Receiving Social Security? Work In 2011? Read This.

As recently as last week, several times I have mentioned that ongoing employment after retirement has the potential to increase your Social Security benefit. 

To determine if payment amounts should increase, work records of everyone receiving Social Security benefits are automatically reviewed each year that new earnings are posted to their record. 

To increase monthly Social Security benefits, your new earnings have to be higher than earnings in a year already used to compute your retirement amount. If not higher than earnings already used, new wages will not change your existing amount. Your best 35 years of gross wages and net self-employment earnings, weighted for inflation, are used to compute your Social Security retirement amount.

An initial computer run to add in new wages and self-employment earnings for 2011 has been completed. Most people who are due a benefit rate increase based upon additional earnings for 2011 or earlier will receive the increase in their Social Security benefit for November 2012. Remember that the Social Security payment for November is received in December. Related retroactive increases covering earlier months of 2012 will also be included in the benefit for November.

More than retirement benefits could be involved. For example, if a person died during 2011 or earlier in 2012, it is possible that ongoing Social Security survivors benefits on that record could increase due to 2011 earnings if they were not previously obtained.

This automatic initial computer run has identified and processed many, but not all, of the cases where an increase because of 2011 earnings is due. Individual case records requiring additional review are always present, to be processed on an ongoing basis.

Individuals receiving a benefit increase based on the addition of 2011earnings will receive a letter explaining the increase.  

Any increase from the addition of 2011 earnings is separate from the upcoming Social Security cost-of-living adjustment (COLA) increase. The 1.7 percent COLA increase will begin with benefits that more that 56 million Social Security beneficiaries receive in January 2013. Separate letters are being mailed to explain COLA related changes.  

Reminder: To receive letters about your benefits, one of your reporting responsibilities is to notify Social Security when your mailing address changes, even though your payments are electronically received by direct deposit. Social Security benefit notices are sent by surface mail through the U.S. Postal Office, not by email.