Category Archives: Survivors

Sources of Social Security income

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Last week’s 2013 Social Security Board of Trustees report press release stated, “Income including interest to the combined OASDI Trust Funds amounted to $840 billion in 2012. ($590 billion in net contributions, $27 billion from taxation of benefits, $109 billion in interest, and $114 billion in reimbursements from the General Fund of the Treasury—almost exclusively resulting from the 2012 payroll tax legislation).”

Usually there are three main income streams into Social Security: payroll taxes, income from the Federal income taxes that some people pay on their Social Security benefits, and interest earned on government bonds held by the Social Security trust funds.

Why were General Funds a large part of 2012 income to Social Security?

Economic stimulus legislation (H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010) provided for a temporary reduction in the Social Security payroll tax rate in 2011 and 2012 and reduced payroll tax revenues to the Social Security funds by an estimated $222 billion in total.

That same legislation provided for transfers from the General Fund to the trust funds in order to “replicate to the extent possible” payments that would have occurred if the payroll tax reduction had not been enacted. Those General Fund reimbursements amounted to about 15 percent of the program’s non-interest income in 2011 and 2012. The temporary payroll tax reduction expired at the end of 2012.

2013 annual report of Social Security Board of Trustees

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Last Friday, May 31, the Social Security Board of Trustees released its annual report on the long-term financial status of the Social Security Trust Funds. The complete press release about it follows. 

You can read the actual 2013 Trustees report at http://www.socialsecurity.gov/OACT/TR/2013/.   A summary is also available there.

Social Security Board of Trustees: No Change in Projected Year of Trust Fund Reserve Depletion

The Social Security Board of Trustees today released its annual report on the long-term financial status of the Social Security Trust Funds. The combined assets of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2033, unchanged from last year, with 77 percent of benefits still payable at that time. The DI Trust Fund will become depleted in 2016, also unchanged from last year’s estimate, with 80 percent of benefits still payable.

 In the 2013 Annual Report to Congress, the Trustees announced:

 • The combined trust fund reserves are still growing and will continue to do so through 2020. Beginning with 2021, the cost of the program is projected to exceed income.

 • The projected point at which the combined trust fund reserves will become depleted, if Congress does not act before then, comes in 2033 – the same as projected last year. At that time, there will be sufficient income coming in to pay 77 percent of scheduled benefits.

 • The projected actuarial deficit over the 75-year long-range period is 2.72 percent of taxable payroll — 0.05 percentage point larger than in last year’s report.

 “The Social Security Trust Funds’ projected depletion dates have not changed, and three-fourths of benefits would still be payable after depletion. But the fact remains that Congress needs to act to ensure the long-term solvency of this vital program,” said Carolyn W. Colvin, Acting Commissioner of Social Security. “The projected year for Disability Insurance Trust Fund depletion remains 2016, and legislative action is needed as soon as possible to address this financial imbalance.”

Other highlights of the Trustees Report include:

 • Income including interest to the combined OASDI Trust Funds amounted to $840 billion in 2012. ($590 billion in net contributions, $27 billion from taxation of benefits, $109 billion in interest, and $114 billion in reimbursements from the General Fund of the Treasury—almost exclusively resulting from the 2012 payroll tax legislation)

 • Total expenditures from the combined OASDI Trust Funds amounted to $786 billion in 2012.

• Non-interest income fell below program costs in 2010 for the first time since 1983. Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.

• The asset reserves of the combined OASDI Trust Funds increased by $54 billion in 2012 to a total of $2.73 trillion.

• During 2012, an estimated 161 million people had earnings covered by Social Security and paid payroll taxes.

 • Social Security paid benefits of $775 billion in calendar year 2012. There were about 57 million beneficiaries at the end of the calendar year.

 • The cost of $6.3 billion to administer the program in 2012 was a very low 0.8 percent of total expenditures.

 • The combined Trust Fund asset reserves earned interest at an effective annual rate of 4.1 percent in 2012.

The Board of Trustees is comprised of six members. Four serve by virtue of their positions with the federal government: Jacob J. Lew, Secretary of the Treasury and Managing Trustee; Carolyn W. Colvin, Acting Commissioner of Social Security; Kathleen Sebelius, Secretary of Health and Human Services; and Seth D. Harris, Acting Secretary of Labor. The two public trustees are Charles P. Blahous, III and Robert D. Reischauer.

The 2013 Trustees Report is posted at www.socialsecurity.gov/OACT/TR/2013/.

Are taxes withheld from Social Security benefits?

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An interesting question about taxation of Social Security benefits was asked last week during a retirement seminar. The person knew that his overall income after retirement would be high enough for a portion of his Social Security retirement to be taxable and asked if those taxes would be withheld from his monthly retirement benefits.

They would not be unless he requested it.Taxes are not routinely withheld from Social Security benefits. 

Based on overall income, about one-third of people receiving Social Security have to pay federal income taxes on a portion of those benefits. Of these people, some pay tax on up to 50 percent of benefits and some on up to 85 percent of benefits. No one pays federal income tax on more than 85 percent of his or her Social Security benefits.

Based on Internal Revenue Service (IRS) rules, if you file a federal tax return as an “individual” and your combined income is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits. With income more than $34,000, up to 85 percent of your benefits may be taxable. If you file a joint return, and you and your spouse have a combined income that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits. With income more than $44,000, up to 85 percent of your benefits may be taxable. If married and filing a separate tax return, you probably will pay taxes on your benefits. See http://www.socialsecurity.gov/planners/taxes.htm. SSA personnel cannot provide tax advice.

 Although taxes are not routinely withheld from Social Security benefits, you can request voluntary Federal tax withholding from them.To do this, complete Internal Revenue Service (IRS) form W-4V (Voluntary Withholding Request) (http://www.irs.gov/pub/irs-pdf/fw4v.pdf ) and return it to your local Social Security office. When completing the W-4V you select a percentage of benefits for tax withholding, not a flat dollar amount. Options are to have 7 percent, 10 percent, 15 percent or 25 percent of your monthly benefit withheld. Voluntary withholding is only for Federal taxes, not state or local taxes.

Updated – How many people receive Social Security in your state?

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Updated to December 2012, the newest release of Social Security Congressional Statistics just became available online at http://www.ssa.gov/policy/docs/factsheets/cong_stats/2012/index.html.  

These annual fact sheets present data on the Social Security and Supplemental Security Income programs, including the number of people receiving benefits and the amount of total monthly payments made in the United States, in each state, and in each congressional district within the state. Information is also provided for the District of Columbia, American Samoa, Guam, the Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands.

For all locations, information is available in html, pdf and Excel formats.

North Dakota information is at http://www.ssa.gov/policy/docs/factsheets/cong_stats/2012/nd.pdf

Minnesota information is at http://www.ssa.gov/policy/docs/factsheets/cong_stats/2012/mn.pdf

South Dakota information is at http://www.ssa.gov/policy/docs/factsheets/cong_stats/2012/sd.pdf.

Current through December 2011, Social Security beneficiary information by state and individual county is at http://www.ssa.gov/policy/docs/statcomps/oasdi_sc/index.html. Note that OASDI stands for the three Social Security programs, Old-Age, Survivors, and Disability Insurance.

Also through December 2011, Supplemental Security Income (SSI) recipient information by state and county is at http://www.ssa.gov/policy/docs/statcomps/ssi_sc/2011/index.html.

Will adoption end benefits to a child?

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Q: My young children receive Social Security survivors benefits because their father died several years ago. I am planning to remarry in a few months. Will the children lose their survivors benefits if my new husband adopts them?

A: Adoption of a child already entitled to Social Security survivors benefits does not end his or her benefits. 

Some other considerations:

Do you also receive Social Security survivors benefits? If you do, and assuming that you are younger than age 60, remarriage normally will end your survivors benefits even though benefits to the children continue. Ask about your specific situation.

Are you changing your name? If so, update your Social Security number (SSN) record at no charge. Assuming that you receive the Social Security benefits on behalf of the children, SSA calls this being their representative payee, you will also have to update your name on those benefits.

Read the Social Security booklet, What You Need to Know When You Get Retirement or Survivors Benefits (publication 05-10077), online at http://www.socialsecurity.gov/pubs/EN-05-10077.pdf, by calling the SSA national toll-free phone number, 1-800-772-1213, TTY 1-800-325-0778, or by contacting any SSA office.

Best wishes.

Social Security & your smartphone

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Social Security Announces New Mobile Site for
Smartphone Users

Agency Leverages Technology to Meet Customer Service Expectations

Carolyn W. Colvin, Acting Commissioner of Social Security, today announced the agency is offering a new mobile optimized website, specifically aimed at smartphone users across the country. People visiting the agency’s website, www.socialsecurity.gov, via smartphone (Android, Blackberry, iPhone, and Windows devices) will be redirected to the agency’s new mobile-friendly site. Once there, visitors can access a mobile version of Social Security’s Frequently Asked Questions, an interactive Social Security number (SSN) decision tree to help people identify documents needed for a new/replacement SSN card, and mobile publications which they can listen to in both English and Spanish right on their phone.

“We are committed to meeting the changing needs of the American people and the launch of our new mobile site helps reinforce our online presence and adaptability to advances in technology,” Acting Commissioner Colvin said. “I encourage all smartphone users looking for Social Security information to take advantage of our new mobile site.”

In addition, visitors to the new mobile site can learn how to create a personal my Social Security account to get an online Social Security Statement, learn more about Social Security’s award-winning online services, and connect with Social Security on Facebook, Twitter, YouTube, and Pinterest. For people unable to complete their Social Security business online or over the telephone, the agency also unveiled a new mobile field office locator. The new mobile office locator has the capability to provide turn-by-turn directions to the nearest Social Security office based on information entered by the person.

“With significant budget cuts of nearly a billion dollars each year over the last few years, we must continue to leverage technology and find more innovative ways to meet the evolving needs of the American public without compromising service,” said Acting Commissioner Colvin.

Each year, more than 35 million Social Security web page views come via smartphones. 

For more information, please go to www.socialsecurity.gov.

Benefits to a wife or husband (spousal benefits)

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An overheard office conversation reminded me that I have not written about spousal benefits in a while. A man wanted to know why his wife could not receive Social Security benefits through his record. Key to his thinking was that her own Social Security retirement amount was less than one-half of his, a very popular misconception.  

Like many misconceptions, there is a historical basis for this. In the early days of Social Security often only the husband was employed, with the wife busy but unemployed at home. In addition, no one could begin monthly retirements before full retirement age because early retirement (age reduced) benefits did not exist yet. Now, both wife and husband are often employed and reduced retirement benefits can begin as young as age 62, with full retirement ages ranging from 65 to 67 under existing law.

Social Security benefits are gender neutral. Both men and women can receive spousal (wife/husband) benefits and each must be alive for spousal benefits to apply. Survivors benefits to a widow or widower are computed differently and might be payable even if a spousal benefit was not. 

Returning to spousal benefits, the one-half idea has some validity but it refers to a comparison of the wife and husband’s individual full retirement age (FRA) amounts, not the monthly amount that either is actually receiving.   

The most that a spouse with lower career earnings could receive through the record of her or his higher earning spouse is one-half of the higher earners full retirement age amount. This is a maximum and reduced by their own Social Security retirement and by age, if younger than FRA. 

To learn if spousal benefits are possible, compare one-half the higher full retirement age (FRA) amount to the lower FRA amount.    

For example, leaving aside the actual monthly benefit amount, say we have a couple where one person has a FRA amount of $2,000 and the other has a FRA amount of $900. 

Half of the higher $2,000 FRA amount is $1,000. Since the other person’s smaller $900 FRA amount is less than this $1,000 (one-half of the higher) amount, a spousal benefit is possible. If the smaller FRA amount were $1,000 or more, and therefore not less than half of the higher, spousal benefits would not be paid.

Note that this only shows IF a spousal benefit is possible, not how much. How much a spousal benefit is depends on the person’s own Social Security retirement amount and their age. In this example, the MOST a spousal benefit could be is $100 per month, derived by subtracting the lower FRA amount of $900 from one-half the higher ($1,000) FRA amount. Potentially reduced for age, the net spousal amount is added to his or her own monthly retirement amount. 

Using the same full retirement age amounts, but with age reduced benefits involved, you can see how the one-half of benefit misconception, rather than the FRA comparison, can lead you astray.

Using the same couple, one person has a full retirement age (FRA) amount of $2,000 and the other has a FRA amount of $900.

However, now the person with the $2,000 FRA amount started retirement at age 62 (with age 66 FRA), giving him or her a benefit reduction of about 25 percent, resulting in a monthly amount of about $1,500.

The person with the FRA amount of $900 waited until full retirement age before starting Social Security. Since he or she waited until FRA, there is no age reduction and the full FRA monthly amount of $900 is received.  

Comparing the actual benefit amounts of $1,500 and $900, one-half of the higher is $1,500 divided by 2 = $750. Given that the overall smaller benefit amount of $900 is more than one-half the higher $1,500, you would wrongly conclude that spousal benefits are not payable. 

The Social Security website, www.socialsecurity.gov, has information to help plan your retirement planning.

Use the Retirement Estimator to estimates your personal full retirement age amount. Learn your full retirement age and obtain approximate monthly reduction percentages at http://www.socialsecurity.gov/retire2/agereduction.htm.

ID questions when creating your “my Social Security” account

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Q: Some of the security questions when I created a my Social Security account took me by surprise. While I expected the often seen birthdate type of question, my Social Security questions involved more details than I expected Social Security to have about me. Where do the questions come from?

A: This question was asked during one of my retirement seminars. Before answering it, I think it is important to mention that the Social Security Administration has less personal information then many people think. If not receiving monthly benefits, the bulk of personal information held by Social Security about you is from your Social Security number (SSN) application as updated, and your work history. If receiving benefits, the agency has information that you provided and needed to pay those benefits, including your address and direct deposit bank account information. 

Maintaining the security of your personal information on Social Security records is very important to the agency, which brings us back to the  question.  

Anyone at least age 18 and having an email address can create their own online my Social Security account. To create an account, you must provide some personal information about yourself and give us answers to some questions that only you are likely to know. Next, you create a username and password that you will use to access your online account. This process protects you and keeps your personal Social Security information private.

Some of the personal information requested is your name, Social Security number and birthdate. For other questions, an external authentication service provider, Experian, helps Social Security verify your identity by using information from your Experian credit report. This can result in what is known as a “soft inquiry” on your Experian credit report but does not affect credit scores and is not reported to lenders. It does provide the ability to protect your personal information by asking questions that only you should be able to answer.   

Please note that you cannot create a my Social Security account online if you have a security freeze, fraud alert, or both on your Experian credit report. You first must ask Experian to remove the freeze or alert. 

A link to my Social Security is on the homepage of www.socialsecurity.gov or you can go directly to http://www.socialsecurity.gov/myaccount/.  Linked from that page are details explaining how your identity is verified and protected. 

 

New Social Security retirement planning webinar on website

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Planning for your retirement is important. Adding to the Retirement Planner information, a brand new Social Security webinar has been added to the Social Security website, www.socialsecurity.gov.

Just recorded, this approximately 28-minute video touches upon many questions that I am routinely asked. 

The How Social Security Can Help You Plan for Retirement webinar topics include:

     How much will your retirement benefit be

     Full retirement age

     Benefits for family members

     Looking ahead – planning for retirement

     When to retire

     Life expectancy calculator

To watch this webinar, go to the Social Security homepage, www.socialsecurity.gov and then to the Social Media Hub in the lower right corner. Clicking on the persons image at right or on “more social media” brings you to the new retirement planning, and other, webinars. 

Pensions and Social Security, Part 3 – GPO

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For the relatively few people involved, today completes the series about pensions that might affect Social Security benefits. 

The general rule is that your company pension will not affect your Social Security benefits because most employment is covered by Social Security.  

The usual exception to this are pensions from government employment not covered by Social Security. A government pension from work covered by Social Security will not affect SSA benefits.

Not covered by Social Security means you did not pay Social Security payroll tax on those earnings, you did not earn coverage for SSA benefits and those earnings do not appear on your SSA work record. Any government level can be involved, not just Federal or state. Local government employment, including school districts, may or may not be covered by Social Security. 

Last week I discussed the Windfall Elimination Provision (WEP), when the person receives Social Security retirement on his or her own record through other work, separate from the non-covered government employment.

Today’s topic is the Government Pension Offset (GPO), involved when the Social Security benefits are through someone else’s record rather than your own work. The GPO affects SSA benefits as a spouse, widow or widower and is a direct offset by the government pension against Social Security benefits.

The Government Pension Offset reduces the amount of your Social Security spouse’s, widow’s or widower’s benefits by two-thirds of the amount of your government pension. The GPO can offset the total Social Security benefit.

Estimating the GPO amount is not hard. Do the math yourself or use the online GPO calculator. For example, if you receive a monthly civil service pension of $600, two-thirds of that, or $400, must be used to offset your Social Security spouse’s, widow’s or widower’s benefits. If you are eligible for a $500 spouse’s benefit, you will receive $100 per month from Social Security ($500 – $400 = $100).

Exemptions exist to the Government Pension Offset (GPO). More about the GPO is in SSA publication 05-10007, Government Pension Offset.

 Other factors that may affect Social Security benefits are part of the SSA online retirement planner at www.socialsecurity.gov.