What is the maximum 2015 Social Security retirement amount?

For the last several years, I have published the maximum monthly Social Security retirement amount payable during the coming year. This generates a lot of interest so today I am providing the 2015 amount.  

To be clear, this will be the maximum amount payable to a person retiring exactly at full retirement age (FRA) in 2015. Full retirement age is 66 for people born in 1943 – 1954. It does not include reductions for early retirement or increases for delaying retirement past past full retirement age. Learn about these increases, called delayed retirement credits, here. 

The maximum monthly Social Security retirement amount changes each year. The 2015 maximum is more than the 2014 maximum, but will be less than the 2016 amount. Several reasons are responsible for this with a major one being that another year of potentially higher earnings becomes available for use in computing retirement amounts. Not only might actual earnings be higher but, depending on the maximum taxable earnings base for that year, more of the earnings could be credited for use in the Social Security computation.

An early step in determining a retirement amount is to compute the person’s amount at full retirement age, without reductions or increases. To do this, Social Security uses the person’s best 35 years of earnings, weighted for inflation. Then, to compute the amount for the person’s actual retirement date, Social Security adjusts the full retirement age amount by the number of months that the person is away from FRA. The FRA amount is reduced or increased if the person is younger or older than FRA. 

So, what is the maximum 2015 Social Security retirement amount? If starting Social Security retirement in 2015 exactly when full retirement age is reached, and if the person earned at least the maximum SSA taxable earnings (the taxable base) in each of the 35 years used in the calculation, then the highest 2015 Social Security retirement amount is $2,663 per month. For comparison, the highest 2014 Social Security retirement amount is $2,642 per month. The estimated average SSA retirement amount as of January 2015 is $1,328 per month.

Knowing the highest 2015 Social Security retirement amount is interesting. Estimating your own retirement amount is more useful. Do so with the calculators included in the SSA Retirement Planner 

The Retirement Estimator is very good because it uses your actual Social Security earnings record. Automatic estimates are shown for age 62, your full retirement age, and age 70. You can adjust these for different ages or different future earnings.  

To adjust your estimate by the number of months that you are away from FRA use the “Compute the effect of early or delayed retirement” calculator. There, primary insurance amount is the same as amount at full retirement age, and normal retirement age is the same as FRA.   

Want to see the earnings on your Social Security record? Create a personal my Social Security account and view your online Social Security Statement. The Statement provides your earnings record, plus family estimates for SSA retirement, survivors and disability benefits. 

Ready to file for your Social Security retirement? Go online.


2015 SSA taxes and taxable earnings base

Q: How much does a person have to earn in 2015 before withholding for Social Security taxes end? 

A: In 2015, the maximum amount of earnings subject to Social Security tax is $118,500. In 2014, this amount was $117,000. People earning above the annual maximum taxable level stop paying SSA payroll tax once that amount is reached.   

Of the estimated 168 million workers who will pay Social Security taxes in 2015, about 10 million will pay higher taxes because of the increase in the taxable maximum. Medicare payroll tax continues on all earnings.  

The taxable earnings level can change annually based on changes in the national average wage index. To reflect the general rise in the standard of living over a working lifetime, changes to this average wage index are used when future SSA benefits are computed.   

From 1937 to 2015, changes to the amount of earnings subject to Social Security earnings tax are here. 

The 2015 Social Security tax is set by statute at 6.2 percent for employees and employers, each. An individual with wages equal to or larger than $118,500 will pay $7,347.00 towards the SSA retirement, survivors and disability programs in 2015, and his or her employer would contribute the same amount. The tax rate for self-employment income in 2015 is 12.4 percent. 

People earning less than the 2014 maximum tax base will not pay more in 2015 because SSA and Medicare tax rates are not changing. They have not changed since 1990. 

The Medicare tax rate is an additional 1.45 percent on all earnings so the total employee and employer tax rate is 7.65 percent. For the self-employed, it is 15.30 percent. 

Historical Social Security and Medicare tax rates are here.

Social Security benefits and citizenship

Q: I am a legal resident alien, working full-time and paying Social Security taxes on my earnings. Will I be able to receive Social Security benefits at retirement? 

A: Yes, assuming you work long enough and meet all usual requirements. United States citizenship is not required to receive Social Security benefits. Your future retirement, or payment of any Social Security benefits through your work record, will be based largely on your work history, not citizenship. You will need to prove legal admittance into the country when applying for benefits. 

Visitors to the United States can usually obtain a Social Security number (SSN) only if authorized to work by the Department of Homeland Security. Work authorization is routinely verified when a person applies for an original, name change correction or replacement card.  

If you become a citizen in the future, contact Social Security to update your citizenship on your Social Security number record. This will make a future application for retirement benefits easier, especially if you use the online application because, since your record would show United States citizenship, legal admittance would not have to be established.  

Learn the documents needed and print the Social Security number application at www.socialsecurity.gov/ssnumber/. Documents submitted must be originals certified by the issuing agency, such as Homeland Security, and are immediately returned. Self-made photocopies or notarized copies are not accepted.

To protect your personal information, SSN applications cannot be submitted electronically. No fees are involved for any SSN action. Protect yourself by going to the official Social Security website, www.socialsecurity.gov for SSN information.


Spousal benefits – file and suspend

Q: My wife’s Social Security retirement will be much more than mine. If I start my own Social Security retirement before she starts hers, can I apply later as a husband on her record once she retires and applies for benefits?  

A: Yes, a husband or wife can start their own SSA retirement first and then look into spousal benefits when their wife or husband retires.  

Social Security benefits to a husband or wife are based on a comparison of the couples individual full retirement age (FRA) amounts, not their monthly retirement amounts. To learn about benefits to a husband or wife, including to a divorced spouse, go to the Retirement Planner section of the SSA website at www.socialsecurity.gov/retire2/, and then to “how members of your family may qualify for benefits.”  

Age when starting Social Security is important. If younger than full retirement age (FRA) when filing for retirement, a person is considered to also be applying as wife or husband at the same time, assuming both members of the couple will then be receiving benefits. Her or his own retirement amount, reduced for age, is received first. If spousal benefits are payable they, also reduced for age, are added to equal the higher total amount.  

A different opportunity for spousal benefits exists if either husband or wife has reached full retirement age (FRA), especially if that person plans to continue working full-time past FRA. Generally, members of a person’s family can receive benefits on his or her record only when that person does. For an exception, see “If you or your spouse are full retirement age” in the spousal benefit section. If a person is at least FRA, and does not want to start Social Security retirement yet, an exception called “file and suspend” allows payment of spousal benefits on their record while the person delays the start his or her own Social Security retirement. Past FRA, delaying the start of your own retirement benefit lets the amount increase up to age 70 due to delayed retirement credits 

If this “file and suspend” idea is of interest, remember that the annual earnings test ends with the month you reach FRA so another option could be to file for your Social Security retirement while continuing to work. You would not gain delayed retirement credits but you would receive all your retirement and, if eligible as a spouse, your husband or wife would also receive through your record. Each of these ideas has advantages or disadvantages based on your personal situation.


Working? Retiring? Options if reaching full retirement age in 2015.

Do you reach your full retirement age (FRA) in 2015? Still working? Thinking about starting Social Security in 2015?

What are some options to consider?  

When to start Social Security benefits is always a popular topic during retirement seminars. In fact, there is no one overall best time that fits everyone. It is an individual decision. 

Last week I posted annual retirement earnings test information for 2015. Noted there, earnings test amounts vary based on whether you are younger than full retirement age (FRA) for the entire calendar year, reach FRA during the year, or are at least FRA. 

Today I am reviewing some options to consider for a person planning to work during 2015 and reaching full retirement age of 66 during 2015. FRA varies with year of birth. It is age 66 for those born from 1943 – 1954. 

If you reach full retirement age in 2015, receive Social Security and are still working, Social Security deducts $1.00 in benefits for every $3.00 you earn above $41,880. Earnings for the retirement test include only your own gross wages and net-income from self-employment. Beginning with the month you reach FRA, earnings no longer reduce your benefits.  

Assume our person, Happy Camper, expects to earn $41,000 in 2015, below the annual earnings test level for a person reaching full retirement age in 2015. Happy reaches FRA in May. 

One option: Since Happy will earn below his retirement test level, he can start Social Security retirement effective with January 2015 and receive benefits for all months of the year even though he continues working. On the plus side, this gets him more monthly benefits. On the negative, this results in a retirement benefit permanently reduced by 4 months with a reduction of 2.22 percent of his full retirement age amount. He gets 97.78 percent of his FRA amount.

Note: To learn percentages for this example, I used the “compute the effect of early or late retirement” calculator, one of the SSA Retirement Planner tools. This calculator uses the terms “normal retirement age” for FRA and “primary insurance amount” for the FRA amount. 

If Happy expects to earn more than the earnings test level of $41,880, this could still be a useful option for him. He would have to compare what he loses due to earnings (the $1.00 for every $3.00 noted above) to what he gains in payable benefits. 

Another option: Since Happy Camper is still working, he could start Social Security effective with May, when he reaches full retirement age. The earnings test ends at FRA so Happy could continue working and receive unreduced Social Security retirement from then on. On the plus side, he does not have any reduction in benefits. On the negative, he gives up the benefits payable in the above option. 

Yet another option:  If Happy Camper plans to work for some months (or longer) past FRA and then retire, he can defer his Social Security until he actually retires. On the plus side, each month of delay gains a small increase from delayed retirement credits. On the negative, Happy again gives up payable benefits.

On a monthly basis, delayed retirement credits increase benefits by 2/3 of 1 percent of the full retirement age amount, or 8 percent annually, up to age 70. Use the previously mentioned “compute the effect of early or late retirement” calculator to compute this.  

The retirement earnings test applies to the full calendar year with a special, one time, monthly earnings test available. The monthly test can apply when a person retires during the year, after already earning over applicable retirement earnings test amounts. It was not considered in the above options since Happy continued working through at least FRA. 

These examples are only to discuss some options involving the earnings test. For simplicity, factors such as the potential for family benefits through Happy Camper’s record were not added in. Social Security benefits are just one thing to consider in your retirement planning. For examples, Happy Camper’s taxable income varies with these options and his life expectancy could influence his decision.

What is best for you?

Annual retirement earnings test amounts for 2015

Q: In 2015, how much can I earn before my Social Security retirement is reduced? 

A: The annual retirement earnings test concerns how your own employment earnings in a year affect your Social Security in that year. The earnings test includes only your personal gross wages or net self-employment for the full calendar year. Your other income or income of a spouse is not applicable.

Three annual earnings levels exist, all based on your full retirement age (FRA). FRA depends on your year of birth. Learn yours here. 

Earnings test amounts for 2015 have changed from 2014. They are: 

  • If under full retirement age (FRA) for the entire calendar year, $1 in benefits will be deducted for each $2 earned above the 2015 limit of $15,720.
  • If you reach FRA in 2015, $1 in benefits will be deducted from each $3 earned above the 2015 limit of $41,880, but only for earnings before the month you reach FRA.
  • No earnings limit exists starting with the month you reach full retirement age.  

Are you starting Social Security retirement in 2015? People retiring mid-year may have already earned over the annual limit for their age. To allow the start of SSA retirement regardless of expected calendar year earnings, there is a special one-time rule based on monthly earnings. This applies for one year, usually the first year of retirement, and lets people receive Social Security for months that they are retired.  

For example, a person retiring in 2015, at least age 62 but younger than full retirement age the entire year, can receive retirement for months that gross wages do not exceed $1,310 even though calendar year earnings will be above retirement test amounts. Similar rules apply for self-employment.   

Consider the retirement earnings test before beginning Social Security. If your plans include working part-time, will those earnings reduce benefits for the year? Can you limit your earnings to stay below earnings test levels? Is retiring with part-time work your best option or should you continue working full time, without SSA benefits, for the immediate future? Keep in mind that Social Security retirement is permanently reduced if started when younger than FRA. 

Learn about the earnings test, including the special, one-time, monthly test, at www.socialsecurity.gov/retire2/whileworking.htm. Examples of how the earnings test is applied are there. 

Reminder: Do you receive Social Security now? Do you expect to earn over your applicable earnings test amount in 2015? If so, provide your estimated earnings amount to SSA early in the year so that benefits can be adjusted in advance to avoid incorrect payment. You can change estimates as needed.

The earnings test does not apply to people receiving SSA benefits due to their own disability. If receiving due to disability, contact Social Security before working.


Compare your retirement plans with the online estimator

Q: The online Social Security Statement retirement estimates cannot be changed to consider different plans. Can I estimate my retirement amount using different earnings or ages? 

A: Yes. Estimate the effect of lower or higher future earnings, or retirement at different retirement ages, with the Retirement Estimator at www.socialsecurity.gov/estimator/.  

One of the Social Security retirement planning tools in the Retirement Planner section at www.socialsecurity.gov/retire2/, the Estimator connects to your actual Social Security earnings record to provide personal retirement estimates at age 62, at your full retirement age (FRA), and at age 70. 

Just as on your Statement estimate, the initial Retirement Estimator reply assumes your most recent wages or self-employment earnings will continue into the future. Unlike the Statement, with the Estimator you can change the default reply to obtain estimates at different ages or with different future earnings amounts. 

Comparing multiple estimates for any given age based on the initial earnings level and then with lower or higher earnings provides an approximate result of different earnings on your future SSA retirement amount. With separate requests, you can estimate benefits based on either lower or higher earnings. Future earnings of more than one amount cannot be used in one estimate.

Your actual Social Security retirement monthly amount is based on your best 35 years of employment and your age, in months, compared to your full retirement age. The Retirement Estimator provides estimates at different ages. 

For estimates in specific months, other online tools are available in the Retirement Planner section, www.socialsecurity.gov/retire2/. If your interest is only for months before your full retirement age (FRA), use the chart for your FRA. To consider months either before or after your FRA, go here.

You can use the Retirement Estimator if you are enrolled in Medicare, but not if you have applied for or receive SSA benefits. The Estimator reply does not show your personal information or earnings record. 

To view your Social Security Statement create a my Social Security account at www.socialsecurity.gov/myaccount/. Your Statement will also show your earnings record and family benefit estimates not available elsewhere.



Should Mom give me the money?

Q: I am 15 and receive Social Security, which goes to my Mom. Should she should give me the money? 

A: When a person younger than age 18 receives Social Security or Supplemental Security Income (SSI), the payment is almost always sent to an adult on their behalf rather than directly to the child. This adult is called the representative payee and it is his or her responsibility to direct the management of the funds. 

Representative payees are also appointed for adults who are incapable of managing their benefits. Payees are often family members but can be different people or even an organization. 

In the booklet A Guide for Representative Payees, a new payee is instructed in how funds should be used and how funds not immediately needed should be held for the future. Payees are told about required reports to Social Security about the funds. Representative payee instructions go into detail about how funds are to be used.  

Should your Mom give you the money? Not directly but the funds must be used for you. Just handing the benefit money to you could mean that she was not exercising proper control of the funds in your best interest. 

A key representative payee responsibility is to know beneficiary needs so that the Social Security or SSI funds can be best used for the person’s care and well-being, in particular making sure that day-to-day food and shelter needs are met. Having basic needs of food, shelter and clothing met indicate benefits are used for you even if you do not directly handle the money.  

Social Security benefits for children might continue or end at age 18. If they continue past age 18, the child often starts to receive them directly, without having a representative payee. Consider asking your Mom to share or create a budget with you. This would show you how the funds are used while giving you practice in handling money.

Reporting possible Social Security fraud

Q: Someone I know receives Social Security disability and is working part-time. How can this be looked at without me providing my name? 

A: Social Security takes potential fraud very seriously. I will write about that in a moment but first will say a few words about this question of working and disability benefits. 

It is a wrong, but popular, assumption that people receiving disability benefits cannot have a job. 

In addition to non-medical requirements, Social Security disability or Supplemental Security Income (SSI) disability have a strict, work based, definition of disability and relatively few people found eligible eventually return to work at levels high enough to end benefits. Despite this, people receiving disability related benefits are encouraged by the Social Security Administration to return to work and many do on a limited basis. If you receive disability benefits and start to work, contact Social Security to report the work and learn the specific details you need to know. 

Rules are different for Social Security and SSI disability but both programs have multiple work incentives to help people return to work. Beneficiaries are required to report work activity. Social Security disability reporting requirements are here; SSI requirements here. 

Returning to the reporting fraud question, you are encouraged to do so through the Social Security Office of the Inspector General (OIG). The direct website of OIG is http://oig.ssa.gov/.  The OIG site is easily reached through the “contact us” links on the Social Security homepage, www.socialsecurity.gov. From the “contact us” page, click on “Report Fraud, Waste or Abuse.” 

The OIG website  has lots of information including some situations, with examples, that may be considered as fraud, waste or abuse against the Social Security administration. Several of these are:

1. Making false statements on claims: When people apply for Social Security Benefits, they state that all information they provide on the forms are true and correct to the best of their knowledge. If a person reports something they know is not true, it may be a crime

2. Concealing facts or events which affect eligibility for benefits: It may be considered fraud if a person makes a false statement on an application or does not tell SSA of certain facts that may affect benefits.

3. Misuse of benefits by a representative payee: When a person receiving benefits cannot handle their own financial affairs, Social Security appoints a relative, friend, or another individual or organization to handle their Social Security matters. This person or organization is called a Representative Payee and it may be a crime if a payee misuses these benefits.

4. Buying or selling counterfeit or legitimate Social Security cards.

This is not a complete list. 

To report a suspected fraud, follow the instructions here. You can do this online or in other ways. Note what information will be requested. You can remain anonymous, but that might limit an OIG investigation.

Importance of Social Security

Social Security benefits were never intended to provide your full retirement income. Under current law, if you have average earnings, your Social Security retirement benefits will replace about 40 percent of your pre-retirement earnings. The percentage is lower for people in the upper income brackets and higher for people with low incomes.

Despite this, 65 percent of SSA beneficiaries over age 65 received at least half of their income from Social Security in 2012.

To be more specific, in 2012, 87 percent of married couples and 86 percent of nonmarried persons aged 65 or older received Social Security benefits. Social Security was the major source of income (providing at least 50 percent of total income) for 52 percent of aged beneficiary couples and 74 percent of aged nonmarried beneficiaries.  

Social Security was 90 percent or more of income for 22 percent of aged beneficiary couples and 47 percent of aged nonmarried beneficiaries.

For the above chart, “An aged unit is a married couple living together or a nonmarried person, which also includes persons who are separated or married but not living together.”

Total income excludes withdrawals from savings and nonannuitized IRAs or 401(k) plans; it also excludes in-kind support, such as Supplemental Nutrition Assistance Program (or SNAP, formerly known as food stamps) benefits and housing and energy assistance.

Source for this information is the publication Fast Facts & Figures About Social Security, 2014. The chart shown is from the section “Income of the Aged Population.”

Lots of Social Security and Supplemental Security Income information is in this publication. I think it is interesting. Perhaps you will too.