When plans change – work after retirement and your Social Security

Posted on May 15, 2013 by Howard Kossover

What if you retire, start collecting Social Security retirement, and then your plans change with a return to work? Using the following question, this is today’s topic.

Q: I started Social Security retirement at age 62, received benefits for over a year, then returned to work with high enough earnings to stop my SSA benefits due to the annual earnings test. I am ready to stop working again and restart my retirement. Will my Social Security amount be higher now because I am older? I am age 65 with a full retirement age of 66.

A: You have two issues here. One will eventually result in a higher retirement amount and the other might do so. Your monthly amount was reduced when you began Social Security retirement at age 62 because you were younger than full retirement age (FRA). While retirement amounts increase with cost-of-living adjustments and other changes, just getting older is not cause for increase and does not increase benefits already started. Considering just age, your retirement benefits will initially resume as they were when you first started them.

However, when a person electing reduced benefits reaches full retirement age (FRA), Social Security automatically reviews their record to see if there are months for which they had a reduction but did not actually receive a payment. If so, you get credit for those months, thus increasing your amount. This fits your situation since you had months without benefit payment due to your return to work. This automatic review takes place when you reach FRA. Effective then, benefits will increase by the number of months that your return to work prevented payment.

A related issue is that new earnings can potentially increase benefits. Social Security retirement is computed using your best 35 earnings years. If new earnings are higher than a previous year used, they could increase your retirement amount. Also automatic, this earnings review takes place each year and can increase benefits whether you are younger or older than full retirement age.

See Social Security publication “How Work Affects Your Benefits” for more information.

When retirement plans change, sometimes a person can withdraw his or her Social Security application and then re-apply at a future date. Doing this requires repayment of all benefits received by you and any family members through the application. However, if you change your mind 12 months or more after becoming entitled to retirement benefits, you cannot withdraw your application. Withdrawing the retirement application was not an option for this person because he or she had already received Social Security for over a year before returning to work.

Did You Know? Recorded in April 2013, a 28-minute webinar titled How Social Security Can Help You Plan for Retirement is now on the SSA website. Topics include your retirement amount, full retirement age, family benefits, retirement considerations and more. To watch, go to www.socialsecurity.gov and then to the new Social Media Hub at lower right.

What is Medicare Part D Extra Help?

Posted on May 8, 2013 by Howard Kossover

Q: What is Medicare Part D Extra Help?

A: Part of the Medicare prescription drug (Part D) program, the Extra Help low income subsidy can help pay for parts of Part D monthly premiums, annual deductibles and co-payments. If on Medicare, people receiving Supplemental Security Income (SSI) or medical assistance are automatically eligible for Extra Help. Estimated to be worth about $4,000 per year, you must be enrolled in a Medicare prescription drug plan to receive this Extra Help.

To apply, you must have Medicare Part A (Hospital Insurance) and/or Medicare Part B (Medical Insurance) and live in one of the 50 States or the District of Columbia. Applications can be completed at any time of the year. An easy way to apply for the Extra Help is through Social Security online at www.socialsecurity.gov/prescriptionhelp/.

To qualify for the Extra Help, people must be receiving Medicare and have income limited to $17,235 for an individual or $23,265 for a married couple living together. Even if annual income is higher than these amounts, some help might still be possible if you support other family members who live with you, have earnings from work or live in Alaska or Hawaii. Resources are limited to $13,300 for an individual or $26,580 for a married couple living together. Resources include things such as bank accounts, stocks, and bonds but not your house or car.

Learn more or apply for Extra Help at www.socialsecurity.gov/prescriptionhelp/, by calling the SSA national number, 1-800-772-1213 (TTY 1-800-325-0778) or at your local office.

Applying for the Part D, prescription drug Extra Help low income subsidy does not enroll a person in a Medicare prescription drug plan. Social Security personnel cannot provide help you choose a prescription drug plan. More about Medicare prescription drug plans is at www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227; TTY 1-877-486-2048).

You can own a home and receive SSI

Posted on May 3, 2013 by Howard Kossover

Q: Can a person who owns a house and car receive Supplemental Security Income?

A: Yes, depending on the details.

Supplemental Security Income (SSI) is a low-income program for people at least age 65, and disabled or blind adults or children. Resource limits exist for SSI, with resources defined as items you own or can convert to cash including bank accounts, property and vehicles. There are income limits also. SSI is a very different program from Social Security, although people apply for it at Social Security.

Not everything you own counts as a resource. If you live in it, your home including the land it is on, generally is not counted toward resource levels. If you own the home but do not live in it, both home and land will probably count as resources. One vehicle usually does not count as a resource either.

Maximum SSI monthly amounts in 2013 are $710 for an eligible individual and $1,066 for an eligible couple, reduced by other income including Social Security benefits. Resource maximums are $2,000 for an individual and $3,000 for a couple. Subject to the SSI income limits, people can receive both SSI and Social Security benefits because they are two different programs.

As with a home or vehicle, other resources might not count towards SSI resource levels. Most household goods, some insurance and some burial funds usually are not included.

Not all income counts for SSI either. For example, portions of wage and self-employment income, pensions, and State or local assistance based on need are not counted.

SSI information is at http://www.socialsecurity.gov/pgm/ssi.htm and in SSA publication 05-11000, Supplemental Security Income.

To apply for SSI or ask questions, contact Social Security. Call the national toll-free number, 1-800-772-1213 (TTY 1-800-325-0778) or contact your local SSA office.

ID questions when creating your “my Social Security” account

Posted on April 29, 2013 by Howard Kossover

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.

How much work is needed for SSA retirement?

Posted on April 8, 2013 by Howard Kossover

Q: For Social Security retirement, I have heard both that you need 10 years of work and 35 years of work. Which is right?

A: In a way, both are correct but they actually involve two different topics. One topic is the amount of work required to be eligible for Social Security retirement. The other is how the amount of your retirement is calculated.

All Social Security retirement, survivors or disability benefits have a work requirement that varies with the specific program. You are insured on your record when you have enough work for a given benefit. The amount of work needed is measured by credits, also called quarters of coverage since you can earn a maximum of four quarters per year based on your gross wages and net self-employment earnings. In 2013, earnings of $1,160 provide one credit so earnings of at least $4,640 during the year provide all four.

For Social Security retirement, a person needs 40 credits, which is where the 10 years comes from. Becoming insured for retirement can take more than 10 years if you have low earnings in a year. With less than 40 credits you are not insured, 40 or more means you have enough work to receive a retirement benefit. Once insured status is established, your number of credits has nothing to do with how much the benefit amount will be.

Your entire career work history is important in determining your own Social Security retirement amount. To compute this amount, the best 35 years of your work earnings are used. While the highest earnings are often just before retirement, this is not always the case. If you do not have 35 years of work, zero years are used to reach 35 years. These best 35 years of earnings are weighted for inflation as part of computing your full retirement age (FRA) amount. Depending on your actual age when starting benefits, this FRA amount is adjusted up or down as needed to arrive at your retirement amount.

The online Social Security Statement states if you are insured for the different SSA programs and shows your earnings record history. See your Statement by creating a my Social Security account at http://www.socialsecurity.gov/myaccount/. A sample Statement is viewable at that link.

SSA Survivors benefits: when a second marriage ends, then what?

Posted on April 4, 2013 by Howard Kossover

Q: I was widowed after a long marriage, remarried for a few years and then divorced. At age 61, I am not married now. Can I receive Social Security benefits through the record of my first husband?

A: Probably you can, assuming that he had worked long enough to be insured for Social Security.

The general rule concerning Social Security survivors benefits and remarriage is that you cannot get widow or widower’s benefits if you remarry before age 60. Remarriage after age 60, or age 50 if you are disabled, will not prevent you from getting survivor benefits based on your deceased spouse’s work record. Survivor benefits are the same for both women and men.

People die at all ages and there variations of Social Security survivors benefits. Contact Social Security and ask about your specific situation before getting remarried.

What happens if a subsequent marriage ends by death or divorce? If by death, there is the possibility of Social Security survivors benefits as widow or widower through the record of either the more recent or the prior spouse. If either marriage ended in divorce, but had lasted at least 10 years, there is also the possibility of benefits as a divorced surviving spouse.

Reduced age based survivor benefits can start at age 60. Reduced retirement based on your own work can start at age 62. Estimated Social Security benefits on your own work are available online at www.socialsecurity.gov. An estimate on the record of someone else, such as your first husband, is not available online. Contact Social Security for this estimate. If eligible for both survivors benefits and from your own work, you can start the lower amount first, and then switch to the larger amount in the future.

More about Social Security survivors benefits is at www.socialsecurity.gov. Also read the SSA booklet “Survivors Benefits” at www.socialsecurity.gov/pubs/10084.html or available from any SSA office.

Contact Social Security by calling the national toll-free number, 1-800-772-1213 (TTY 1-800-325-0778), or your local office.

Changing from spouse to survivors benefits

Posted on March 25, 2013 by Howard Kossover

Q: Both my father-in-law and my dad died over the past year. Social Security started sending an increased widows amount to my mother-in-law automatically but my mother had to complete paperwork. Why the difference?

A: Before discussing some possible reasons, this is a good point to state that Social Security should always be contacted when there is a death in the family.

Social Security benefits do not start “automatically” on their own, even if the work needed is not readily seen by the public. Action must be taken within the Social Security Administration to either start or change benefits paid. Contacting Social Security, either by calling the national toll-free number, 1-800-772-1213 (TTY 1-800-325-0778), or a local office, provides opportunity to answer your questions and to take action to get any benefits due paid.

Depending on what benefits were received prior to the death, an application is not always needed. The process is the same whether Social Security survivors benefits are payable to a widow or widower.

For one example, have husband and wife each receive Social Security retirement based on their individual work history. He receives from his work, she from hers. The two records are independently established. When either dies, an application is needed from the widow or widower for any survivors benefits to be paid. In addition to determining if any survivor benefits are payable, development includes establishing the marital relationship, usually with the marriage certificate. This was not needed before because each person was receiving only through his or her own work record.

Now use an example where either husband or wife had been receiving a spousal benefit, even if also receiving through his or her own retirement work record. When the family sees the change to a survivors benefit as “automatic”, this is usually the situation. For simplicity, say the wife was eligible as a spouse on the husband’s record and he dies first. When notified of his death, action within Social Security is taken to change her benefits from that of wife (spouse) to widow (survivor). No application is needed. Since she was eligible as a spouse, Social Security had previously established that she would be eligible for a survivors benefit if widowed and the marital relationship was already developed.

Even when both people received Social Security on the same record, as in the preceding example, sometimes paperwork, although not a complete application, is required to change a Social Security spousal benefit to husband or wife to a survivors benefit to a widower or widow. An example is if the surviving spouse is younger than his or her personal survivors full retirement age (FRA). Starting a benefit when younger than FRA results in reduced benefits. Documentation is required to show that the person chose to start reduced survivors benefits rather than wait for a higher benefit in the future.

Survivors benefits are not always payable. For example, if the survivors own Social Security retirement amount was higher than the one received by his or her deceased spouse, receipt of an ongoing, monthly, survivors benefit is unlikely although a one-time payment might be possible.

Always contact Social Security when there is a death in the family.

Born on first of month – FRA and the retirement test

Posted on March 22, 2013 by Howard Kossover

Q: I reach my full retirement age (FRA) of 66 on May 1, 2013. Is there any significance to waiting until age 66 ½ to start my Social Security retirement? That is when I plan to retire.

A: You can start your Social Security retirement with whatever month you think best, if you meet all requirements at the time.

If starting SSA retirement when older than full retirement age, your monthly amount would be more than the full retirement age (FRA) amount. If starting before FRA, the amount would be less than the FRA amount.The amount of increase or reduction depends on the specific number of months involved, not your age in years.

Being born on the first day of the month is important for you. Legal precedent states that a person attains their age on the day before their birthday. When born on the first of the month, Social Security figures your benefit amount and your full retirement age as if your birthday was in the previous month. With a birthday of May 1, you are considered to reach FRA in April. Consider this when deciding when to start your Social Security retirement.

Estimate your full retirement age (FRA) amount with the Retirement Estimator in the SSA Retirement Planner section (www.socialsecurity.gov/retire2/). Then, use your estimated FRA amount with the “compute the effect of early or delayed retirement” calculator to estimate amounts for specific months before or after FRA. This calculator is at http://www.socialsecurity.gov/OACT/quickcalc/early_late.html#calculator.

How much will you earn in 2013? The earnings limit (annual earnings test) for people turning age 66, their full retirement age, in 2013 is $40,080. A special monthly, one time, earnings test exists and usually used in the first year of retirement if high earnings are expected that year. Depending on your anticipated 2013 earnings, you might decide to start benefits with January, with a smaller monthly benefit, even though you plan to continue working until May. Use the tools mentioned above to estimate benefits starting with any month. The earnings test stops with the month you reach full retirement age. With no limit on your earnings, starting your Social Security at FRA is another option even if you continue to work.