Will marriage change my Social Security?

Q: Will marriage change my Social Security benefits?

A: Remember that these articles provide general information and the answer to such a broad question varies with the type of Social Security benefits received. To learn about your actual benefits, contact Social Security and have a representative check your record.

Marriage will not change Social Security retirement or disability benefits from your own work record because they are based largely on your personal work history over many years and age when starting retirement or becoming disabled. Amounts received by husband or wife through their personal work records do not affect what the other receives.

Do you receive Social Security benefits as a divorced spouse? If a divorced spouse remarries, he or she generally cannot collect benefits on the record of the former spouse unless the later marriage ends.

If you receive Social Security survivors benefits as a widow or widower, your age at remarriage makes a difference in the answer. Widow or widowers of many ages receive Social Security survivor benefits. In general, if you remarry after you reach age 60 (age 50 if disabled), remarriage will not affect your eligibility for survivors benefits. For example, remarriage could end Social Security survivors benefits to a widow at age 40 but not to the same person at age 61. Social Security benefits to a surviving divorced spouse follow this age difference too.

Children can receive Social Security benefits through the work record of a parent. With rare exception, these Social Security benefits end if the child marries.

In addition to Social Security retirement, survivors and disability benefits, the Social Security Administration is also responsible for the very different, need based, Supplemental Security Income (SSI) program. Since household income is used to compute SSI amounts, marriage could change monthly amounts.

One-time monthly earnings test rule

RetirePlanner-working

Q: I plan to retire in September at age 63. If I have earned over $17,000 so far this year, can I still start Social Security when I retire?

A: Yes, a person can receive Social Security when they retire even if having high earnings up to retirement.

This question is about the annual earnings test, also known as the retirement test.

Gross wages or net self-employment above earnings limits in a year can reduce Social Security payable during the year. The amounts vary based on your age compared to full retirement age (FRA), which is age 66 for birth years 1943 – 1954. Earnings limits end with the month you reach FRA. For a person younger than FRA all year, the 2015 earnings limit before benefit reduction is $15,720.

People retire all during the year and many have earned over annual earnings limits before then. For them, a one-time special earnings limit rule lets Social Security be paid for months of actual retirement even if calendar year earnings are high.

Earnings test information for 2016 should be available during October.

Including earnings test amounts, 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 are in the Retirement Planner section for your use. One of these is an “earnings test calculator” to help you see how your earnings may affect your benefit payments if you are currently working and are eligible for retirement or survivors benefits this year.

RetirePlanner-work_calculator

No one knows about a 2016 COLA yet

Articles guessing about a Social Security cost-of-living adjustment (COLA) for next year are starting to appear.

No matter what you read or hear, no one knows 2016 COLA information yet and no one will know until approximately mid-October. Last year, Social Security announced 2015 COLA details on October 22, 2014.

COLAs for Social Security benefits are based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a COLA was determined to the third quarter of the current year.

The CPI-W is determined by the Bureau of Labor Statistics in the Department of Labor. By law, it is the official measure used by the Social Security Administration to calculate COLAs.

The third quarter of the year ends September 30. Until CPI-W information is available, any cost-of-living adjustment (COLA) amount mentioned for next year is a guess.

 

 

 

Receiving Social Security? Is your earnings estimate accurate?

Q: I am 64, work part-time and receive Social Security retirement. In 2015, I will earn more than expected. Should I update my earnings estimate with Social Security?

A: You probably should but it depends on what your original estimate was and what your current estimate is.

Gross wages or net self-employment earnings in a year can reduce benefits for the year until full retirement age (FRA). If expecting earnings over the 2015 limits for your age, update your earnings estimate now.

At age 64, which is younger than your FRA, the 2015 earnings limit is $15,720. Earnings over this will reduce benefits. Lower earnings will not.

If your current 2015 earnings estimate is over $15,720, you should definitely contact Social Security and update your estimate. On the other hand, if you originally expected to earn $10,000, but will actually earn $14,000, an updated estimate is not needed because both amounts are less than the $15,720 limit for 2015 and neither would reduce benefits payable this year.

Earnings test amounts vary based on your age compared to your full retirement age. Details about 2015 earnings limits for different ages are in the SSA retirement planner section, www.socialsecurity.gov/planners/retire/, and in publication 05-10069, How Work Affects Your Benefits, also in that section. Pensions and other non-employment income do not count for the earnings test.

If younger than full retirement age for all or part of the year, keeping your estimated calendar year earnings current with Social Security is important if you expect to earn over the earnings limit. This is especially so if your original estimate was below the limit and you will actually earn over it. You can update your estimate anytime during the year.

If you will earn more than originally estimated, and the amount is above your earnings test limit, updating your estimate now can prevent or reduce the chance of your being incorrectly paid and needing to refund money to Social Security.

If you originally expected to earn above your 2015 earnings test amount limit, but will really earn less, updating your estimate now can release any withheld benefits to you faster.

If your final earnings this year are over the annual limit for your age, report actual 2015 amounts directly to Social Security when you get your W-2 form, or if self-employed when you complete your taxes. This is different from tax filings.

The earnings test can apply to anyone younger than full retirement age if receiving Social Security benefits that are not based on their own disability. Separate rules apply to people receiving benefits because of their own disability. If working, they should contact Social Security for information.

Earnings test information for 2016 should be available during October.

See “What You Need To Know When You Get Retirement or Survivors Benefits” for other things to report. Call Social Security nationally at 1-800-772-1213 (TTY-1-800-325-0778) or contact your local office to report changes including your earnings estimate.

Bad things only happen to other people

Of course you have heard the saying “Bad things only happen to other people.” However, we are all “other people” to everyone else.

This brings me to the reminder that Social Security is much more than retirement. Nationally, about 10 percent of SSA monthly benefits go to survivors of all ages due to a death in the family and about 19 percent go to disabled workers and their families.

You can obtain both survivor and disability estimates on your record by creating a personal, pin and password protected, my Social Security account at www.socialsecurity.gov/myaccount/ and viewing your Social Security Statement.

Hoping that you never need this information is different from planning in case you, or your family, do.

Learn more about Social Security disability and survivors benefits now. Make that information part of your family financial planning.

Then you can tell other people about them.

Social Security benefits by state and county

The annual publication “OASDI Beneficiaries by State and County” was recently released with information as of December 2014. OASDI is the Social Security retirement, survivors and disability benefits.

From the preface:

This annual publication focuses on the Social Security beneficiary population—people receiving Old-Age, Survivors, and Disability Insurance (OASDI) benefits—at the local level. It presents basic program data on the number and type of beneficiaries and the amount of benefits paid in each state and county. It also shows the numbers of men and women aged 65 or older receiving benefits. … “ 

As of December 2014, approximately 18.5 percent of the United States population received a monthly Social Security benefit with about 91 percent of people aged 65 or older receiving benefits.

How many people receive Social Security benefits in your state?

In your county?

How much money does that involve?

Find out here. For a specific state and county as of December 2014, click on the state information. Then scroll down to Table 4 to seen the number of beneficiaries in that state, with individual county data. Scroll down to Table 5 for the amount of benefits involved. Note that amounts are shown in thousands of dollars. 2014-SSA-state&county

When eligible as widow and retiree

Q: Does starting Social Security as a widow prevent me from receiving my own retirement?

A: No. If eligible for SSA survivors benefits as widow or widower and also eligible for your own retirement, you can start the smaller one first and switch to the higher later on. Based on age, survivors benefits can start as early as age 60 and retirement at age 62.

You can estimate Social Security retirement amounts online but estimated survivors benefits are not available online.

Get survivors estimates from your local SSA office and of your own retirement online at the SSA retirement planner, www.socialsecurity.gov/planners/retire/. To consider your options, my suggestion is to get estimates for each type of benefit at different ages.

Some options to consider are in the Social Security survivors planner section. The following is from the “if you are the worker’s widow or widower / how much would your benefit be?” pages.  

“If you receive benefits as a widow or widower or as a surviving divorced spouse, you can switch to your own retirement benefit as early as age 62. This assumes you are eligible for retirement benefits and your retirement rate is higher than your rate as a widow, widower or surviving divorced spouse.  

In many cases, a widow or widower can begin receiving one benefit at a reduced rate and then, at full retirement age, switch to the other benefit at an unreduced rate.” 

Having the option to start with the lower benefit and then switching to a higher one later is useful but what you decide is based on your personal situation. Many people choose the largest amount immediately available, even if a reduced amount, and do not switch benefit types.

More about Social Security survivors benefits is at http://www.socialsecurity.gov/survivors/.

survivorsplanner

 

The start of Social Security disability benefits

The original Social Security disability benefits did not provide monthly payments.

As signed into law by President Dwight D. Eisenhower in the Social Security Amendments of 1954, originally disability benefits provided for a “freeze” to a person’s record during the years when they were unable to work. This was to help prevent periods of disability from reducing or wiping out retirement and survivor benefits due to reduced earnings.

On August 1, 1956, the Social Security Act was amended to provide monthly cash benefits to permanently and totally disabled workers aged 50-64 and to pay child’s benefits to disabled children aged 18 or over of retired or deceased workers, if their disability began before age 18.

More changes came later.

Learn about today’s Social Security disability program here.

 

 

How many people pay into Social Security?

Last week I wrote about how to correct a work record that was missing some employment earnings.

It is important for your personal record to be correctly posted. In addition to helping fund current Social Security benefits, your earnings are used to compute your future retirement amount.

Through W-2 reporting and self-employment tax information, the Social Security Administration works with the earnings information of almost everyone employed in the country.

How many people is this?

The Research, Evaluation and Statistics component of the Social Security Administration released the publication “Earnings and Employment Data for Workers Covered Under Social Security or Medicare, 2012” in June.

From the Preface:

This report presents 2012 earnings and employment data by state and county for persons covered under the Social Security and Medicare programs.

The data show, by sex and age, the number of wage and salary workers and self-employed persons, the amount of their taxable earnings, and the amount they paid in Social Security and Medicare contributions.

From the Highlights section:

Social Security

  • In 2012, 161.7 million workers had earnings taxable under the Social Security program. About 143.0 million had only wages, 11.2 million had only self-employment income, and 7.5 million had both.
  • Social Security taxable earnings totaled $5.712 trillion, which includes earnings up to the taxable maximum of $110,100.
  • Social Security taxes totaled about $708 billion. 

Medicare

  • In 2012, 165.6 million workers had earnings taxable under the Medicare program. About 146.1 million had only wages, 10.9 million had only self-employment income, and 8.6 million had both.
  • Medicare taxable earnings totaled $7.133 trillion.
  • Medicare taxes totaled about $207 billion.

The “Earnings and Employment Data for Workers Covered Under Social Security or Medicare, 2012” publication is available in pdf and html versions.

Earnings&Employment2012

 

Correcting your work record

Q: I work part-time as an employee for a business and receive a W-2 for those wages plus I have separate self-employment earnings that I pay taxes on when filing my taxes each year. Only the W-2 wages appear on my most recent Social Security Statement. Since I have been paying self-employment taxes, shouldn’t they be on my Social Security number earnings history as well? How do I fix this?

A: Most people who pay into Social Security work for an employer. Their employer deducts Social Security taxes from their paycheck, matches that contribution, sends taxes to the Internal Revenue Service (IRS), and reports wages to Social Security. If registered for SSA Business Services, employers can verify employee Social Security numbers online and report W-2 wage information electronically.

Self-employed people must report their earnings and pay their taxes directly to IRS. If self-employed, you report your earnings for Social Security when you file your federal income tax return. If your net earnings are $400 or more in a year, you must report your earnings on Schedule SE, in addition to the other tax forms you must file.

All employment earnings for a year are usually posted to your personal work record near the end of October of the following year so your total 2014 employment earnings should be posted to your record approximately the end of October 2015. This applies whether or not a person receives monthly Social Security benefits. When already receiving benefits, new earnings are automatically reviewed to see if they will increase the amount.

If earlier years are not correctly posted, your local Social Security office can help correct your record. Evidence generally needed includes proof of the earnings, such as a W-2 and 1099. For self-employment, tax return information including tax form Schedule SE and proof of tax payment is also needed.

If you received your Social Security Statement by mail, know that you can get a copy of it anytime at your convenience by creating a personal, pin and password protected, my Social Security account. More about doing this is at http://www.socialsecurity.gov/myaccount/.