Monday, May 16, 2022

How Do I Find Out About Social Security Benefits

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Theres An Annual Social Security Cost

How to Calculate Your Social Security Benefits

One of the most attractive features of Social Security benefits is that every year the government adjusts the benefit for inflation. Known as a cost-of-living adjustment, or COLA, this inflation protection can help you keep up with rising living expenses during retirement. The Social Security COLA is quite valuable its the equivalent of buying inflation protection on a private annuity, which can cost a pretty penny.

Because the COLA is calculated based on changes in a federal consumer price index, the size of the COLA depends largely on broad inflation levels determined by the government. In 2021, Social Security beneficiaries will see a 1.3% COLA in their monthly Social Security benefits.

The Kiplinger Letter forecast in March that the 2022 COLA would be 3%, which would be the largest increase since 2012 when Social Security benefits ticked up 3.6%.

Heres what COLAs have been in other recent years:

  • 2009: 5.8%
  • 2021: 1.3%

Do Not Provide Your Personal Information Online

As a general rule, you should never provide your sensitive personal information online to unknown organizations. Never give out your name, address, Medicare number, Social Security number, bank information or other identifying details to someone who claims to be a Medicare sales representative. If they approach you or contact you first, do not engage. Most legitimate organizations require you to reach out first they wont contact you unsolicited. If someone reaches out to you and then asks for your personal information, thats a big red flag. Dont fall for it.

If you give that site your personal information, they are likely going to sell it for profit. You will probably get a lot of phone calls and contact from insurance companies that have paid for your information. At best, it will be annoying. At worst, it could result in you being scammed. Its very important to be careful with where you put your information online.

What Is A Flex Card

Flex cards are tied to health insurance, and these flex card for seniors are actually a health insurance marketing tactic designed to lure seniors into switching to specific Medicare Advantage plans.

Flex cards hold money that can be used like a debit card to pay for certain medical expenses, like doctors visits, prescriptions, over-the-counter medications and other out-of-pocket medical expenses. In some cases, you can use your card to purchase healthy groceries at participating stores as well. You can even add a flex card to your Amazon account for eligible purchases.

However, you cant just spend flex card money on anything. Just like there are only certain items that can be purchased with an EBT card, there are only certain items that can be purchased with a Flex card as well.

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How Do Benefits Work And How Can I Qualify

While you work, you pay Social Security taxes. This tax money goes into a trust fund that pays benefits to:

  • Those who are currently retired

  • To people with disabilities

  • To the surviving spouses and children of workers who have died

Each year you work, youll get credits to help you become eligible for benefits when its time for you to retire. Find all the benefits Social Security Administration offers.

There are four main types of benefits that the SSA offers:

  • Learn about earning limits if you plan to work while receiving Social Security benefits

Getting A Social Security Number For A New Baby

I Receive Social Security Disability Should I Get A ...

The easiest way to get a Social Security number for your child is at the hospital after they are born when you apply for your childs birth certificate. If you wait to apply for a number at a Social Security office, there may be delays while SSA verifies your childs birth certificate.

Your child will need their own Social Security number so you can:

  • Claim your child as a dependent on your income tax return
  • Open a bank account in their name
  • Get medical coverage for them
  • Apply for government services for them

Keep your Social Security card in a safe place to protect yourself from identity theft.

Read Also: Social Security Retirement Check

How Does The Social Security Administration Calculate Benefits

Benefits also depend on how much money youâve earned in life. The Social Security Administration takes your highest-earning 35 years of covered wages and averages them, indexing for inflation. They give you a big fat âzeroâ for each year you donât have earnings, so people who worked for fewer than 35 years may see lower benefits.

The Social Security Administration also makes annual Cost of Living Adjustments, even as you collect benefits. That means the retirement income you collect from Social Security has built-in protection against inflation. For many people, Social Security is the only form of retirement income they have that is directly linked to inflation. Itâs a big perk that doesnât get a lot of attention.

There Are Social Security Benefits For Surviving Spouses And Children

If your spouse dies before you, you can take a Social Security survivor benefit, but not in addition to your own benefit. You must choose one or the other. If you are at full retirement age, that benefit is worth 100% of what your spouse was receiving at the time of his or her death .

A widow or widower can start taking a survivor benefit at age 60, but the benefit will be reduced because it’s taken before full retirement age. If you remarry before age 60, you cannot get a survivor benefit. But if you remarry after age 60, you may be eligible to receive a survivor benefit based on your former spouse’s earnings record.

Eligible children who are under age 18 or were disabled before age 22 can also receive a Social Security survivor benefit, worth up to 75% of the deceased’s benefit.

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How To Receive Federal Benefits

To begin receiving your federal benefits, like Social Security or veterans benefits, you must sign up for electronic payments with direct deposit.

If You Have a Bank or Credit Union Account:

  • Call the Go Direct Helpline at .

If You Don’t have a Bank or Credit Union Account:

Make Changes to an Existing Direct Deposit Account:

Learn how to make changes to an existing direct deposit account. You also may contact the federal agency that pays your benefit for help with your enrollment.

How Credits Are Earned

Video: How To Calculate Social Security Benefits

Since 1978, when you work and pay Social Security taxes, you earn up to a maximum of four credits per year.

The amount of earnings it takes to earn a credit may change each year. In 2021, you earn one Social Security or Medicare credit for every $1,470 in covered earnings each year. You must earn $5,880 to get the maximum four credits for the year.

During your lifetime, you might earn more credits than the minimum number you need to be eligible for benefits. These extra credits do not increase your benefit amount. The average of your earnings over your working years, not the total number of credits you earn, determines how much your monthly payment will be when you receive benefits.

Read our publication, “How You Earn Credits,” for more information.

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Using Your Benefit Estimates

As your statement will show, your Social Security retirement benefits will vary depending on when you claim them before or after your full retirement age . The longer you wait to start receiving payments, the higher your benefit amount will be.

However, it’s not always better to wait until your full retirement age to claim your Social Security benefits. If you need your Social Security benefits for living expenses, or you have a health condition that makes it unlikely that you will live past age 75 or so, you may be better off collecting your benefits sooner rather than later. You can use a calculator at the Social Security website to see which retirement age makes the most financial sense for you .

For comprehensive practical information about how and when to claim Social Security benefits, see Social Security, Medicare & Government Pensions, by Joseph Matthews with Dorothy Matthews Berman .

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  • Number Of Credits Needed For Survivors Benefits

    The number of credits needed for family members to be eligible for survivors benefits depends on your age when you die. The younger you are, the fewer credits needed. Nobody needs more than 40 credits.

    Under a special rule, we can pay benefits to your children and your spouse caring for your children, even if your record doesn’t have the number of credits needed. They can get benefits if you have credits for one and one-half year’s work in the three years before your death.

    If you are already receiving retirement or disability benefits at the time of your death, we will pay your survivors based on that entitlement. We will not have to determine your credits again.

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    Checking Your Social Security Earnings Record

    Social Security

    How confident are you that your Social Security earnings record is accurate?

    Unless youve checked it recently, you shouldnt be too sure.

    Mistakes in an individuals Social Security earnings record are actually much more common than most people think. In tax year 2012 alone, the Social Security Administration reported $71 billion in wages that could not be matched to an individuals earnings record! The good news is that the Social Security Administration has a system for sorting out some of these mistakes and assigning the earnings to the correct record. But nearly half of the mismatches are never corrected. That means that in 2012 there were approximately $35 billion in wages that was never credited to an individuals Social Security history.

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    What Does Social Security Pay For Disability

    The answer to this depends on whether a person gets disability through Social Security Disability or SSI. SSI beneficiaries are all limited to the same maximum amount. But Social Security Disability is based on your history of earnings, and can be more than $2500 per month, though the average is probably closer to $1200.

    Factors Affect What You Get

    Scarlett: If you are already drawing a small amount from your ex-husbands Social Security, you should be eligible to receive a survivor benefit when he passes away. As long as a divorced spouse does not remarry before the age of 60 , he or she is treated as a spouse and will receive spousal and survivor benefits.

    The determination of how much a survivor will receive is calculated by looking at two things. First, under most circumstances, the amount that a survivor receives is based upon the benefit that the deceased partner had been receiving.

    If the deceased did not claim a benefit until after full retirement age , then the survivor benefit will be higher, since the survivor benefit will equal the higher benefit the deceased partner received from delayed claiming.

    If the deceased partner was older than their FRA and had never claimed, then the survivor benefit will be based on the benefit that the deceased partner would have received if claimed at the time of death.

    If the deceased partner was receiving less than 82.5% of his or her PIA, then the basis for the survivor benefit will be 82.5% of the PIA.

    For example, lets suppose that the deceased partner had an FRA of 66, but claimed at 62. The benefit in this case would be reduced to 75% of his or her PIA. The survivor benefit would be based on 82.5% of the PIA, not 75%.

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    Your Social Security Benefits Will Be Taxed

    Most people know that you pay tax into the Social Security Trust Fund throughout your career, but did you know that you may also have to pay tax on your Social Security benefits once you start receiving them? Benefits lost their tax-free status in 1984, and the income thresholds for triggering tax on benefits haven’t been increased since then.

    As a result, it doesn’t take a lot of income for your Social Security benefits to be pinched by Uncle Sam. For example, a married couple with a combined income of more than $32,000 may have to pay income tax on up to 50% of their Social Security benefits. Higher earners may have to pay income tax on up to 85% of their benefits.

    You may also have to pay state income taxes on your Social Security benefits. See our list of the 13 States That Tax Social Security Benefits.

    Will My Social Security Benefits Be Reduced If I Work

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    A worker who claims benefits before full retirement age may run into the earnings limit, in which Social Security temporarily withholds $1 in benefits for every $2 in earnings above a certain amount in 2021, the limit is $18,960.

    And though a person may need benefits to supplement low earnings, the downside of permanently reduced benefits also exists if you claim early, whether or not you exceed the earnings limit, Ms. Floyd said.

    A working widow who collects a survivor benefit could also face the earnings limit. A widow can claim a survivor benefit as young as 60, though her benefit will be reduced by claiming before full retirement age. If she is working and exceeds the earnings limit, part of those reduced benefits will be withheld.

    The earnings limit also applies to the spousal benefit claimed by a nonworking spouse if the other spouse is working and both are younger than full retirement age. Social Security withholds benefits on total household earnings that exceed the limit.

    Withheld benefits are not lost forever, however. At the beneficiarys full retirement age, Social Security will adjust the monthly benefit upward to account for the withheld benefits. The beneficiary will continue to receive the higher payment even after she recoups the withheld benefits, which could take 12 years.

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    Calculate My Social Security Income

    These days thereâs a lot of doom and gloom about Social Securityâs solvency – or lack thereof. And regardless of whether you think Social Securityâs future is secure, the fact remains that you shouldnât plan on living exclusively off your Social Security benefits. After all, Social Security wasnât designed to make up a retireeâs entire income.

    Still, many people do find themselves in the position of having to live off their Social Security checks. And even if you have other income sources in retirement, Social Security can make up a significant part of your retirement income plan. That’s why itâs important to know all the rules surrounding eligibility, benefit amounts, taxation and more.

    Do you need help managing your retirement savings? To find a financial advisor near you, try our free online matching tool.

    Brief History Of Social Security

    The Social Security program was created by the Social Security Act that President Franklin D. Roosevelt signed into law in 1935. The first checks went out in 1940. Originally it paid benefits only to workers 65 and older, but in the 1970s the government altered it to allow workers to claim benefits as early as 62. It also instituted annual cost-of-living adjustments to help Social Security keep pace with inflation.

    The program has worked fairly well so far, but many people fear for the future, when there will be fewer workers to support a greater number of Social Security recipients. The latest Social Security Trustees’ Report indicates the program’s trust funds would be depleted by 2035, after which it would be able to pay out only about 76% of benefits to retirees and about 92% to disabled workers.

    The government has proposed several possible solutions for ensuring the long-term sustainability of the program, but at present no plans have been set. There’s no risk of the program disappearing in the next decade or two, but it’s possible future benefits may not go as far as they do today. That’s why today’s workers need to prioritize their personal retirement savings, so they can cover most of their expenses on their own.

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    Number Of Credits Needed For Disability Benefits

    To be eligible for disability benefits, you must meet a recent work test and a duration work test.

    The number of credits necessary to meet the recent work test depends on your age. The rules are as follows:

    • Before age 24 – You may qualify if you have 6 credits earned in the 3-year period ending when your disability starts.
    • Age 24 to 31 In general, you may qualify if you have credit for working half the time between age 21 and the time you become disabled. As a general example, if you become disabled at age 27, you would need 3 years of work out of the past 6 years .
    • Age 31 or older – In general, you must have at least 20 credits in the 10-year period immediately before you become disabled.

    The following table shows how many years of work credits you need to meet the duration of work test based on your age when your disability began. For the duration of work test, your work does not have to fall within a certain period. The table only provides an estimate of how many work credits you need. It does not cover all situations. If you are statutorily blind, you must only meet the duration of work test. When statutory blindness is involved, there is not a recent work test requirement.

    NOTE: This table is an estimate only and does not cover all situations

    If you become disabled…
    9.5 years

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