Young people get Social Security

Regular readers know that Social Security benefits people of all ages. Highlighting information for children under the age of 18, at the end of 2013 about 3.2 million children under the age of 18 were receiving an average monthly benefit of $534 because one or both of their parents are disabled, retired or deceased.

When a parent becomes disabled or dies, Social Security benefits help to stabilize the family’s financial future. In fact:

About 325,690 minor children of retired workers were receiving an average monthly benefit of $615.

About 1.2 million minor children of deceased workers were receiving an average monthly survivor benefit of $806.

About 1.7 million minor children of disabled workers were receiving an average monthly benefit of $328.

 More about Social Security protection for young people is at http://www.socialsecurity.gov/youngpeople/

 

 

Who receives benefits for a child? The representative payee.

Q: To receive benefits, must children be living in the same household when a parent receives Social Security disability?

A: No. For Social Security retirement, disability and survivors benefits, the parent-to-child relationship is important in determining if a child is eligible for payment.

This means that otherwise eligible children born in an existing marriage, without marriage, or in an ended marriage can receive Social Security if a parent receives retirement or disability, or survivors benefits if the parent is deceased. Child benefits are payable to eligible adopted or stepchildren. For stepchildren, the parent-to-parent relationship is important because it defines the parent-to-child relationship.

For a minor, or perhaps a disabled child, a separate question is what person receives those Social Security benefits on behalf of the child. Actual custody or other legal responsibility helps determine the person or agency to receive SSA payments on behalf of a child. Usually the custodial parent will be the person selected to receive these if the parents do not live together.

For a commonplace example, assume Parent A is receiving Social Security benefits and has a biological minor child living in another town with Parent B. If all other requirements are met, the child can receive Social Security benefits through the record of Parent A. Since Parent B has custody, those SSA benefits for the child would be paid to Parent B.

Representative payee is the term Social Security uses for a person receiving benefits on behalf of another person. In the above example, Parent B is representative payee for the child. 

Not just for children, representative payees are appointed to provide financial management for the Social Security and Supplemental Security Income (SSI) payments of people who are incapable of managing their own payments.

To become a representative payee, a person or agency must file an application and then provide ongoing accounting of how funds are used. Payees are appointed only for Social Security and SSI purposes and are completely different from guardianship or power of attorney. FAQ’s for representative payees are here.

Note that the Treasury Department does not recognize power of attorney for the purposes of negotiating federal payments, including Social Security or SSI checks.

 

February 2014 statistical snapshot

The monthly statistical snapshot for February 2014 for Social Security and Supplemental Security Income (SSI) is available. Monthly snapshots provide a quick view about benefits paid during the month.

Here you can learn national totals, by beneficiary count and percentage, of the different benefits paid and average amounts of each type of benefit.

For example, during February 2014, retirement related benefits accounted for 70.6 percent of all Social Security benefits paid, including benefits to retired workers, spouses of retired workers and children of retired workers. Each of these categories is shown separately with its own percentage of the total and other information.

In February 2014, across the nation 58,201 thousand people of all ages received a Social Security payment. Noted above, most of this was retirement related. Survivor benefits accounted for 10.6 percent and disability benefits, including family members, accounted for 18.9 percent.

A detailed February benefit picture for the separate Supplemental Security Income (SSI) program is linked at the bottom of the snapshot page.

 You can subscribe to receive an email alert when these monthly updates are released. To do so, follow the “Subscribe to Updates” link

When self-employed, who gets the credit? / Surviving divorced spouse benefits

When a couple works together in self-employment, who gets the Social Security work credit? Is this important? Based on a recent question, these topics are part of today’s post.

Q: Divorced and unmarried for over a decade, I had been married for over 20 years. We farmed, but when I checked my Social Security Statement work record (www.socialsecurity.gov/myaccount/), no farm self-employment earnings were there even though my ex-husband and I worked together. Only my non-farm wages were shown. Why would this be? Do I get any Social Security credit for that work? My ex-husband has since died.

A: It is likely that all of the self-employment income was posted to your ex-husbands work record rather than split between the two of you. If so, this does not imply that a mistake was made. Assigning self-employment income is done on the tax return and would have been a decision made by you two and your tax preparer at the time.

During the time you farmed, and even now, self-employment earnings were often credited to one person, usually the husband, even when both spouses worked together. Positives and negatives exist to doing this. A positive is that the person credited will have a larger amount for future retirement or other SSA benefit. This can increase benefits to family members if any are eligible on the record. A negative is that the person not credited, such as you, will have a smaller retirement benefit, or perhaps not be insured at all unless also working at another job.

If working together in a self-employment business, this is an important topic for a couple to discuss. Being insured for Social Security is not just about retirement. It involves possible benefits if the person not credited becomes disabled or dies, especially if family benefits to minor or disabled adult children could be involved.

At age 60 you are potentially eligible for surviving divorced spousal benefits on your ex-husbands record. Indirectly this could provide you a Social Security benefit related to your farm work because a survivor benefit would be higher with all the self-employment credited to his record rather than split between the two of you.

Contact Social Security for an estimate on your ex-husbands account. A survivors benefit estimate cannot be obtained online. To obtain one, call the national SSA toll-free number, 1-800-772-1213 / TTY 1-800-325-0778 (7:00am – 7:00pm business days) or your local office. Learn about SSA survivors benefits, including for a surviving divorced spouse at www.socialsecurity.gov/pgm/survivors.htm.

 

Reduction percentages for early retirement

Q: By what percentage would my SSA retirement be reduced if started at age 63?

A: Retirement benefits are reduced by the number of months started before a person’s full retirement age (FRA), also called normal retirement age.  Determined by year of birth, FRA is scheduled to reach age 67 for people born in 1960 or later.  

Social Security retirement benefits can be started anytime during the year if you are at least age 62.  There is no need to wait for your birthday.  As a percentage, retirement benefits are reduced 5/9 of one percent for each month before FRA, up to 36 months.  If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.  

For example, if the number of reduction months is 60, the maximum number for retirement at 62 when FRA is 67, then the benefit is reduced by 30 percent.  This maximum reduction is calculated as 36 months times 5/9 of 1 percent plus 24 months times 5/12 of 1 percent. 

Total percentages of reduction vary with full retirement age because the numbers of reduction months are different from full retirement age to age 62.  

For comparison, FRA is age 66 for people born between 1943 and 1954.  For them, starting benefits at age 62 will provide 75 percent (25 percent reduction) of the full retirement age amount because an additional 48 months are involved.

However, FRA is age 66 and 6 months for people born in 1957. For them, starting benefits at age 62 will provide 72.5 percent (27.5 percent reduction) of the full retirement age amount because an additional 54 months are involved.

Monthly retirement percentages are readily available on the Social Security website.  Go to “find your retirement age” in the retirement planner section at www.socialsecurity.gov/retire2/. Click on your year of birth for monthly percentages. 

Note that Social Security survivor benefits, when based on age, are also reduced by the number of months before full retirement age involved but FRA for survivors benefits is different from FRA for retirement.

 

Annual Statistical Supplement, 2013, now available

The Social Security Annual Statistical Supplement, 2013 is now available. 

The Supplement includes more than 240 statistical tables providing comprehensive data on programs administered by the Social Security Administration. These are Social Security (Old-Age, Survivors, and Disability Insurance (OASDI) ) programs and the separate Supplemental Security Income (SSI) program.  

Information includes beneficiary counts, benefit amounts, trust fund status, program summaries and legislative histories to help you understand these programs.

In addition to Social Security administered programs, information is presented about the major health care programs, Medicare and Medicaid, and other social insurance pro­grams, including workers’ compensation, unemployment insurance, temporary disability insurance, Black Lung benefits and veterans’ benefits.

With so much information available, it is likely that some part of the Supplement will interest you.

Table of contents: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/index.html

Highlights: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/highlights.html

Many information snippets are here, including about unemployment, workers’ compensation veterans’ benefits are.  For example:

  • About 56.8 million persons received Social Security benefits for December 2012, an increase of 1,353,705 (2.4 percent) since December 2011. Seventy percent were retired workers and their spouses and children, 11 percent were survivors of deceased workers, and 19 percent were disabled workers and their spouses and children.
  • OASDI benefit awards in calendar year 2012 totaled 5,654,668, including 2,735,007 to retired workers, 511,524 to their spouses and children, and 885,060 to survivors of insured workers. Benefits were awarded to 960,206 disabled workers and to 562,871 of their spouses and children.

Trust fund section: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/4a.html

Current beneficiary information: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/5a.html

Beneficiaries by state: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/5j.html

Information about people working and paying into Social Security: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/4b.html

Veterans’ benefits: http://www.ssa.gov/policy/docs/statcomps/supplement/2013/veterans.html and http://www.ssa.gov/policy/docs/statcomps/supplement/2013/9f.html

Do not ignore letters from Social Security

The Social Security Administration sends people letters about their benefits for many reasons. Some of these letters confirm that action was taken to change something, such as your address.

Read these letters. They are important. Especially if the letter is confirming a change made to where your Social Security payment is sent, for example, to a different bank. The letter is sent as protection for you.

For example, if you contacted Social Security to change where you payment goes, such as to a different bank account, the letter is confirmation that action was taken and tells you the effective date of change.

What if you received a letter like this but did not make any change? Do not ignore the letter. It might mean that thieves are trying to hack into your Social Security record in order to have your benefits sent to an account they control. There have been instances of this across the country.   

Contact Social Security immediately if you receive a letter about a change in your bank direct deposit that you did not authorize. If phones are busy, be patient. Call the national Social Security toll-free number, 1-800-772-1213 / TTY 1-800-325-0778 (hours of 7:00am – 7:00pm, local time) or contact your local office. SSA national and local representatives use the same computer system to help you.

Protect yourself. Social Security does not send email asking for personal information nor do representative’s cold call for information. When you contact us, information is needed so that your questions can be answered. The difference is that you made the call, it was not unexpected.

Do not ignore letters from Social Security about your benefits, especially one about a change that you did not authorize.

Disabled Adult Child benefits

Earlier this week I wrote about Social Security survivors benefits for a disabled widow, widower or surviving divorced spouse. Although having a disability is key to these, they are survivors benefits because they are based on the work record of the deceased, rather than the work record of the person receiving the benefit.

Another type of Social Security family benefit involving disability is for disabled adult children, age 18 and older. This variation of child benefits is available through your work record whether you are receiving Social Security retirement, disability or you are deceased and your family is eligible for survivors benefits.

When younger than age 18, eligible children can receive Social Security family benefits through a parent’s record whether the child is disabled or not. One factor for paying family benefits to a child past age 18 is whether they have a disabling impairment that started before the age of 22.

The issue is not how old your adult child is at time of application but their age at start of their disability. For example, if your child has a severe disability since birth, he or she could be in their 40’s when you file for Social Security retirement. However, since the impairment began before age 22, benefits as a disabled child through your record are possible at that time.

If he or she had worked and paid into the Social Security system, a disabled adult child might also be eligible for SSA disability through their own record. This does not prevent them from possibly receiving SSA benefits as a child through a parent.

Social Security benefits for children are the same whether through the retirement, survivors or disability programs. Benefits paid to family members through your work record do not lower the amount of your own benefit.

 

Surviving disabled widow(er) benefits

Most information about Social Security disability benefits concentrates on benefits for people receiving through their own work record.

To receive disability based on his or her own work record, a person must meet a work requirement with enough work at the right time based on age and a strict medical definition of disability that is largely concerned with ability to work. General information about Social Security disability is at http://www.socialsecurity.gov/pgm/disability.htm.

This is not the only type of Social Security benefit related to disability. Sometimes, a disabled family member can receive Social Security through your work record if you are retired, deceased (survivors benefits) or disabled.

For example, if a worker is deceased, disabled widow or widower’s benefits might be payable as a type of Social Security survivors benefit. This is potentially payable to a widow, widower or surviving divorced spouse with a disability if all requirements are met. Some of the requirements for this include that:

  •   the survivor be between age 50 and 60
  •   he or she has a medical condition meeting the definition of disability and
  •   the disability started before or within seven years of the worker’s death (exceptions exist)

Even though the beneficiary must be disabled to receive benefits as a disabled widow, widower or surviving divorced spouse, this is a type of Social Security survivors benefit because the worker must be deceased. It is not for husbands, wives or former spouses having a disability since the worker is alive.

Voluntary tax withholding from Social Security benefits

People filing application to start Social Security benefits often ask if taxes are withheld from their monthly payments. They are not. Taxes are not routinely withheld from Social Security benefits.   

Especially during this time of year as people pay their Federal income tax, another popular question is whether taxes can voluntarily be withheld from Social Security payments. Yes, you arrange this.

If desired, you can request voluntary Federal tax withholding from your monthly Social Security benefits. You may find doing this easier than paying quarterly estimated tax payments. See http://www.socialsecurity.gov/planners/taxwithold.htm.

To start voluntary Federal tax withholding you need to complete Internal Revenue Service (IRS) Form W-4V, Voluntary Withholding Request, and return it to your local Social Security office. To change or end an ongoing voluntary withholding, complete another form W-4V.

Withholding is by your selected percentage of monthly benefits, not a flat dollar amount. When completing the W-4V you select the percentage of benefits for tax withholding. Available options are to have 7 percent, 10 percent, 15 percent or 25 percent of your monthly benefit withheld.

The Social Security Administration has no authority to withhold state or local taxes from your benefit. Voluntary withholding is only for Federal taxes.

Social Security employees cannot provide tax advice. If voluntary withholding interests you, discuss it with your tax preparer or call IRS at 1-800-829-3676 (TTY 1-800-829-4059). To start voluntary tax withholding, complete and provide IRS Form W-4V to your local Social Security office.