What are delayed retirement credits?

Q: What are delayed retirement credits?

A:  You can start Social Security retirement as young as age 62 or wait to a later age. Full retirement age (FRA), sometimes called normal retirement age, is the Social Security Administration term for how old a person must be to receive retirement without age-based reductions. Delayed retirement credits (DRC’s) are increases to a retirement benefit when you delay starting retirement benefits 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. 

As with reduced benefits for early retirement, the amount of a delayed retirement credit increase depends on the number of DRC’s involved. The monthly DRC increase for people born in 1943 or later is 2/3 of 1 percent per month for a yearly increase of about 8.0 percent. 

There is no “best age” to start receiving Social Security retirement. It is a very individual decision. Overall, if you live to the average life expectancy for your age, you will receive about the same amount in lifetime Social Security benefits whether you start at age 62, full retirement age, age 70 or any age in between. However, monthly amounts can differ substantially based on your retirement age. You can get lower monthly payments for a longer period of time or higher monthly payments over a shorter period of time. Every choice has advantages and disadvantages but people are more likely to start Social Security retirement when younger. 

Retirement benefits started prior to FRA are referred to as “early” while those started past FRA are “late or delayed.” Part of the Social Security online Retirement Planner; use the “compute the effect of early or delayed retirement” calculator to estimate DRC amounts. Before doing this, estimate your benefit at full retirement age with the Retirement Estimator.


Average Social Security monthly amounts

Q: How much is the average Social Security benefit amount? 

A: The answer varies widely depending on the type of Social Security benefit.

Benefits are payable through the three Social Security component programs of Old-Age (Retirement), Survivors and Disability. Within each, a variety of benefits exist. Retirement and disability benefits could be payable to the worker based on his or her own Social Security number record as well as to eligible family members such as spouses or children. Survivor benefits are to eligible family members.

Nationally in November 2013, about 57,917,000 people received a monthly retirement, survivors or disability related benefit. Considering all of these people, the average monthly Social Security amount paid, combining all the different Social Security benefits, was $1,164.18.

For Social Security retirement benefits, the average worker, based on his or her individual work record, received $1,273 that month.

It is usual for SSA retirement benefits to be started when the person is younger than their full retirement age. For comparison, in calendar year 2013, the highest Social Security retirement amount for a person retiring exactly at full retirement age, and earning at least the maximum SSA taxable earnings for all 35 years used in computing benefits, was $2,533 per month. Maximum retirement information for 2014 is in the post of December 26, 2013.

When to start your SSA retirement is a personal decision. There is not one overall “best age” to do so. A few things to consider when making your decision are here.

For survivor benefits, the average monthly benefit amount for November 2013 was $1,066. Average amounts varied widely within the different types of survivors benefits. 

For disability benefits, the average worker, based on his or her individual work record, received $1,129 that month.   

More November 2013 average amounts for other SSA benefits are here.

Estimate your own retirement amount with the SSA Retirement Planner tools, especially the Retirement Estimator. Create your my Social Security account and see your online Social Security Statement for individual and family estimates for SSA retirement, surviviors and disability benefits.


ID theft and your SSN

Posting about identity theft is not the most cheerful way of closing out the year but I have received questions on the topic, answered below, due to the recent theft of personal information from a major retailer.

The Federal Trade Commission (FTC) website (www.ftc.gov) has a lot of information related to identify theft including about the recent retailer data theft. See the FTC consumber information section at http://www.consumer.ftc.gov/.  

Q: Will the Social Security Administration know if someone is misusing my Social Security number (SSN)? 

A: Eventually, perhaps. You will likely know long before Social Security does. Although other agencies and organizations use SSN’s, within Social Security the primary use of the SSN is to associate wages or self-employment earnings with a person’s individual record so that Social Security retirement, survivors and disabilty amounts are properly computed.

Individual earnings information is received from employers, or the self-employed, once a year when W-2 data is reported or with self-employment tax returns. This is posted to individual records on a flow basis all during the year and, for paper W-2s, usually completed in the fall of the following year. For example, calendar year 2012 earnings were almost all posted by the fall of 2013. Posting is faster for W-2 information electronically transmitted to Social Security using the free Business Services Online tools. Posting of wages just updates a record. It does not automatically identify if those wages are actually yours or if someone has stolen your identity and using your Social Security number.

Social Security recommends that you review your personal earnings record at least annually. Do this by creating a my Social Security account at http://www.socialsecurity.gov/myaccount/ and then looking at the earnings on your Social Security Statement. If those earnings are wrong, provide the accurate information to Social Security and corrections can be made. 

The Statement also provides estimated benefit amounts for yourself and family members. See a sample at http://www.socialsecurity.gov/myaccount/SSA-7005-OL.pdf. Read the How We Verify and Protect Your Identy section when creating your my Social Security account.

Q: Can I get a new Social Security number (SSN) due to ID theft?

A: Not impossible, but definitely rare. This action is usually only for very severe and ongoing problems. Obtaining a new number will not solve all misuse problems and might actually create new ones since your work, credit, tax, banking information and more are referenced under the orginal number. A person receiving a new SSN cannot use the old number anymore.  


Computing retirement: what is the maximum 2014 SSA retirement amount?

For the last several years, I have published the maximum Social Security retirement amount payable to a person retiring during the coming year. The topic generates a lot of interest so today I am providing the maximum Social Security retirement monthly amount payable to a person retiring at full retirement age (FRA) in 2014. Full retirement age is 66 for people born in 1943 – 1954.

The maximum monthly Social Security retirement amount changes each year. The 2014 maximum is more than the 2013 maximum, but will be less than the 2015 amount. Several reasons are responsible for this with a major one being that different years of earnings become available to include in the retirement calculation. 

With each new calendar year, a year of potentially higher earnings becomes available for use in computing retirement benefits. Not only might actual earnings be higher but, depending on the maximum taxable earnings base for that year, more of the earnings could be credited for use in the Social Security computation.

An early step in determining a retirement amount is to compute the person’s amount at full retirement age, without reductions or additions. To do this, Social Security uses the person’s best 35 years of earnings, weighted for inflation.

To compute the benefit at the person’s actual retirement date, Social Security adjusts the full retirement age amount by the number of months that the person is away from FRA. The amount is reduced if the person is younger than FRA, or increased if older than full retirement age.

If starting Social Security retirement in 2014 exactly at full retirement age, and if the person earned at least the maximum SSA taxable earnings (the taxable base) in each of the 35 years used in the calculation, then the highest 2014 Social Security retirement amount is $2,642 per month.

For comparison, the highest 2013 Social Security retirement amount was $2,533 per month.

Knowing the highest 2014 Social Security retirement amount is interesting. Estimating your own retirement amount is more useful. Do so with the calculators included in the SSA Retirement Planner. The Retirement Estimator will be especially useful.

The Retirement Estimator provides an estimate from your actual Social Security earnings record. Estimates are automatically provided for you at age 62, your full retirement age, and age 70. You can use the Estimator to obtain other estimates for different ages or annual earnings amounts.

Other SSA online calculators are available for you too. To estimate by the number of months that you are away from FRA when starting retirement benefits, use the “Compute the effect of early or delayedretirement” calculator. This calculator uses the terms primary insurance amount, which is the same as amount at full retirement age, and normal retirement age, which is the same as FRA.  

Want to see your earnings as recorded on your Social Security record? Create a personal my Social Security account and view your online Social Security Statement. The Statement provides a list of your lifetime earnings, plus family estimates for SSA retirement, survivors and disability benefits.

Ready to file for your Social Security retirement? Go online.

Will a health savings account change my SSA retirement?

Q: I am considering use of a heath savings account plan at work. Using one would reduce my taxes but have a secondary result of lowering my earnings for Social Security. Can this reduce my future Social Security retirement amount?

A: It potentially could, depending on the amount of money involved and for how long a time. An individual answer partly depends on the persons work record over many years. Social Security retirement amounts are based on your best 35 years of work earnings and your age, in months compared to full retirement age, when starting benefits. If your current earnings are included in those best 35 years, future benefit amounts might be smaller.

The Social Security website has a Retirement Estimator calculator that could help you reach an individual answer. Part of the SSA Retirement Planner section, the Estimator connects to a person’s actual SSA work record to provide a personal estimate. You can use the Retirement Estimator if already enrolled in Medicare, but not if now applying for or receiving SSA benefits.  

Initial estimates provided are for age 62, at full retirement age, and at age 70. These assume that a person will continue earning the amount of wages or self-employment earnings most recently posted to his or her record. For different estimates, you can change either the amount of future earnings used or the age when starting benefits.   

Comparing Retirement Estimator results for the same age based on the initial earnings level and then with lower or higher earnings provides approximate results of different earnings on your future Social Security retirement amount.

Actual Social Security retirement amounts consider how many months you are away from full retirement age, either younger or older, when starting benefits. The Retirement Estimator provides estimates for years such as 62, 63, 64 and older, not months. For specific months and additional information, other calculators are available in the Retirement Planner section. 



When to start Social Security – a new short video

A new, short video by the Denver Region of the Social Security Administration is now at http://www.socialsecurity.gov/denver/

The third video in a series, When to Start Receiving Retirement Benefits, focuses on filing for retirement benefits at various ages. It also highlights how to create a my Social Security account to get your Statement and how, if you are receiving benefits, you will be able to make changes to your account and get a benefit verification letter instantly.

As noted in this approximately seven-minute video, Social Security representatives are often asked what the best age to start receiving retirement benefits is. The answer is there really is no one best age for everyone. You can start your Social Security retirement benefits as early as age 62 or as late as age 70. Your monthly benefit amount will be different depending on the age you start receiving it.

Watching this video will give you some ideas. The Social Security Retirement Planner has much more information and calculators to help in your planning. From the SSA homepage, www.socialsecurity.gov, go to the “Benefits” tab and then go to the Retirement section.

Creating a my Social Security account can help your overall financial planning, not just for retirement. Available there, your personal Social Security Statement contains several estimates and a record of your earnings history as shown on Social Security records. Social Security is more than retirement and these estimates are for more than just retirement planning. They provide current disability estimates for you and your family as well as suvivors estimates for your children and other family members.

Watch the When to Start Receiving Retirement Benefits video directly from the Social Security website at www.socialsecurity.gov/denver.

Another short video available there, Medicare Enrollment Periods at Age 65, covers the four parts of Medicare, when to enroll in Medicare, when coverage begins, and how to apply. More Medicare information and an online application are at www.socialsecurity.gov. From the homepage, go to the “Benefits” tab and then go to the Medicare section.

Watch When to Start Receiving Retirement Benefits, available on your schedule, 24 hours a day, 7 days a week.

File now for a January 2014 retirement benefit

Q: I want my Social Security retirement to start with January. When should I complete my application?

A: Now is a good time. 

Use the SSA Retirement Planner tools to be sure of your plans and then use the online retirement application. A SSA representative will review the application and might call you. If you want to speak to a SSA representative when applying, either by telephone or in-person, call the SSA national number, 1-800-772-1213 (TTY 1-800-325-0778), for an appointment. 

When completing your application, whether online or not, have the following information available:

  • Your date and place of birth and Social Security number (SSN).
  • The name, SSN and date of birth or age of your current spouse plus know your date and place of marriage.
  • For a previous marriage that ended in death or a marriage that lasted at least ten years before ending in divorce, have the same information available.
  • If you have a child under age 19, or a child severely disabled before he or she reached age 22, know their date of birth and SSN.
  • The beginning and ending dates of any active U.S. military service you had before 1968.
  • Your bank or other financial institution’s Routing Transit Number and the account number for electronic deposit of benefits
  • The name and address of your employer(s) for this year and last year.
  • Your actual earnings amount from gross wages or net self-employment for last year and estimated amounts for this year and next year. Last year’s W-2 form might be requested if needed to update your work record.
  • It is suggested that you create a my Social Security account to view your earnings history on your SSA Statement for accuracy and estimate benefits. 
  • You might be asked to provide your birth certificate or proof of citizenship or lawful alien status if not born in the United States. If so, provide the document certified by the issuing agency, such as state vital statistics, not a photocopy that you made. Documents are returned to you.

Social Security benefits for a month are paid in the following month. Your retirement benefit for January is payable in February with the actual payment date based on your birthdate.



Land rent income; when to start SSA retirement

Q: My main income is from land rent and a part-time job. Will this prevent me from receiving Social Security retirement at age 62 next year? 

A: Land rent is not a concern for Social Security annual earnings test purposes. It will not prevent you from receiving Social Security retirement. Only your own gross wages or net self-employment for the calendar year is considered for the earnings test.  

At age 62, you are younger than full retirement age (FRA) so your part-time earnings might lower the amount of retirement payable depending on how much they are. In 2013, earnings over $15,120 could affect benefits for people younger than FRA the entire year. Earnings test information for 2013 is at www.ssa.gov/retire2/whileworking.htm. Earnings test levels for 2014 are not known yet. 

Keep in mind that you do not need to start Social Security retirement just because you are age 62, even if you are retired. Will you need the SSA income at 62? Compared to waiting until full retirement age (FRA), starting at age 62 leaves your benefit amount permanently reduced, excluding cost-of-living changes, by about 25 percent. In other words, a $1,000 monthly benefit at FRA of age 66 is reduced to $750 at age 62. Since benefits increase a small percentage with each month delayed, totaling about 8 percent annually, until you reach age 70, you could delay starting Social Security in favor of a higher amount in the future.

You could be retired for many years and having a higher SSA benefit might be important in years to come. The SSA Retirement Planner section has calculators and details to consider when making your decision. More items for you to consider are in the SSA publication When to Start Receiving Retirement Benefits in the Retirement Planner section.  

You decide when to start your Social Security retirement. Whatever you decide, you can complete your retirement application online


SSA mothers & fathers survivors benefits

Q: What are Social Security mothers and fathers benefits?  

A: These are Social Security survivors benefits paid to a surviving spouse or surviving divorced spouse based on having a child of the deceased in their care.   

Mothers and fathers benefits may be paid to a surviving spouse or surviving divorced spouse regardless of age, if she or he is currently unmarried and has a young child under age 16, or a disabled adult child, of the deceased in their care, and the child is entitled to survivors benefits on that deceased parent’s record.   

For a simple example, use the family of a man dying in his thirties leaving behind a widow of the same age and a young child. Assuming the child is eligible for Social Security survivors benefits from the deceased parents record, then the widow would likely be eligible for SSA mothers benefits, up until the child reaches age 16 if a disability is not involved. 

Since they are based on having an eligible child in care, mothers and fathers survivors benefits are usually paid to young widows and widowers. Amounts are not reduced for age but can be reduced by earnings of the person receiving them in the same way as working while receiving retirement benefits.

Similar benefits are payable to the spouse of a person receiving SSA retirement or disability benefits if children are involved, but not to a former spouse. 

Create your personal my Social Security account to look at your SSA Statement and see estimated family benefit amounts based on your work record. 

Learn more at the Benefits and my Social Security sections of the SSA website, www.socialsecurity.gov.

Like Cats? Baseball?

Like cats?  Yes, this is really related to Social Security.

Official Social Security information is available on several social media platforms in addition to the agency website, www.socialsecurity.gov

Four recent uploads to the Social Security YouTube channel feature cats promoting online retirement applications. Cats not interesting to you? Watch one of the baseball stadium videos instead. 

Interested in filing your SSA retirement application? Go to the Benefits tab of www.socialsecurity.gov to learn about retirement benefits, estimate your own amount, consider your options and then file your application online when convenient for you. Some application questions have drop down boxes to provide more information. 

File online to apply for Social Security retirement or spouses benefits. To do so, you must be at least 61 years and 9 months old and want to start your benefits in the next four months. When completed your application is reviewed by SSA representatives, usually but not always from your local office. If needed, a SSA representative will contact you.

Filing online is gaining in popularity and you are invited to go online. However, if online filing is not for you or if you have unanswered questions mid-way through the application, call the SSA national number (1-800-772-1213, TTY 1-800-325-0778) for an appointment. Appointments can be made for either a telephone or in-office interview.

Either way, you can still watch the cat and baseball SSA videos.