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.

More than retirement

Posts of last week emphasized the need for retirement planning, the value of Social Security benefits in retirement and the importance of having other income in addition to your Social Security. 

Social Security is far more than just retirement. With disability and survivors benefits, it should be an important part of your financial planning, no matter what your age, but especially for people early in their working years with young families. Based on your employment, Social Security helps provide a financial floor of protection at all ages for now, not only for some distant retirement point. 

Disability and death are not popular discussion topics. They happen anyway. In fact, if a younger worker, your chances of becoming disabled are probably greater than you realize. Social Security information shows that a 20-year-old worker has a 3-in-10 chance of becoming disabled before reaching retirement age.  

Social Security disability benefits can provide valuable help to you and your family. SSA disability has both work and medical requirements, with benefits only for a total disability expected to last at least a year. If you are eligible, payments to you and eligible family members can continue as long as you remain disabled. After two years, Medicare coverage based on receiving disability begins for you, no matter what your age. In addition, Social Security disability has many work incentives to help you retain benefits as you reenter the workforce.  

Including benefits to the disabled worker and eligible family members, disability payments accounted for 19 percent of Social Security benefits paid nationally, as of December 2012. 

Death is not just for the old. If you have enough work, Social Security survivors benefits are payable to eligible family members. The amount of work needed for survivors benefits, measured in Social Security credits, depends on your age when you die. The younger a person is, the fewer credits he or she needs for family members to receive survivors benefit.

Survivors benefits, to people of all ages, accounted for 11 percent of Social Security benefits paid nationally, as of December 2012.

How do you estimate Social Security amounts for disability and survivors benefits? Easy. Establish your personal my Social Security account and use it to see your Social Security Statement. The second page of the Statement shows if you have enough work for benefits and provides current estimates based on your actual earnings record. Your earnings record is also on the Statement, so check it for accuracy.

Social Security is far more than just retirement. With disability and survivors benefits, it should be an important part of your financial planning, no matter what your age.

Plan your retirement financial independence

Are you hoping for a secure financial retirement or are you planning for one?

Whether on your own or with professional guidance, planning for retirement is important. Your financial independence depends on you.

Years ago I was one of several speakers at a retirement planning seminar and heard another speaker mention that he was often asked when a person should start financially planning for retirement. He said his answer was always “five years ago, but at least today.”

Independence Day is tomorrow. Plan today to review your personal plans for retirement financial independence before the picnic, parade or family gathering. Then do it.

Include Social Security retirement benefits as part of your planning, but realize that Social Security was never intended to provide full retirement income. Under current law, if you have average earnings, your Social Security retirement benefits will replace about 40 percent of your pre-retirement earnings. The percentage is lower for people in the upper income brackets and higher for people with low incomes. Financial planners suggest you have in the area of 70-80 percent of pre-retirement earnings for a comfortable retirement.

As of May 2013, the average Social Security retirement amount was $1,267 per month to the individual worker, excluding any related family benefits. If starting SSA retirement in 2013, exactly at full retirement age and with maximum taxable earnings over your entire career, the highest Social Security retirement amount is $2,533 per month. There is a wide range to amounts.

How much will your Social Security retirement amount be?  Estimate it and learn more using the SSA retirement planner at http://www.socialsecurity.gov/retire2/.  In particular, use the Retirement Estimator for an estimate based on your actual work record.  Combined with this, many other calculators are available, including one to compute the effect of early or delayed retirement compared to your full retirement age (FRA). 

Social Security should be just one part of your retirement planning. Reach non-SSA financial planning websites through the retirement planner section. 

One of these is the Employee Benefit Research Institute / American Savings Education Council “Choose to Save” website, www.choosetosave.org/. Use the “Ballpark E$timate” there, an easy to use interactive tool to help you identify about how much you need to fund a comfortable retirement. The “Ballpark E$timate” takes issues like projected Social Security benefits and earnings assumptions on savings, and turns them into easy to understand results. 

Are you hoping for a secure financial retirement or are you planning for one? Your financial independence depends on you. I hope you are planning, if not five years ago, then today.

Happy Independence Day.

Starting SSA retirement – consider family benefits

One consideration mentioned this week for starting Social Security when younger than full retirement age was if Social Security benefits through your record are payable to family members. Using benefits to children, today I will provide an example of this. Benefits to children are not the only potential family benefits payable. This is just a general example.

When you qualify for Social Security retirement, your children may also qualify to receive benefits on your record. An eligible child can be your biological child, adopted child or stepchild with other categories possible. To receive benefits, the child must be unmarried and under age 18, be 18-19 years old and a full-time student (no higher than grade 12) or be 18 or older and disabled from a disability that started before age 22. Normally, benefits stop when children reach age 18 unless they are disabled. However, if the child is still a full-time student at a secondary (or elementary) school at age 18, benefits continue until the child graduates or until two months after the child becomes age 19, whichever is first. 

Starting your Social Security retirement when younger than full retirement age (FRA) permanently reduces the monthly amount paid to you. Amounts paid to others on your record will not reduce your own amount. Your personal amount is the same whether benefits on your record are paid just to you or to you and family members.

If you receive SSA retirement, an eligible child can receive up to a maximum 50 percent of your full retirement age (FRA) amount per month, not 50 percent of your reduced monthly benefit.

Based on career earnings and full retirement age amount, there is a maximum amount of family benefits payable through a person’s work record. Obtain an estimate of this amount on your Social Security Statement after creating a my Social Security account. If your earnings have been very low, it is possible that no family benefits are payable. More usual is that this maximum is reached once you and approximately two children are receiving benefits. Maximums vary based on individual work records but, once reached, additional eligible family members proportionally reduce the amount that other family members receive. All eligible children receive the same monthly amount.

For this example, say that your full retirement age (FRA) is 66 (birth years 1943-1954), your amount at FRA is $1,000 per month, and you have an eligible child. If starting Social Security at FRA, your monthly amount would be $1,000. This would be less or more if starting benefits when younger or older.  However, child’s benefits are based on the FRA amount, not the amount you are actually receiving. In this example, a child could receive up to $500 per month on your record.

Starting SSA retirement at FRA, your amount would be $1,000 and the child would receive $500 for a total of $1,500 per month. If you start reduced retirement at age 62, your amount is reduced to $750 per month but the child’s amount remains at $500 for a total of $1,250 per month.

Estimate your FRA amount with the online Retirement Estimator.

Depending on your plans and other income, perhaps child or other family benefits make early retirement worthwhile for you. Perhaps not.

Eligibility rules for your children are the same for Social Security retirement, survivors or disability benefits but amounts differ. If you receive SSA retirement or disability benefits, an eligible child can receive up to 50 percent of your full retirement age (FRA) amount per month. If you are deceased, an eligible child can receive up to 75 percent of your FRA amount per month. Other family members receiving benefits through your record can reduce these amounts.

Deciding when to start SSA retirement

Last week I wrote that there is no one best time for you to start Social Security retirement related benefits. It is a very individual decision, based on your own personal family and financial circumstances. You can retire without starting Social Security retirement. You can start Social Security without fully retiring.

In no particular order, here are a few of many questions for you to consider before deciding when to start your Social Security, or before retiring at all.  Use the SSA retirement planner tools at http://www.socialsecurity.gov/retire2/.  

1. What are your retirement plans? Stay home or travel extensively? Can you afford to retire earlier or should you wait and continue building your savings? Social Security retirement benefits are permanently reduced if started when you are younger than full retirement age (FRA). If delayed they continue growing each month until age 70. Do you want a smaller, reduced, amount or do you want to wait for a larger amount?

2. What is your other income? Social Security was never intended to be your primary retirement income. You will need other income. If you have average earnings, under current law your Social Security retirement benefits will replace about 40 percent of your pre-retirement earnings. The percentage is lower for people in the upper income brackets and higher for people with low incomes. Social Security benefits are the foundation for a secure retirement but you will need other income such as savings, pensions or investments. Financial advisors have told me that people need about 70-80 percent of pre-retirement earnings to comfortably maintain a pre-retirement standard of living. Depending on overall income, part of your Social Security might be subject to income tax

 3. Are Social Security benefits through your record payable to family members?  If so, perhaps starting sooner, with a permanent age reduced amount, is a good idea for you so that family members can receive also. Starting retirement at a younger age will reduce your benefits, but amounts paid to others on your record will not reduce your own amount.

4. How long are you going to live? Retirement could last many years. On average, a man reaching age 65 today can expect to live until age 84 and a woman until age 86. About one out of every four 65-year-olds today will live past age 90 and one out of ten will live past age 95. Are members of your family generally long-lived and healthy or not?  How is your own health? Your answers might lead you to start retirement either sooner or later.

5. Do you expect die before your spouse? Will she or he be eligible for a survivors (widow/widower) benefit on your work record? Delaying your retirement benefits could provide a higher survivors benefit to your surviving spouse, if one is payable. Survivors benefits might be payable even if spousal benefits are not. 

6. Are you eligible for both Social Security retirement and survivors benefits? How much is each? The timing of which benefit to start first can matter. Survivor benefits based on age can begin as early as age 60; your own retirement not before age 62. Starting the survivor benefit first could let your retirement amount grow, up to age 70. Starting retirement first could let the survivors amount grow, up to your survivor full retirement age. Learn your options. Full retirement age (FRA) is different for retirement and survivor benefits.

 7. Will you continue working? Consider the effect of continued employment on your Social Security benefits. You might be able to work and receive all your SSA retirement or expected earnings might prevent payment of at least a portion of your benefits. Once reaching full retirement age (FRA), Social Security benefits are not limited by earnings. Ongoing employment might increase future benefits. 

8. Remember Medicare. Are you approaching age 65? You can enroll in Medicare without receiving Social Security monthly benefits. If not yet receiving Social Security, you must take action to enroll in Medicare.  Enroll in Medicare Hospital Insurance (Part A) about three months before reaching age 65. You can apply online. You may not need Medicare Medical Insurance (Part B) at age 65 if your medical insurance is under a group plan based on your, or your spouse’s, current employment.  Research your needs in advance. General Medicare general information is in “Medicare” SSA publication 05-10043. Coverage details are at www.medicare.gov. .  

9. What does your spouse or partner want?  Perhaps the most important question here. Discuss it together.

When to start receiving Social Security retirement benefits (see SSA publication 05-10147) is an individual decision. You decide what is right for you. Use the SSA retirement planner tools at http://www.socialsecurity.gov/retire2/.   

Starting SSA retirement – now or later?

Q: I had expected to retire and start my Social Security next year at age 64 but I’ve been reading articles urging people to wait until reaching at least their SSA full retirement age, for me age 66, before starting benefits. What is best?

 A: One aspect of this question shows how Social Security has influenced retirement thinking. Prior to the Social Security Act legislation of 1935, few people were able to retire. According to the history section of the SSA website, only about five percent of the elderly received a retirement pension in 1932. People generally worked as long as they physically could do so. The concept of retirement, whether at 62 or a different age, is thanks in part to Social Security.

There is no one answer for when you should start Social Security retirement related benefits. This is a very individual decision, based on your own personal family and financial circumstances. 

If you live to the average life expectancy for your age, you will receive about the same amount in lifetime Social Security retirement benefits no matter whether you start receiving benefits at age 62, full retirement age, age 70 or any age in between. However, monthly benefit amounts can differ substantially based on when you start. Basically, you can get lower monthly payments for a longer period of time or higher monthly payments over a shorter period of time. Consider more than just the amount in your planning.

I have also seen articles suggesting that people delay starting SSA retirement benefits in order to receive a higher monthly amount. Benefit amounts change monthly in relation to your full retirement age (FRA).  Using your FRA of 66, which includes birth years of 1943-1954, if you start receiving retirement Social Security retirement at age 62, you receive 75 percent of your full retirement age amount because you will be getting benefits for an additional 48 months before FRA. Waiting until age 65, you get 93.3 percent of your FRA amount because you will be getting benefits for an additional 12 months. For an age 66 FRA, monthly percentages for age 62 – 66 are here. If delaying benefits past FRA, up to age 70 monthly increases equal 8 percent annually. Some articles encouraging waiting that I’ve seen mention that this is a larger rate of return than many investments currently offer.

There is no one answer for when you should start Social Security retirement related benefits. Next time I will discuss some topics for your consideration.