway. So what are we supposed to do, die on the job? In other countries your social security goes into a separate savings account that cannot be used by anyone else, our Country should have done this in the beginning. Now we are paying for those who were not born here not to mention the baby boomers. Sorry, just angry that working my A** off will never pay off.
Posted by: Bernie at 11/28/2009 06:55:23 PM
My daughter is a stay at home Mom. When her husband retires is my daughter able to collect some of his s.s. retirement money?
Posted by: karl at 11/28/2009 07:04:09 PM
You mention the birth year of 1943-1956. What about if the recipient was born prior to 1941. My dad waited till he was 66 to get the full amount but he was born in 1941. Would it have mattered for him if he retired in 2006. He was informed that he would also have to wait till he was 66 to get the full amount, and that he would be able to earn unlimited income without a reduction in benefits...sounds too good to be true, but ????
Posted by: anne torrance at 11/28/2009 07:46:20 PM
I have been caught in the very secret Offset Law that very few people have been told about. I worked for 20 years in a town hall as a secretary and when my husband past away I was suppost to get $800.00 a month but due to the offset law that no one knew about I would only get $35.oo a month. supposedly the congress was suppost to correct that law but 15 years later I am still trying to live off $ll00.00. I would certainly like to see one of our congressmen live off this. the sad part of that law was kept a secret when it was past ans a lot of women widows were badly hurt by it.
Posted by: LUZ at 11/28/2009 08:05:57 PM
I NEED HELP, I BECAME DISABLE IN 1995. UNABLE TO WORK BECAUSE OF BACK ISSUES AND BECAUSE ALL THE MEDS I AM ON, IT HAS BEEN HELL FOR ME. I WAS APPROVED FOR DISABILITY AND MEDICARE IN 2004.I ONLY GET 412 DOLLARS A MONTH WHO COULD LIVE ON THAT? THANKS GOD MY HUSBAND WORKS AND WE BARELY ARE LIVING PAY CHECK TO PAY CHECK. WHAT OR WHAT CAN I DO TO GET MY DISABILITY RISED? I WILL NEVER BE ABLE TO WORK AND I HAVE DOCTORS PAPERS TO PROVE IT. PLEASE I NEED HELP WE ARE HARDLY MAKING IT, OUR BILLS ARE SO OVER DUE I AM AFRAID WE MIGHT LOSE OUR HOUSE. PLEASE TELL ME WHAT I COULD DO. THANK YOU
Posted by: assefa woldetensaye at 11/28/2009 08:29:39 PM
im disabled do i will get ritairment benefit?
Posted by: cao at 11/28/2009 08:43:59 PM
dear Kevin McCormally, this is the message I get when I go to the ssdi link you provided: Social Security Online Message www.socialsecurity.gov Search File Not Found Youve requested a Social Security Online page that does not exist. Please follow the instructions below: If you have reached this page by following a link on another Web site, please notify the owner of the Web site, not Social Security. If you have reached this page by selecting a bookmark that worked previously, check the Site Map or use our Search to find the new location and update your bookmark. If you have reached this page by following a link in a letter or publication from Social Security, please check your spelling. Remember, web addresses are case sensitive. If you have reached this page by clicking on a link on Social Security Online, let us know about bad links by sending Feedback. When sending the message please let us know the name or address of the page where you found the broken link so that we may make a correction.
Posted by: becky at 11/28/2009 09:14:22 PM
my husband passed away 2 &1/2 years ago...am I entitled to what he would have recieved at age 66?
Posted by: Joan at 11/29/2009 07:46:56 AM
I am 64, plan to work until 70. My ex-spouse retired at 62. Will the earnings test apply to me if I claim a spousal benefit between now and age 70? Thank you.
Posted by: Luisa Perez at 11/29/2009 08:53:56 AM
I am 81 years,born 8-25-28. I work part time for the county earning a stipin of fifteen dolors an hr. . Last year I earned $8000 . How will this affect my social security of $400. a month. I will earn $12000 in 2010
Posted by: Kathy at 11/29/2009 09:23:56 AM
Can someone explain how SS works when you have been divorced once or twice and you are currently single. My 1st ex-husband has passed away. Age bracet is 1943-54. Can you draw SS from an EX to put off drawing from your own so you can reach a higher amount and then switch over?
Posted by: pat at 11/29/2009 09:49:48 AM
it is my understanding that if you delay receiving your SS for your retirement benefit at the full rate, it would take you 14 years to make up the difference between the lower benefit received for "early retirement" and money you receive by waiting for your "full benefit"...in otherwords, someone eligible for early retirement in 1962 born in 1943 would be 76 years old before waiting until age 66 to begin receiving full benefits...the current life-span for men is around 79 years of age delaying the receipt of social security isn't as great as it sounds...it's a gamble that a person will live long enough to recoup the lost in greater benefits by delaying receiving the benefits. even so, if you work and keep under the $12-14,000 threshold, you can more than off-set any real health or monetary benefit by delaying your retirement. there is much more than monthly benefit to consider when looking at the options...your health, longevity, your current job and stress it puts on older workers, ect...there's more to life than a monthly benefit...
Posted by: ALEX at 11/29/2009 10:11:50 AM
I'm 66 and collecting SS benefits. My wife is 65. If she's going to apply for SS benefits, can she claim an addition benefits from mine SS and how much as percentage wise (Her SS being far much less than mine)
Posted by: Annette at 11/29/2009 10:39:52 AM
HI! My husband starting receiving his S.S. pmts this year. Our youngest daughter is 17 and going to college when she graduates H.S. She is receiving a stipend ck. from S.S. as a dependant. When she goes to college, is she still recognized as a "dependant"? Would our middle daughter who wasn't able to receive stipends, due to the age requirements for my husband, be able to still collect if she is living at home and still a dependant? He is on Veterans Disability also.
Posted by: Paula at 11/29/2009 11:33:35 AM
What if u are drawing social security off of your dad and u have been disabled since you was 13 years old. I have siezures and i am on meds for it, but i have other bills that to be paid. I can not work at all. I am 46 years old and need my benefits each month. Please do not lower our social security. I am speaking just not for myself , but for everybody else that is on social security or disability.
Posted by: AL DuBay at 11/29/2009 11:37:35 AM
Im 63 and retired. Do the math folks .. If you dont take early retirement you lose big time. My break even age (the difference between 62 and 66 benefits) was 87 years old. I dont plan to live that old! Just in the last year, Ive lost eight friends who were younger than I am. One more thing. Why is the government penalizing people who retire early? You should be able to make as much as you want to without having to worry about going over a certain limit and losing benefits. Maybe once you reach full retirement age nobody wants you!
Posted by: Dave at 11/29/2009 11:44:13 AM
If I claim ss benefits at 62(early) and then go back to work part-time and stay under the $14,400 threshold, will my benefit amount increase at 66 and then 70 if I continue to work? Or will it freeze at the 62 level ?
Posted by: patincalifornia at 11/29/2009 12:44:28 PM
If born in 1945 in January, am I subject to the penalty? (The chart above is blank for my birth year). If the excess earned was from a business venture, is the earned income the gross or after deductions (profit)? Thank you for any insight on this. Is 1945 a baby boomer year? If not, why? (end of the war?) It seems I hear of the year 1946 as the official beginning.
Posted by: rayjoiner at 11/29/2009 01:24:51 PM
I do not understand teea's comment of 9-22. How is it we are being punished for getting older? It seems to me the opposite is true; we are rewarded for getting older. After reaching full retirement age, we are rewarded by no longer having an earnings test, and by receiving a larger benefit in the case something was withheld previously because of the earnings test. Also, we are rewarded with a higher benefit if we wait until that age to start receiving it.
Posted by: Mirnamik Jafarov at 11/29/2009 03:50:13 PM
I need benefits.
Posted by: Angela at 11/29/2009 04:21:44 PM
Can you claim any social security benefits at 54 years of age. If wife has been the bread winner spouse has little income?
Posted by: JOE GWYER at 11/30/2009 12:38:22 PM
My wife and I are both on social security total disability never to return to the work place. What do we do we make less then 18,000 a yr and don't work are have other income. Do we have to pay taxes? thanks for your help !
Posted by: Tony at 12/01/2009 11:37:03 AM
Very good article on the SS spouse benefits. It has raised several questions that perhaps you can answer. I am 63 turning 64 in February 2010, my wife just turned 63 in November of 2009. I am currently drawing SS monthly of approx $1,500.00, and with earned income of the max without penalities to my SS. My wife draws approx $130,000.00 per year now to boost her SS when she would stop working at either 65 or 66. She is the full owner of an S-corporation. We are currently saving as much cash as possible for the next few years before fully retiring. Questions: 1) She would like to draw SS now piggy-backing on my SS benefits, can this be done without penalities? 2) When can I go back to work earning unlimited funds and not be penalitized on my SS income? We are open to any suggestions or options. Thank you.
Posted by: kevin mccormally at 12/01/2009 01:11:28 PM
This is Kevin McCormally of Kiplinger's with an answer for JOE GWYER. If you and your wife's total income is $18,000 a year and it's all from Social Security disability benefits then you do not have to pay tax on the benefits. Social Security benefits are tax-free if the recipient's "provisional income" (defined as adjusted gross income, plus 50% of the benefits plus any tax-free interest) is less than $25,000 on a single return or $32,000 on a joint return. Since your total income is below those thresholds, your benefits are tax free.
Posted by: kevin mccormally at 12/01/2009 01:16:43 PM
This is Kevin McCormally at Kiplinger with an answer for patincalifornia. 1945 is in the table...between 1943-1954, so your full retirement age is 66. So, you would be subject to the earnings test if you claim benefits before then and continue to work. And, you're right, 1946 is considered the start of the baby boom generation, the year following the year World War II ended and servicemen returned home to start their families.
Posted by: kevin mccormally at 12/01/2009 01:20:24 PM
This is Kevin McCormally at Kiplinger's with an answer for AL DuBay. You've got a lot of company in thinking it makes more sense to take benefits as soon as possible. As I note in the story, 43% of men and 48% of women claim them at age 62. Of course the earnings test basically makes it impossible to claim benefits if you continue to work and make a significant salary.
Posted by: kevin mccormally at 12/01/2009 01:24:19 PM
This is Kevin McCormally of Kiplinger with an answer for cao. Try the link again. It works for me. http://www.ssa.gov/pubs/10153.html
Posted by: koolie32218 at 12/01/2009 08:51:15 PM
are there any future legislation to increase earning cap for retirees that retire at 62?
Posted by: kevin mccormally at 12/01/2009 09:53:54 PM
This is Kevin McCormally at Kiplinger with a couple of answers for Tony. First, the earnings test would apply to spousal benefits your wife claims on your records so, with $130,000 of earnings, she would forfeit all benefits. It would be as though she didn't claim the spousal benefits at all. And, based on your age, your full retirement age is 66, so the earnings test will disappear for you on your 66th birthday. You could earn any amount after that time without jeopardizing your benefits.
Posted by: kevin mccormally at 12/01/2009 10:09:14 PM
This is Kevin McCormally at Kiplinger with an answer for gk thompson. Your benefit will be reduced by 5/9ths of one per cent for each month you retire prior to age 66. So, if you claim benefits the months early, the reduction would be 1.66%. See http://www.ssa.gov/OACT/quickcalc/early_late.html for more details.
Posted by: kevin mccormally at 12/01/2009 10:13:07 PM
This is Kevin McCormally at Kiplinger with an answer for Jean. Yes. The earnings test disappears when you reach your full retirement age. So, once you hit 66, you can earn any amount and still keep 100% of your benefits. If you were to delay claiming benefits until after your full retirement age, you'll get the delayed retirement, which hikes benefits by 8% for each year you delay. Hope this helps.
Posted by: kevin mccormally at 12/04/2009 11:47:23 AM
Kevin McCormally at Kiplinger's with a comment for LORD JARAA. Please go back to bed and see if you can get up on the right side of it next time. I can't figure out what you're trying to say...but I can tell you're in a foul mood.
Posted by: MariaMani at 12/06/2009 02:15:34 PM
Too late for me. I lost about $ 500 due to this catch 22 sitiuation when last two years.. I am 67 now and in reasonably good health; , I wonder if my decision is good to postpone my retirement to 70, working PT making about 10-15K and collecting widow benefits (about $900) instead of the $1806 I could collect now. In 2012 when I am 70, I can collect $2200 based on my own record.
Posted by: kevin mccormally at 12/09/2009 10:06:14 PM
kevin mccormally here at kiplinger with an answer for koolie32218. the earnings cap usually goes up every year, along with inflation. It was just $10,080 in 2000, for example, compared with $14,160 for 2009. The figure will stay the same for 2010, though, because according to the numbers Social Security uses, there was no inflation between 2008 and 2009. Hope this helps.
Posted by: Marty at 12/11/2009 03:17:50 PM
When I applied for benefits at age 63, I wanted the spousal benefit from my previous marriage of 20 years. My former husband who retired at 62 always paid the max for Social Security and I was always in lower paying jobs or jobs exempt from social security (churches). I was shocked when they told me my benefit was more than half of his. I said I didn't care as I would go to mine at age 66. I was told I couldn't do that. Now after reading your info, I think I was misled. Can I undo this and go the way I wanted to orginially. My benefit is $800 a month and I am now 65 and 1/2. Thank you for your help.
Posted by: Marty at 12/11/2009 03:35:34 PM
What is the maximum monthly social security benefit at age 66?
Posted by: kevin mccormally at 12/12/2009 09:17:38 AM
Kevin McCormally of Kiplinger here with an answer for Marty. The maximum Social Security benefit for someone retiring at full retirement age -- 66 -- in 2009 is $2,323.
Posted by: Marion at 12/20/2009 05:25:52 PM
After retiring Oct 1, 09 at age 64 (due to health issues) we were told that my husband could earn the $14,160 on top of his SS payments, like everyone else. Now we got a letter saying that he won't get a check for two months because he made over $1180 after retirement in the last few months. Nobody bothered to tell us that they figure things out differently depending on your retirement month. Now we have no income for two months, which makes it hard to survive. Who dreams up the backwards rules to our SS system? And why don't they explain things the right way when one retires.
Posted by: P.wargo at 12/20/2009 08:28:44 PM
Mr. Mccormally, got a challenging for you, my divorced mother is 65, my father is 62 and still working, mother was mostly a housewife and never really paid into the system. We were told she would get $1060 per month (half of my father's benefit) on Dec 5. No deposit came and instead we got a letter stating that although my mother's spousal benefit is $1060, but this is being withheld because of my father's estimated earnings for 2009. Is this correct? I was informed by the first social security person we met with that told us she would get the $1060 starting Dec that it didn't matter whether he is working or not, I looked further on the internet and it states that the "earnings test" doesn't apply if you are at full retirement age.. the catching being my mother is 65 and father is 62.
Posted by: David at 02/09/2010 04:38:09 PM
Sounds like waiting is the thing to do but - what if a decrease in benefits occurs or a there is a decrease in inflation adjustments or just a plain freeze in benefits. All of these have been discussed at one time or another and if one or more of them does occur then waiting could be costly. They may also reduce benefits based on earnings other than SS and the result would be those who can afford to wait would be just the ones who are cut the most. Sounds like the decision is a gamble.
Posted by: Ms Brown at 02/27/2010 12:08:21 AM
I am asking to see if I understand how this works I will be 62 in a couple of years My deceased husband would have turned 66 in that same year. My understanding is that I will be able to file for his social security (his age 66-full benefits) when I turn 62?
Posted by: sheri b at 03/02/2010 08:41:12 AM
I drew SS disabilty for about 4 years b/c of mental/medical issues, unsure which issue was biggest factor, later got some help and went back to work, now have good job and have worked 8 years making decent income, have paid taxes each year. how will this affect my SS when i retire 10 years from now, (if my health holds out), will i be able to draw SS retirement after disability????
Posted by: M Rogers at 03/09/2010 01:19:42 PM
I am at full retirement age and will be filing for SS benefits soon. My concern is, if I draw from a retirement account, 401-k or an IRA, will my monthly SS benefit be reduces by the amount of the withdrawal? If that is the case would it be possible to transfer or gift the funds in either the 401-k or an IRA to my children without the SS monthly benefit being reduced? If that isn't an option can I withdraw the retirement funds prior to applying for SS benefits, pay the tax and deposit the funds into a personal account and not have the SS benefit reduced? Thank you.
Posted by: D M at 03/11/2010 10:30:26 PM
My friend, a retired teacher, taught in MA and is not eligible to collect Soc. Sec AND her pension (perhaps due to legislation covering doubledipping?). Also, she doesn't have enough credits to collect Soc Sec on her own (from nonteaching employment). She actually has lived in a nearby state, not MA.. Since her husband is eligible for Soc Sec, can she get spousal Soc Sec benefits without reducing her school pension?
Posted by: Major at 05/04/2010 08:29:33 PM
What if you get laid off and start drawing unemployement benefits while drawing your SS benefits at 65, do the unemployemnt benefits count towards the $14,160 earnings level? I know that drawing SS benefits does not effect the unemployement benefits amount.
Posted by: michelle at 05/24/2010 10:48:01 AM
...my ex husband of 17 years passed away last july. wil i be able to get his social security ? i am 54years old and he was 51. i am on ssd/ssi?
Posted by: Diane at 06/16/2010 11:13:54 PM
How long do you have to married to collect his benefits if and when he passes away.
Posted by: sherri at 08/07/2010 02:46:26 PM
Is there anything I can do to boost mine even though I'm not 65(44) but am on disability?
Posted by: William E. Moseley at 08/07/2010 03:02:07 PM
I worked two jobs, one with a pension plan and because I collect a pension frrom that job SS will not pay me the full benefits I earned from the other. Please explain why and is there any appeal available?
Posted by: Dan at 08/07/2010 03:05:10 PM
I started paying into Social Security at age 15, at 55 I got a print out showing my year by year contributions for 40 years. I took the money I contributed,and treated it as if I had put it into the Bank at 3% per year interest compounded anually. At that point in time, the interst on my contributions would have paid me $2500.00 per month, and the principle would go to my heirs if I died. Under Social Security at that time I would get $1740, and my survivors would get $500 if I died. Remember my employers paid in an equal amount, if that was invested also, the other $2500 per month would pay for health care! Of course a private system will never be implemented in this country, Congress couldn't rob it like they did with the SSS Trust Fund. Thats why it's going broke, it's full of IOU's!
Posted by: daryll morgan at 08/07/2010 03:29:07 PM
hi. my name is daryll i have been fighting soc,sec, for 5 years being denied for the most dumbest reasons i am totally disabled by many doctors i have 5 of their qualifying disabilities so why do i have to live with no income at 53 years old? just have to put this out there thanks for reading...
Posted by: ruth at 08/07/2010 03:38:59 PM
well how does the ss office make a decision based on the age of retirement, 70 come on most guys will work because they have to, not because their bodies want them to, you know it should be that instead of taking 1 dollar off the amount you make...you let us have a gov ira account and put it there to help when times are tough damn???
Posted by: ruth at 08/07/2010 03:40:46 PM
Wht happens when you become disabled early and collect ssi when you becaome 66 does it increase and change to retirement? or does the amount you get now decrease or stay the same?
Posted by: Ofelia A. at 08/07/2010 03:42:51 PM
I don't understand SSA why they want me to paid paid back the money, if I want it (to) stop so that I can earn more for when I turn 66 at age of retirement, It should not make any difference it was my husband's money he earnrd it was not given to him he earn it by working 30 years for the State Of California now I am only 62 and can't work more then 20 hours a week so that I can't go over my 1180 a month allowance from SSA. DO YOU THINK I CAN GET HELP ON THESE ISSUE? AN IF SO PLEASE LET ME KNOW
Posted by: ruth at 08/07/2010 03:43:10 PM
you know if they took 1 dollar out of every american on ssi ssd or any benefit or working american they would have enough for health care costs and plans to help all of us. think about it 1 dollar out everyone goverment included.
Posted by: Frank Valle at 08/07/2010 04:13:40 PM
I'm a retired military. When I reach 66 yrs old and apply for full SS benefits, will my SS payments or my military retirement pay be off set or reduced because I'm drawing military retirement pay and SS retirement pay? And if my SS retiremant benefits are affected how much is the offset ???
Posted by: Regina at 08/07/2010 04:52:40 PM
I guess what I'm not understanding is I worked 32 yrs to earn my Federal Retirement which I receive monthly. God was good to me and I'm healthy and I love to work, at something. So I became a Schoolbus Driver for Special Needs children. I'm almost 10 yrs into a second career. I turned 62, went to have my SS calculated and I'm severely penalized on my SS for having earned a Fed Ret annuity. I've paid my necessary quarters into SS and now I can't get my own money back as SS told me would happen when I turned 62-66. My Fed Ret is a complete separate entity from civilian sector SS. I've faithfully paid into both funds and our great government penalizes me for working!!! Does anyone know of any legislation on the floor, whom I can contact to voice my opinions?...Thanks
Posted by: Sweet Rita at 08/07/2010 06:08:54 PM
I have been getting $78 a month since I retired at 65 years. As medicare goes up I still get $78. My SS started at $120 and has increase to $160 but I always get $78, but I pay tax on the $160 amount. I tried to draw on my husband SS (we were married 20 years before he died at age 84.), but because I draw an retirement from Texas Retirement System, I can not draw even half of my husband SS, while he was living or dead. It seems like I should draw from his income instead of my total income.
Posted by: fredipuppy at 08/07/2010 07:22:19 PM
Oh no ! Does that mean pension earnings too?
Posted by: diane d. at 08/07/2010 08:07:10 PM
I'm 62, Was going to retire, found out I would only get 649.00 a mo. But I would get extra ( don't know how much) for my grate grand daughter I have cuostody of since her mom was murdered. I would get A little more if I wait Till I'm 66. Should I apply with the apply and suspend strat. or just wait till the age of 66. Also are they rasing the age limit?
Posted by: Elaine at 08/07/2010 08:15:15 PM
I have COPD (Emphysema and Chronic Bronchitis) so I started collecting at age 62 but kept working for 2 years. I now collect the Spousal Benefit which is $300 more than I collected on my own work record. I feel I did the right thing. I think if one has a chronic medical problem they should do as I did.
Posted by: pete marks at 08/07/2010 08:40:29 PM
my,question,is how-can-the-goverment,pay-social benifit-to-people-who-adopt their own-kin-because-the-parent-do-not-wont-them,i see-nothing-right-with -this. grand-parent-adopting-own-grand-children. this is an insulate to the hard working people-who ,struggle-to provide for-their family.
Posted by: Arlan H. at 08/07/2010 08:53:28 PM
I was born in 1942 so my retirement age was 65 & 10-months. I waited until then to draw and got my first check in July of 2008. While I was at S.S. office I was told you could make as much as you wanted with no penalty. Later I found out that there is a minumim amount you can make (and) they tax your 80% of Social Security at your going tax rate. What is the minimum amount? I can't live off the social secuity as I have a son am trying to get through college.
Posted by: Jerry F. at 08/07/2010 09:55:43 PM
I am a retired federal employee. I understand that my SSA benefits will be reduced by the amount of my annuity basically allowing me to receive no SSA. This is even though I have long since accured by 40 quarters and have worked steady for six years after my post federal government retirement. Also at 61 years old, I plan to work another 5 yers. is this accurate?
Posted by: beverly s. at 08/07/2010 11:43:27 PM
If i work until age 65 will I recived my full amount at age 65, and can i work and make as much as I want at age 65? Or will i have to wait until age 66? I was born in 48 my husband is collecting ss now age 70 he got sick at 68