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.

Social Security number as tax ID

Q: When did Social Security numbers start being used for tax ID?

A: President Kennedy signed into law Public Law 87-397 on October 5, 1961. This legislation was designed to cut down on tax cheating by assigning a tax identity number to every taxpayer.

 In 1962, the Internal Revenue Service adopted the Social Security number (SSN) as its official taxpayer identification number. IRS assigns a tax number to people not eligible for a SSN. 

The Tax Reform Act of 1986, signed into law by President Reagan, required that every dependent age 5 or older listed on a tax return had to have his or her own SSN. This new requirement doubled the Social Security number workload the following year. 

Related to this, many children today receive a Social Security number (SSN) as part of their birth registration, a process called Enumeration at Birth. Starting when birth certificate information is provided at the hospital, this voluntary and free process allows the state agency issuing birth certificates to share information about the child with the Social Security Administration. A SSN is then provided to the child and mailed to the parents without any additional paperwork or cost.  

More about Social Security numbers for children is here. General information for obtaining, updating or replacing a SSN card is at www.socialsecurity.gov/ssnumber/. There is no charge for any SSN activity.

 

Does it matter if I retire in December or January?

Q: I am 63, work full time, and plan to retire effective either this December 31 or January 2, 2015. Is there any difference as far as how much I can earn while on Social Security either way? I may work occasionally at my present job after retiring.   

A: At age 63 there is no difference between retiring at the end of December compared to the beginning of January. Either way, you work all through December, and probably start Social Security retirement effective with January. Payment for January arrives in February.  

For the annual retirement test in any given year, how much you can earn without penalty is based on whether you will be younger than your full retirement age (FRA) the entire year, reach FRA during the year, or are older than FRA. For your birth year, FRA is 66.Since you will be younger than FRA all of 2015, the lowest retirement test limit will apply before reducing benefits. In 2014, that amount is $15,480. 

Retirement test earnings amounts for calendar year 2015 are not yet available. When announced they will be posted in the SSA retirement planner at www.socialsecurity.gov/retire2/.    

Although this person will be retired for the full 2015 calendar year, people retire all months of the year with many earning over their earnings test amounts before retiring. So that these people can start their Social Security retirement, a one-time special rule using monthly earnings, rather than calendar year earnings, is usually applied during the year that SSA retirement benefits are started.  

Annual retirement test earnings include only your own calendar year gross wages and net self-employment.

Paying Medicare premiums without Social Security

Q: I will sign up for Medicare at age 65 soon, but am not getting Social Security yet. How do I pay Medicare premiums if not receiving monthly SSA benefits? 

A: If not receiving Social Security monthly benefits, a quarterly Medicare premium payment schedule is arranged that is payable by automatic deduction from a savings or checking account, by check or money order, or by credit card. Details are on the Medicare website, www.medicare.gov, in the “Your Medicare Costs” section. 

Note that there are different parts to Medicare and you might not have a Medicare premium to pay yet. 

Most people enroll in Medicare Part A (Hospital) at age 65 even if working and having employment based insurance. Part A does not have a monthly premium.  

Medicare Part B (Medical) has a monthly premium and can be refused. If you have suitable medical insurance through the current employment of you or your spouse, you might not need Part B yet. Before deciding, check with your employer health coverage.  

See the booklet “Medicare” for general information about the parts of and enrolling in Medicare.  

Complete your application for just Medicare online. Learn how at www.socialsecurity.gov/medicare/ 

No charge for SSN update

Q:  I looked for instructions to change my name on my Social Security card and found a website that charged money for this. A friend said changing my name with SSA is free. Is it? 

A:  Yes, it is free. Social Security does not charge a fee for Social Security number (SSN) card actions. See the Numbers & Cards section at www.socialsecurity.gov for needed evidence and a downloadable application. 

To protect your personal information and avoid identity theft, you cannot electronically submit the Social Security number (SSN) application. Some areas of the country have centralized sites to process SSN card actions but generally completed applications and evidence can be brought or mailed to your local office. 

It is important to note that any document submitted as evidence must be either the original or a copy certified by the issuing agency. A photocopy that you made yourself or a copy that you had notarized cannot be used. The website links to addresses to use if you need a certified copy of a document showing a birth, marriage or divorce within the United States. All evidence is returned to you. 

SSN cards are mailed from a central location when processing is complete. Allow approximately two weeks to receive your corrected or replacement card.

The name on your card should be the same as reported by your employer so that your wages are correctly shown on your work record. Have your employer correct your payroll record after your SSN card is updated. 

Be careful when searching the Internet for Social Security information. Avoid private for-profit websites that charge for services provided free by Social Security, including name changes to your SSN card.  

Go to www.socialsecurity.gov or www.ssa.gov for accurate information and free services.  

 

 

 

 

What is the disability waiting period?

Q: What is the disability waiting period? 

A: Social Security disability requirements include a waiting period of five full calendar months before entitlement to benefits can begin. Benefits are paid starting for the sixth full month after the date a disability is determined to begin. 

This date, called the onset, is when the person became disabled and not when the application was submitted or the decision made. 

For example, say someone’s Social Security disability due to illness or injury was established as beginning on September 22, 2014, the onset date. The waiting period would be the five full months of October 2014 – February 2015 with payment effective starting with March. Since Social Security payments are made in the following month, payment for March arrives in April. 

When a person files a disability application and approved near the onset date, he or she has to wait until the waiting period is completed before benefits start. If approved after the waiting period, benefits begin right away. Using the above example, if the person is approved for disability in January 2015, he or she is still in the waiting period and must finish it before benefits start. If the decision is made in May 2015, the waiting period is already completed and benefits can begin immediately. Either way, the waiting period applies. 

In addition to the Social Security disability program, the Social Security Administration is responsible for the very different, low income, Supplemental Security Income (SSI) program. SSI also has disability benefits but does not have a disability waiting period. If eligible for both programs, a person might receive SSI during the Social Security waiting period. Then, when Social Security disability begins after the waiting period, the amount of those benefits will reduce or end the SSI.

 

Living apart and Social Security spousal benefits

Q: My husband and I are not divorced but have lived apart for many years. Can I still receive Social Security through his record?  

A: Living together is not required for Social Security spousal benefits as a wife or husband. Your individual SSA retirement amounts might prevent spousal benefits but living apart while married will not.   

In addition, having lived apart will not prevent either of you from potentially receiving future survivor benefits as widow or widower.  

Should you divorce, SSA benefits might be payable as a divorced spouse or surviving divorced spouse if the marriage lasted at least ten years and other requirements are met.  

More about Social Security benefits for a current or former spouse is in the SSA website Retirement Planner section. See “how members of your family may qualify for benefits.”  

You can file an online application for benefits as a spouse. Details are here 

Go here to learn more about Social Security survivors benefits.