Q: I am working through December and have completed my Social Security online application to start retirement in 2016. Will 2015 earnings be used to determine my retirement amount?
A: Your best 35 earning years, adjusted for inflation, are used to compute your SSA retirement amount. Assuming your 2015 earnings are one of these best 35 years, they will be used.
Employers report employee earnings to Social Security annually with W-2 information. Since the employer deadline for providing W-2’s to Social Security is the last day of February (longer if filing electronically), your 2015 earnings will not be immediately available. This is not a problem.
No matter how many years a person has been receiving Social Security benefits, retirement amounts are automatically recomputed every year when new earnings are posted to his or her work record. If new earnings increase benefits, the new amount is retroactive to the start of a year. Reviews generally occur in the fall, after most W-2’s for the prior year are posted to individual work records. This means your 2015 earnings will be on your work record in the fall of 2016, with any resulting benefit increase received retroactively to January 2016.
Especially for people working part-time after retirement, new earnings do not guarantee an increase in monthly Social Security benefits. For an increase, new earnings would have to be better than one of the 35 years already used and increase your overall average earnings.
While emphasizing that all new work is automatically reviewed for a benefit increase, you can make this occur faster by providing a copy of your W-2 to your local Social Security office and requesting a review. Either way, it all comes out the same.
Did you know? Employers can electronically transmit W-2 data to Social Security through SSA Business Services Online (BSO) In addition to reducing paperwork, the filing deadline is extended to March 31 when filing W-2 data electronically. Firms providing payroll services need only register once to transmit W-2 date for all clients. Learn more or register for this free service at www.socialsecurity.gov/thirdparty/business.html.