Social Security disability, retirement or both?

Q: My brother is 64 years old but in poor health even though he still works full-time. His doctors are telling him to retire. The doctors say he should qualify for disability. What would be the best for him? Social Security or disability? 

A: Just to be clear, retirement, survivors and disability benefits are all Social Security, just different parts. 

Social Security disability information is here. Your brother should especially look at the Disability Planner section. 

Since the disability definition for Social Security purposes is based on ability to work, not just health, it is unlikely that a disability application by your brother would be approved as long as he continues working full-time, assuming no employer subsidy or special considerations that allow him to work. 

In general, if working in 2014 and having earnings that average more than $1,070 a month, a person cannot be considered disabled. Usually disability clients file for benefits after they stop working or have greatly reduced work activity. With that, the decision to file or not is his.  

Only your brother can decide what is best for him. He can file an application for Social Security disability or retirement. Disability benefits are not reduced for age. Retirement benefits are reduced for age if started when the person is younger than full retirement age (FRA).

Since your brother is at least the minimum SSA retirement age of 62, another available option is for him to file for both disability and retirement (reduced for age) benefits at the same time. 

If he does this, retirement benefits could be received while the disability application is pending. If disability is not approved, his retirement benefits continue at the reduced rate. If the disability application is approved, the benefit amount is reviewed and increased although not to 100 percent. Final amounts would be based on the number of months that he received a reduced retirement.

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.

 

 

 

 

 

 

OASDI Beneficiaries by State and County (2013)

The annual Social Security Administration publication OASDI Beneficiaries by State and County (2013) is available.  

Quoting from the preface: 

This annual publication focuses on the Social Security beneficiary population—people receiving Old-Age, Survivors, and Disability Insurance (OASDI) benefits—at the local level. It presents basic program data on the number and type of beneficiaries and the amount of benefits paid in each state and county. It also shows the numbers of men and women aged 65 or older receiving benefits.”

In your state or county, how many people receive Social Security monthly benefits?

How is that divided between Social Security retirement, survivors or disability benefits?

How much money does that bring in to your local economy?

Find out here. 

As of December 2013, 18.3 percent of the entire United States population received a Social Security retirement, survivors or disability benefit. Including family members, this was approximately 70 percent retirement benefits, 11 percent survivors, and 19 percent disability.

In North Dakota, 17.1 percent of the population received Social Security benefits, 17.5 percent in Minnesota, 19.3 percent in South Dakota and 20.5 percent in Montana. What about where you live?  

When looking up your state or county information, keep in mind that benefit amounts are shown in thousands of dollars.

When do I get credit for my 2013 earnings?

Q: I retired effective January 2014, so my current Social Security payment only reflects earnings through 2012. When will my retirement amount include 2013 wages? What do I need to do to make that happen?  

A: Earnings for 2013 are automatically reviewed for possible increase to your retirement benefits when posted to your work record, approximately by October 2014. You do not need to do anything for this to happen. The automatic review includes employment from wages and self-employment.  

Employers pay estimated taxes to IRS based on wages paid during the year but specific information of how much individual employees earned during a year are only sent to the Social Security Administration with annual W-2’s. Your employer reports earnings to Social Security at about the same time you receive your W-2 form. The employer report is a copy of the W-2.  

Employers of all sizes can register to report W-2 information electronically with Social Security Business Services Online. Incentives exist to encourage electronic W-2 reporting but many still are received by paper, requiring additional handling and processing time.  

W-2 processing for a year is usually completed during the fall of the following year, approximately October. Social Security receives more that 250 million wage reports annually. These are processed by employer report, not by individual employee. If you worked for more than one employer during the year, your total earnings will not be posted to your personal earnings record all at one time. Earnings from each employer will be added to your record when that employer’s report is processed.  

Your 2013 earnings will be automatically reviewed for possible increase to your retirement benefits when posted to your work record. While this review is automatic, it does not mean that benefit amounts will increase a significant amount or even at all. Retirement benefits are based on your best 35 years of employment, with the actual earnings amounts adjusted (indexed) to account for changes in average wages over the years. New earnings would have to replace earnings already used to increase your retirement amount. If 2013 earnings increase benefits, the increase is retroactive to the start of 2014.   

Since Social Security posts W-2 information all during the year, this automatic review might be sooner, especially if the employer reports W-2 data electronically with Social Security Business Services Online, but final reviews are completed when all W-2’s for the preceding year are processed in the fall. 

This review is done automatically every year that new earnings are posted to your work record. You do not need to take any action for this to happen.  See page 9 of “How Work Affects Your Benefits” at http://www.socialsecurity.gov/pubs/EN-05-10069.pdf.

Whether or not receiving monthly benefits, you can check your personal Social Security earnings record by creating your my Social Securityaccount and looking at your SSA Statement. Earnings on the Statement are updated as described above, with earnings for a year posted during the fall of the next.

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.”

Update: Social Security and same-sex marriages

Following is a Social Security press release dated June 20, 2014.

 Social Security Defines Policy for Same-Sex Married Couples

Agency Extends Benefits Broadly, Subject to Legal Constraints

Social Security has published new instructions that allow the agency to process more claims in which entitlement or eligibility is affected by a same-sex relationship. These instructions come in response to last year’s Supreme Court decision in U.S. vs. Windsor, which found Section 3 of the Defense of Marriage Act unconstitutional. 

This latest policy development lets the agency recognize some non-marital legal relationships as marriages for determining entitlement to benefits. These instructions also allow Social Security to begin processing many claims in states that do not recognize same-sex marriages or non-marital legal relationships.  We have consulted with the Department of Justice and determined that the Social Security Act requires the agency to follow state law in Social Security cases. The new policy also addresses Supplemental Security Income claims based on same-sex relationships.

As with previous same-sex marriage policies, we worked closely with the Department of Justice,” said Carolyn W. Colvin, Acting Commissioner of Social Security. “We are bound by the law within the Social Security Act, and we have to respect state laws.  We remain committed to treating all Americans fairly, with dignity, and respect.”

If a person believes he or she may be entitled to or eligible for benefits, they are encouraged to apply now.

To learn more, please visit www.socialsecurity.gov/same-sexcouples.

 

If delayed, to what age do SSA survivors benefits increase?

Q: My husband and I both worked so each of us received our individual Social Security retirement, although his amount was more. I was age 64 when he died a year ago but decided to delay starting SSA survivors benefits as a widow to wait for a higher amount. Until what age will they keep increasing if I wait?

A: Differences exist between retirement and survivors Social Security benefits but, as with retirement, the younger you are when starting survivors benefits based on age, the larger the reduction. Reductions are based on the number of months away from full retirement age (FRA) a person is. Survivors FRA is different from retirement FRA. For example, for birth years 1945 – 1956, the survivors FRA is age 66 compared to birth years 1943 – 1954 for retirement FRA age 66.

Another big difference is that age based survivors benefits to widows or widowers can start at age 60, compared to age 62 for retirement benefits.

Coming to your question, unlike retirement delayed retirement credits, survivors benefits do not continue increasing if you wait past full retirement age. There is no point in waiting past your survivors FRA to start widows benefits through your husbands work record because they will not continue increasing just because you are older. Of course, you can start to receive them earlier, with a reduction, if desired. 

Along with your age, the widow’s amount will depend on your husband’s retirement amount. By waiting until full retirement age, this will be approximately what he had received, with the total reached by adding the increase from the widows to your existing retirement benefit.  

Since applications for SSA survivors benefits are not yet online, make an appointment with Social Security about two months before you want to start them. Do this by calling the national SSA toll-free number 1-800-772-1213 (TTY 1-800-325-0778). You already proved your birthdate for your retirement application but will need to show proof of marriage to your husband now.  

More about Social Security survivors benefits is at www.socialsecurity.gov/pgm/survivors.htm.

 

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.

How many people work while receiving Social Security?

Q: How many people receiving Social Security benefits are also working?

A: The publication Earnings and Employment Data for Workers Covered Under Social Security and Medicare, by State and County, 2011 mentioned earlier this week does not provide information based on whether the worker received Social Security or not, so a specific answer is not readily available. 

Through SSA retirement, survivors and disability programs, plus family benefits in each of those, payments go to people of all ages, many of whom might be working.

 As reported in the Income of the Aged Chartbook, 2012, based on Census Bureau household survey data, in 2012 approximately 28 percent of those aged 65 or older had employment earnings. Not all of those surveyed were receiving Social Security benefits but nearly 90 percent were. 

In the households surveyed, employment greatly varied based on age. Of those in the age 65-69 range, 49.7 percent had earnings. By age 70-74 this dropped to 30.6 percent , then to 19.8 percent for people aged 75-79 and ending at 8.5 percent for those age 80 or older. 

Social Security provides the largest share of aggregate income for units aged 65 or older. Aggregate income for the aged population comes largely from four sources. Social Security accounts for 35.3%, earnings for 33.9%, pensions for 17.1%, and asset income for 10.5%. Only 3.0% comes from other sources.

The Income of the Aged Chartbook, 2012, is on the SSA website at www.ssa.gov/policy/docs/chartbooks/income_aged/2012/index.html

If you work and receive Social Security benefits, other than because of your own disability, the annual retirement test applies if you are younger than full retirement age (FRA). FRA is different for retirement compared to survivors benefits.

 If receiving SSA benefits due to your own disability, report the work to Social Security and ask how it might affect your benefits. Disability work incentives exist to help you return to work.