Young people get Social Security

Regular readers know that Social Security benefits people of all ages. Highlighting information for children under the age of 18, at the end of 2013 about 3.2 million children under the age of 18 were receiving an average monthly benefit of $534 because one or both of their parents are disabled, retired or deceased.

When a parent becomes disabled or dies, Social Security benefits help to stabilize the family’s financial future. In fact:

About 325,690 minor children of retired workers were receiving an average monthly benefit of $615.

About 1.2 million minor children of deceased workers were receiving an average monthly survivor benefit of $806.

About 1.7 million minor children of disabled workers were receiving an average monthly benefit of $328.

 More about Social Security protection for young people is at http://www.socialsecurity.gov/youngpeople/

 

 

April is Financial Literacy Month

April is Financial Literacy Month, the perfect time to examine your saving habits and ensure that you are on track for a comfortable retirement. Financial planning can put your mind at ease, but getting started can be overwhelming. 

If you have not begun saving for retirement, now is a good time to start, no matter what your age. Whether retirement is near or seems a lifetime away, now is the time to begin savings so that time and compound interest works to your advantage.

Get a good estimate of your future SSA retirement amount with the Social Security online Retirement Estimator, one part of the SSA retirement planner. The estimator connects to your actual work record to provide a personal estimate. You can change the default estimates for those more in tune with your actual plans. 

For those years from retirement, create a my Social Security account and use it to view your Social Security Statement. The Statement contains your earnings from your Social Security record but, more to the point of financial planning, has estimated personal and family benefits should you become disabled or die. This information helps you arrange other parts of your financial planning.

Social Security personnel cannot assist with financial planning. Select your own helpers for this. Two websites to help you get started are www.mymoney.gov,the official U.S. government website dedicated to teaching Americans the basics of finances, and the Ballpark Estimator at www.choosetosave.org/ballpark, part of the American Savings Education Council program, which includes the Social Security Administration.

These sites, and others like them, are not just about savings for retirement. There are reasons to save for every stage of life. 

April is Financial Literacy Month. Now is a good time to review your existing plan, or start one.

 

Annual retirement test background

How much can I earn and still receive Social Security” has always been a popular topic for questions. The retirement earnings test, also called the annual earnings test, describes how your own employment earnings from gross wages or net self-employment income can reduce Social Security payments to you during the year.

Details about the retirement test for 2014 are in the Social Security retirement planner section and are only indirectly today’s topic.

Today, retirement test restrictions end with the month a person reaches full retirement age (FRA). Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings. This is a relatively recent change, only taking place in 2000. The retirement test still applies to beneficiaries not yet FRA.

The final version of the Social Security Act of 1935 contained retirement test language, stating that “Whenever the Board finds that any qualified individual has received wages with respect to regular employment after he attained the age of sixty-five, the old-age benefit payable to such individual shall be reduced, for each calendar month in any part of which such regular employment occurred, by an amount equal to one month’s benefit.” Recall that at this time, age 65 was the Social Security retirement age since reduced benefits did not yet exist.

Starting with the 1950 Amendments, the retirement earnings test ended at age 75. From that point on, it was established that the retirement test need not always apply. 

Over years, additional changes were made to the retirement test ending age as well as allowing partial payment depending on how much one earned. Until the 1960 Amendments, earnings over exempt amounts stopped benefits completely with the full benefit withheld when limits were exceeded.

When I started with Social Security, the retirement test applied until age 72. Several years later it eventually went to age 70 as part of the 1977 Amendments. You can read the legislative history of the retirement earnings test here.

So, when did the retirement earnings test end for people at full retirement age?

In his 1999 State of the Union Address, President Bill Clinton stated that the Social Security retirement test should be eliminated. Legislation to do this received unanimous support in both houses of Congress and, on April 7, 2000, “The Senior Citizens’ Freedom to Work Act of 2000″ was signed into law, eliminating the retirement earnings test for beneficiaries at or above full retirement age (FRA) (also called normal retirement age). It still applies to beneficiaries not yet FRA. Remarks of President Clinton during the signing statement are here. In those remarks, President Clinton also introduced the Social Security online retirement planner.

Retirees are used to it now, but ending the annual retirement test at FRA was a historic change in the Social Security retirement program. As noted earlier, from the beginning of Social Security in 1935, retirement benefits had been conditional on the requirement that the beneficiary be substantially retired. For those who have reached full retirement age, “The Senior Citizens’ Freedom to Work Act of 2000″ effectively repealed this requirement.

Retirement test information for 2014 is here.

Who receives benefits for a child? The representative payee.

Q: To receive benefits, must children be living in the same household when a parent receives Social Security disability?

A: No. For Social Security retirement, disability and survivors benefits, the parent-to-child relationship is important in determining if a child is eligible for payment.

This means that otherwise eligible children born in an existing marriage, without marriage, or in an ended marriage can receive Social Security if a parent receives retirement or disability, or survivors benefits if the parent is deceased. Child benefits are payable to eligible adopted or stepchildren. For stepchildren, the parent-to-parent relationship is important because it defines the parent-to-child relationship.

For a minor, or perhaps a disabled child, a separate question is what person receives those Social Security benefits on behalf of the child. Actual custody or other legal responsibility helps determine the person or agency to receive SSA payments on behalf of a child. Usually the custodial parent will be the person selected to receive these if the parents do not live together.

For a commonplace example, assume Parent A is receiving Social Security benefits and has a biological minor child living in another town with Parent B. If all other requirements are met, the child can receive Social Security benefits through the record of Parent A. Since Parent B has custody, those SSA benefits for the child would be paid to Parent B.

Representative payee is the term Social Security uses for a person receiving benefits on behalf of another person. In the above example, Parent B is representative payee for the child. 

Not just for children, representative payees are appointed to provide financial management for the Social Security and Supplemental Security Income (SSI) payments of people who are incapable of managing their own payments.

To become a representative payee, a person or agency must file an application and then provide ongoing accounting of how funds are used. Payees are appointed only for Social Security and SSI purposes and are completely different from guardianship or power of attorney. FAQ’s for representative payees are here.

Note that the Treasury Department does not recognize power of attorney for the purposes of negotiating federal payments, including Social Security or SSI checks.

 

February 2014 statistical snapshot

The monthly statistical snapshot for February 2014 for Social Security and Supplemental Security Income (SSI) is available. Monthly snapshots provide a quick view about benefits paid during the month.

Here you can learn national totals, by beneficiary count and percentage, of the different benefits paid and average amounts of each type of benefit.

For example, during February 2014, retirement related benefits accounted for 70.6 percent of all Social Security benefits paid, including benefits to retired workers, spouses of retired workers and children of retired workers. Each of these categories is shown separately with its own percentage of the total and other information.

In February 2014, across the nation 58,201 thousand people of all ages received a Social Security payment. Noted above, most of this was retirement related. Survivor benefits accounted for 10.6 percent and disability benefits, including family members, accounted for 18.9 percent.

A detailed February benefit picture for the separate Supplemental Security Income (SSI) program is linked at the bottom of the snapshot page.

 You can subscribe to receive an email alert when these monthly updates are released. To do so, follow the “Subscribe to Updates” link

Question about delayed retirement credits

Recently I received a question about delayed retired credits, the topic of my January 8, 2014, post.

Delayed retirement credits (DRC’s) are increases to a Social Security retirement benefit when you delay starting them past full retirement age. DRC increases stop when you reach age 70 even if you continue to delay receiving benefits. There is no additional advantage to putting off Social Security benefits once you reach age 70. 

The question and answer follow:

Q: What is the value of the delayed retirement credits for ages 62-66?

A: Delayed retirement credits do not exist for ages younger than someone’s full retirement age because the person is electing reduced benefits. They are a benefit increase paid when the start of Social Security retirement benefits are delayed past full retirement age, up to age 70.

Social Security retirement benefits started before full retirement age are reduced by the number of months involved. Reduction percentages were discussed last week.

Lots of SSA retirement planning information is on the Social Security website, www.socialsecurity.gov, in the Retirement Benefits section and especially in the Retirement Planner area at http://www.socialsecurity.gov/retire2/.  Different calculators to help your planning are also there.  With the Retirement Estimator, the compute the effect of early or delayed retirement (early or delayed means before or after FRA) calculator is useful for comparing different start month amounts.

Reduction percentages for early retirement

Q: By what percentage would my SSA retirement be reduced if started at age 63?

A: Retirement benefits are reduced by the number of months started before a person’s full retirement age (FRA), also called normal retirement age.  Determined by year of birth, FRA is scheduled to reach age 67 for people born in 1960 or later.  

Social Security retirement benefits can be started anytime during the year if you are at least age 62.  There is no need to wait for your birthday.  As a percentage, retirement benefits are reduced 5/9 of one percent for each month before FRA, up to 36 months.  If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.  

For example, if the number of reduction months is 60, the maximum number for retirement at 62 when FRA is 67, then the benefit is reduced by 30 percent.  This maximum reduction is calculated as 36 months times 5/9 of 1 percent plus 24 months times 5/12 of 1 percent. 

Total percentages of reduction vary with full retirement age because the numbers of reduction months are different from full retirement age to age 62.  

For comparison, FRA is age 66 for people born between 1943 and 1954.  For them, starting benefits at age 62 will provide 75 percent (25 percent reduction) of the full retirement age amount because an additional 48 months are involved.

However, FRA is age 66 and 6 months for people born in 1957. For them, starting benefits at age 62 will provide 72.5 percent (27.5 percent reduction) of the full retirement age amount because an additional 54 months are involved.

Monthly retirement percentages are readily available on the Social Security website.  Go to “find your retirement age” in the retirement planner section at www.socialsecurity.gov/retire2/. Click on your year of birth for monthly percentages. 

Note that Social Security survivor benefits, when based on age, are also reduced by the number of months before full retirement age involved but FRA for survivors benefits is different from FRA for retirement.

 

Annual Statistical Supplement, 2013, now available

The Social Security Annual Statistical Supplement, 2013 is now available. 

The Supplement includes more than 240 statistical tables providing comprehensive data on programs administered by the Social Security Administration. These are Social Security (Old-Age, Survivors, and Disability Insurance (OASDI) ) programs and the separate Supplemental Security Income (SSI) program.  

Information includes beneficiary counts, benefit amounts, trust fund status, program summaries and legislative histories to help you understand these programs.

In addition to Social Security administered programs, information is presented about the major health care programs, Medicare and Medicaid, and other social insurance pro­grams, including workers’ compensation, unemployment insurance, temporary disability insurance, Black Lung benefits and veterans’ benefits.

With so much information available, it is likely that some part of the Supplement will interest you.

Table of contents: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/index.html

Highlights: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/highlights.html

Many information snippets are here, including about unemployment, workers’ compensation veterans’ benefits are.  For example:

  • About 56.8 million persons received Social Security benefits for December 2012, an increase of 1,353,705 (2.4 percent) since December 2011. Seventy percent were retired workers and their spouses and children, 11 percent were survivors of deceased workers, and 19 percent were disabled workers and their spouses and children.
  • OASDI benefit awards in calendar year 2012 totaled 5,654,668, including 2,735,007 to retired workers, 511,524 to their spouses and children, and 885,060 to survivors of insured workers. Benefits were awarded to 960,206 disabled workers and to 562,871 of their spouses and children.

Trust fund section: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/4a.html

Current beneficiary information: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/5a.html

Beneficiaries by state: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/5j.html

Information about people working and paying into Social Security: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/4b.html

Veterans’ benefits: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/veterans.html and http://www.ssa.gov/policy/docs/statcomps/supplement/2013/9f.html

Do not ignore letters from Social Security

The Social Security Administration sends people letters about their benefits for many reasons. Some of these letters confirm that action was taken to change something, such as your address.

Read these letters. They are important. Especially if the letter is confirming a change made to where your Social Security payment is sent, for example, to a different bank. The letter is sent as protection for you.

For example, if you contacted Social Security to change where you payment goes, such as to a different bank account, the letter is confirmation that action was taken and tells you the effective date of change.

What if you received a letter like this but did not make any change? Do not ignore the letter. It might mean that thieves are trying to hack into your Social Security record in order to have your benefits sent to an account they control. There have been instances of this across the country.   

Contact Social Security immediately if you receive a letter about a change in your bank direct deposit that you did not authorize. If phones are busy, be patient. Call the national Social Security toll-free number, 1-800-772-1213 / TTY 1-800-325-0778 (hours of 7:00am – 7:00pm, local time) or contact your local office. SSA national and local representatives use the same computer system to help you.

Protect yourself. Social Security does not send email asking for personal information nor do representative’s cold call for information. When you contact us, information is needed so that your questions can be answered. The difference is that you made the call, it was not unexpected.

Do not ignore letters from Social Security about your benefits, especially one about a change that you did not authorize.

Disabled Adult Child benefits

Earlier this week I wrote about Social Security survivors benefits for a disabled widow, widower or surviving divorced spouse. Although having a disability is key to these, they are survivors benefits because they are based on the work record of the deceased, rather than the work record of the person receiving the benefit.

Another type of Social Security family benefit involving disability is for disabled adult children, age 18 and older. This variation of child benefits is available through your work record whether you are receiving Social Security retirement, disability or you are deceased and your family is eligible for survivors benefits.

When younger than age 18, eligible children can receive Social Security family benefits through a parent’s record whether the child is disabled or not. One factor for paying family benefits to a child past age 18 is whether they have a disabling impairment that started before the age of 22.

The issue is not how old your adult child is at time of application but their age at start of their disability. For example, if your child has a severe disability since birth, he or she could be in their 40’s when you file for Social Security retirement. However, since the impairment began before age 22, benefits as a disabled child through your record are possible at that time.

If he or she had worked and paid into the Social Security system, a disabled adult child might also be eligible for SSA disability through their own record. This does not prevent them from possibly receiving SSA benefits as a child through a parent.

Social Security benefits for children are the same whether through the retirement, survivors or disability programs. Benefits paid to family members through your work record do not lower the amount of your own benefit.