Planning for Someday with the SSA retirement planner

Planning for retirement, including learning the basics of Social Security, should begin well before you actually retire.  

Based on the questions I receive, advance planning is not always done. 

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/.  

 Here is a partial list of Retirement Planner topics:

     Finding your retirement age (full retirement age – FRA)

     Estimating your retirement benefits and other calculators

     Working after retirement

     Discover your retirement options

     Benefits for family members

     Needed documents

     Online retirement application

     Applying just for Medicare

 Someday you will want to retire. Start planning today to make someday possible.

What is your Someday?

The newest Social Security Update became available today and includes a section, partially reprinted here, about a time that everyone seems to look forward to – Someday – and how you can help plan for yours.

From the Update newsletter: 

For many people, Someday is an elusive day on the far-off horizon—always seeming close enough to see, but too distant to touch. Perhaps Someday you plan to go skydiving. Or enter a hot dog-eating contest. Maybe Someday you plan to ride a mechanical bull. Or travel around the world. Or visit all of America’s national parks.

Someday, you will want to retire. If you are mid-career, Someday, you will need to start planning for retirement. Even if you are just now starting your career, Someday you’re going to want to see what your future Social Security benefits will be and check your earnings for accuracy. Someday has arrived. Open a my Social Security account at www.socialsecurity.gov/myaccount, and you’ll see what we mean. 

Millions of people have opened a my Social Security account, and our Someday campaign will help millions more learn about my Social Security and sign up for their free online account. Someone opens a new account just about every six seconds. 

Watch our new Public Service Announcement at www.socialsecurity.gov/myaccount.

 

You can estimate your reduced retirement amount

It has been many years since age 65 was routinely full retirement age (FRA). Except for people born in 1937 or earlier, FRA is an older age, resulting in a reduced retirement amount for benefits started at age 65. The legislative change to FRA was included in the Social Security Amendments of 1983, signed into law by President Reagan. 

Despite this change taking place years ago, I routinely receive questions from people who do not seem to be aware of it. Very recently, several questions arrived from a person reaching age 65 in March of 2015, when he planned to retire. He wanted to start his Social Security retirement at that time but was concerned about avoiding a reduced retirement amount. 

As noted above, since he will be age 65 in 2015, starting his SSA retirement that March results in a reduced benefit because he will still be younger that his full retirement age (FRA) of 66. The way to avoid a reduced Social Security retirement benefit is by waiting to start until FRA. 

Once at least age 62, you can start your SSA retirement with any month you chose. Any reduction or increase depends on the number of months that you are before or past your full retirement age (FRA). Reductions are permanent but any cost of living adjustments are received. 

Information and calculators are at the SSA Retirement Planner. Use the Retirement Estimator to obtain your approximate full retirement age (FRA) amount based on your own work record.

In the Retirement Planner, use the “Find your retirement age” chart to find your own full retirement age (FRA). More than just providing a FRA, this chart also shows the month-by-month percentage of reduction from age 62 to FRA. Each full retirement age has slightly different reduction percentages because the number of months from age 62 to the FRA will be different from the other FRA’s.

Full retirement age is 66 for people born between1943-1954. For them, starting SSA retirement before age 66 means a reduced amount, with different reductions for each month. Below are two images from the FRA page for these years of birth. The first shows what the FRA is and the second is an example of the monthly reduction rates for FRA at age 66. Neither is a full image.

Using these charts to estimate the retirement amount for any month is easy. For example, use a birthdate of March 7, 1950, and an FRA amount of $1,500. Starting SSA retirement effective March 2016 at age 66 provides an unreduced $1,500 monthly amount. Using this, here are results of several 2015 retirement months.

Depending on expected 2015 earnings and the 2015 SSA retirement earnings limits, which are not yet known, this person might decide to start Social Security retirement effective with January 2015, even with an actual retirement date in March. That is 14 months early, providing a monthly benefit reduced to about 92.2 percent of the FRA amount, or about $1,383.  

Benefits started effective March 2015, are 12 months early. Starting then results in a monthly retirement about 93.3 percent of the FRA, equal to about $1,399 per month,  while benefits started with April are 11 months early and reduced to about 93.9 percent or $1,408. Start benefits when best for you, whether before, at or after FRA.  

Also part of the Retirement Planner, the “Compute the effect of early or delayed retirement” calculator provides the same basic reduced benefit information while also including benefit amount increases information for retirement started when you are older than full retirement age. Early or delayed refers to before or after your full retirement age. This calculator uses the term “primary insurance amount” which means the same thing as your full retirement age (FRA) amount. As above, use the Retirement Estimator to estimate your personal FRA amount based on your own work record.

 

 

 

 

 

 

Survivor benefits if twice widowed

This interesting question came from a woman so, for convenience, the answer refers to Social Security survivors benefits for a widow. The information also applies to a widower.

Q: I did not work outside the home, but have been widowed twice. I started Social Security widows benefit at age 60 after my first husband died. Eventually I remarried, continuing those benefits, until now at age 65 was widowed for a second time. The SSA representative said I could receive a larger benefit amount from my second husband now or wait for an even higher amount at age 66. Please explain this.

A: It was excellent that this person contacted Social Security to learn about possible benefits. Social Security representatives can provide options to consider based on personal information you provide, but the decision is yours. Ask questions until you understand your options.

A person can be eligible for benefits on more than one Social Security work record. For this question, survivors benefits are possible through the work records of two deceased husbands. More routine examples are people who are eligible for retirement through their own work record and that of a spouse or through their own retirement and a suvivors record as widow or widower. When eligible on more than one record, combined benefit amounts will equal the highest individual benefit amount.

Age 60 is the earliest a widow or widower can start Social Security survivors benefits based on age. The younger you start, the larger the reduction. As with SSA retirement benefits, each month of delay in starting provides a larger monthly amount, but only up to when you reach your survivors full retirement age (FRA). Survivors FRA’s are different from retirement FRA’s.

For example, when started at age 60 the monthly reduction in survivors benefits is about 28.5 percent so this woman receives about 71.5 percent of the maximum survivors benefit amount on her first husband’s record.

Since she remarried after age 60, SSA survivors benefits through her first husband continued. These benefits cannot be paid if a person remarries before age 60, unless that marriage ends. Although possible, for simplicity it is being assumed that she did not receive SSA benefits as a spouse through her second husband’s work record.

Based on the question, she is younger than her full retirement age (FRA) for survivors benefits and SSA benefits from her second husband’s work record will be higher than those already being received.

Effective with the month of the second husband’s death, one option she has is to begin widow’s benefits through his work record immediately. These would be reduced for age. If exactly age 65, she would receive about 95.3 percent of the full amount.

Another option is that she could continue receiving only the widows benefit through her first husbands record and delay starting benefits through the second husband until she was older. That benefit amount would increase with each month of delay up to FRA when she would receive 100 percent of the amount payable through his record.

People of all ages receive monthly Social Security survivors benefits. Learn more at www.socialsecurity.gov/survivorplan/survivors.htm

Social Security at age 62

Every so often, I have mentioned that Social Security legislation is now gender neutral, meaning that benefit requirements are the same for women and men. This has not always been the case.

Today, June 30, is the anniversary of legislation that helped provide men with the same retirement benefits already enjoyed by women. Although few are probably aware of it now, this legislation was important to any man starting Social Security retirement benefits before reaching full retirement age (FRA).

Today’s concept of full retirement age was not required when Social Security first began because the Social Security Act of 1935 did not contain provisions for retirement payments before age 65. 

Concerning age for retirement, the 1935 Act, section Title II-Federal Old-Age Benefits, states:

“SEC. 202. (a) Every qualified individual (as defined in section 210) shall be entitled to receive, with respect to the period beginning on the date he attains the age of sixty-five, or on January 1, 1942, whichever is the later …”

For men, this changed on June 30, 1961 when the Social Security Amendments of 1961 were signed by President John F. Kennedy. Along with other provisions, these Amendments permitted male workers to elect early retirement at age 62.

When were women able to start Social Security retirement at age 62? November 1956, when Dwight D. Eisenhower was President.

When to start your Social Security retirement is an individual decision but starting before reaching full retirement age remains very popular. Use the free, personalized, online planning tools and calculators in the SSA Retirement Planner to help plan your SSA retirement. For some topics to consider, read the SSA publication “When to Start Receiving Retirement Benefits.”

More about creating your my Social Security account

Q: My daughter tried to create a my Social Security account to see her work record and get family estimates but could not because her address did not match a credit report address shown for her. She moved frequently over the last several years and does not know what address was needed. Can this be fixed?

A: Yes. The Social Security Administration puts lots of effort into protecting the identity and electronic records of our public. Usually these efforts do not create inconvenience but, unfortunately, this time they did. An overview of methods used to verify and protect a person’s identity are in the my Social Security section at www.socialsecurity.gov/myaccount/.

In summary, creating a my Social Security account involves use of routine ID questions from SSA records and several others provided by the Experian credit firm. The credit firm questions are a security feature since the answers are less likely to be known except by the actual person.

Social Security does not keep an address database except for people currently receiving benefits so the address question seen by your daughter would be from the credit firm. As in your daughter’s attempt, online registration cannot be completed if all information provided fails to completely match available records. She can still complete her my Social Security registration by visiting a Social Security office and presenting current photo ID. An appointment is not required.

Having a security freeze or credit alert on your Experian credit report also prevents you from creating a my Social Security account online. In this case you can either temporarily unblock your credit report to create your my Social Security account online, or you can retain the block and visit a Social Security office with photo  ID to have a representative help you.

People not yet receiving Social Security benefits can use their my Social Security account to get their SSA Statement with retirement, survivors and disability estimates and view their earnings record as it is on SSA records. They can also receive information about previously received benefits. Through my Social Security, people receiving a Social Security benefit can request a letter to verify the amount as well as update their address and direct deposit bank information for those benefits.

SSA online services update

As regular readers know, many Social Security activities can be completed online. 

Social Security has available online services whether you do not expect to be receiving Social Security anytime soon, are completing an application to begin SSA benefits, or are already receiving monthly benefits. Online services are available for specific groups, including employers for W-2 wage reporting and verification of employee Social Security numbers.

From the start of Fiscal Year 2014 in October 2013 through April 2014, here are examples of public online use for Social Security activities:

Through my Social Security, with services for people both receiving or not yet receiving benefits:

14,898,898 views of personal Social Security Statements for estimates and to see earnings records

664,649 changes to a current beneficiary mailing address or of direct deposit bank information (electronic fund transfer)

Applications:

Just over 50 percent of retirement and disability applications are now received online.

760,095 Retirement applications

760,825 Disability applications

391,534 Medicare only applications, for people age 65 but not starting SSA retirement

Other online actions:

145,990 requests to replace a Medicare card

128,589 requests to replace Form 1099 for filing taxes (largely during February – March)

Online services are available for you through the Social Security website, www.socialsecurity.gov, anytime at your convenience without calling or visiting an SSA office but those options are available if preferred.

The national SSA toll-free number is 1-800-772-1213 (TTY 1-800-325-0778). Both numbers have representatives Monday – Friday, excluding holidays, between 7:00am – 7:00pm, local time. Automated services are available 24 hours a day at 1-800-772-1213. Appointments can be made for your local office by calling the national numbers.

Local office public hours are usually Monday, Tuesday, Thursday and Friday from 9:00am – 3:00pm with Wednesday hours of 9:00am – noon. Small offices can have different public hours. Learn local office addresses and public hours here.

Did you know? The original Social Security website was launched in May 1994, just over 20 years ago. That first site received about 17,000 visits in its first month.  Now, in 2014, the SSA website averages more than 17 million visits monthly, contains roughly 45,000 pages of information including retirement planning tools and provides online services. Visit it at www.socialsecurity.gov.

Faces and Facts of Disability

Social Security benefits are for much more than just retirement. In mid-May, I wrote about the start and growth of the Social Security disability program.

To add to SSA website information about disability benefits and how to apply for them, recently the Social Security Administration created The Faces & Facts of Disability, a website section to help increase public awareness of the SSA disability program by providing program facts and personal stories about people receiving disability benefits.

 What do you know about disability? Test your knowledge at the disability quiz section. Here is one quiz question:

 Q: Only 31 percent of people have private sector long-term disability insurance. What percent of workers does Social Security Disability Insurance cover?

If you became disabled right now, how much in Social Security disability benefits could you potentially receive? What about potential benefit amounts to your family?

Obtain a current estimate based on your own work record by creating your personal my Social Security account and then reviewing your own Social Security Statement online.

 

my Social Security & credit reports

Q: I was unable to create a my Social Security account because I have a security freeze on my credit report. Why should this matter?

A: As a protection for you, part of the process when you create your my Social Security account includes contact by Social Security with the credit report firm Experian to help verify your identity. As a result, 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.

From its own internal records, Social Security can verify some of the information requested from you to establish your personal my Social Security account. For example, your birthdate and parent’s names are part of your Social Security number record.

Using an additional, external from Social Security, means to further prove your identity when creating the my Social Security record provides another layer of security. Experian provides questions from its records that also serve to verify your identity. These questions would not be about information routinely available, for example from a lost wallet or purse. Your Social Security number is not shared with Experian and information from that firm is not kept by Social Security.

Using Experian credit report information to help verify your identity may result in what is known as a “soft inquiry” on your Experian credit report. That report will show an inquiry by the Social Security Administration with the date of the request. Soft inquiries do not affect your credit score, are not reported to lenders and you do not incur any charges related to them. It will not appear on your credit report from Equifax or TransUnion, and generally will be removed from your Experian credit report after 25 months.

Multiple layers of security protection are available for your use when creating your my Social Security account. Learn about them at http://www.socialsecurity.gov/myaccount/.

Once established, your my Social Security account is useful whether or not you receive benefits yet. If receiving benefits or having Medicare now, you can:

Get your benefit verification letter

Check your benefit and payment information and your earnings record

Change your address and phone number and

Start or change direct deposit of your payment

If not receiving benefits yet, you can get your Social Security Statement with estimates of retirement, disability, and survivors benefits to help financial planning. You will also see your earnings record and the estimated Social Security and Medicare taxes you have paid. 

 

April is Financial Literacy Month

April is Financial Literacy Month, the perfect time to examine your saving habits and ensure that you are on track for a comfortable retirement. Financial planning can put your mind at ease, but getting started can be overwhelming. 

If you have not begun saving for retirement, now is a good time to start, no matter what your age. Whether retirement is near or seems a lifetime away, now is the time to begin savings so that time and compound interest works to your advantage.

Get a good estimate of your future SSA retirement amount with the Social Security online Retirement Estimator, one part of the SSA retirement planner. The estimator connects to your actual work record to provide a personal estimate. You can change the default estimates for those more in tune with your actual plans. 

For those years from retirement, create a my Social Security account and use it to view your Social Security Statement. The Statement contains your earnings from your Social Security record but, more to the point of financial planning, has estimated personal and family benefits should you become disabled or die. This information helps you arrange other parts of your financial planning.

Social Security personnel cannot assist with financial planning. Select your own helpers for this. Two websites to help you get started are www.mymoney.gov,the official U.S. government website dedicated to teaching Americans the basics of finances, and the Ballpark Estimator at www.choosetosave.org/ballpark, part of the American Savings Education Council program, which includes the Social Security Administration.

These sites, and others like them, are not just about savings for retirement. There are reasons to save for every stage of life. 

April is Financial Literacy Month. Now is a good time to review your existing plan, or start one.