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How Do Social Security Benefits Work

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Report The Death Of A Social Security Or Medicare Beneficiary

How Social Security Works

You must report the death of a family member receiving Social Security or Medicare benefits. The Social Security Administration processes death reports for both. Find out how you can report a death and how to cancel benefit payments. In addition to canceling SSA and Medicare benefits, find out what other benefits and accounts you should cancel.

Workers Who Retire In Certain Foreign Countries

U.S. citizens who travel toor live inmost foreign countries after they retire usually can receive Social Security benefits. However, if that country is Azerbaijan, Belarus, Cuba, Kazakhstan, Kyrgyzstan, Moldova, North Korea, Tajikistan, Turkmenistan, or Uzbekistan, then the government will not send them Social Security payments. Exceptions may be available in all of these countries except Cuba and North Korea. The governments Payments Abroad Screening Tool is an easy way to check if you will be able to continue receiving Social Security benefits while living abroad or if restrictions will apply.

How Much Do You Get

There are different types of Social Security benefits that you can claim. You can take Social Security income based on your own work history and earnings. Or, you can collect a spousal benefit instead.

If you take the benefits based on your spouse’s work history and earnings, you will get 50% of the amount of your spouses Social Security benefit.

This amount is calculated at their full retirement age . FRA depends on when you were born. You can check the Social Security website to find out how old you or your spouse need to be to reach FRA.

Social Security calculates and pays the higher amount.

If you were born on or before Jan. 1, 1954, once you reach your FRA, you can choose to receive only the spousal benefit. You can apply for this by filing what is known as a restrictedapplication.

This lets you put off getting your own retirement benefit. Your benefit will keep growing until you file at a later age. If you were born any later than Jan. 1, 1954, you no longer have this option.

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Know Your Social Security Full Retirement Age

First things first:Determine your Social Security full retirement age. For people born between 1943 and 1954, full retirement age is 66. If your birthday falls between 1955 and 1959, it gradually climbs to 67. If you are born in 1960 or later, your full retirement age is 67.

You can claim your Social Security benefits a few years before or after your full retirement age, and your monthly benefit amount will vary as a result. More on that in a moment.

What You Need To Know About Social Security

How Does Social Security Work? Top Questions Answered ...

First off, let’s establish some basics about Social Security. The Social Security administration determines a worker’s benefit, known as the primary insurance amount , by using a calculation based on a worker’s 35 highest earning years, says Kiner.

Workers are able to start collecting benefits at age 62 but their benefit will be reduced if they don’t wait until full retirement age. Full retirement age is between 66 and 67, depending on when you were born.

If you wait until you’re at full retirement age to collect, you’re eligible to receive 100% of the benefits that you’re entitled to. For every year after full retirement age that you delay receiving benefits, your benefits will increase 8% each year.

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How Do I Estimate My Monthly Retirement Benefits

You can estimate your monthly retirement benefits by calculating your PIA, the monthly benefit youre eligible to receive once you reach your FRA. To determine your PIA, the Social Security Administration uses your best 35 years of employment to arrive at your Average Indexed Monthly Earnings . If you havent worked for 35 years, some of the included earnings may be zero.

If you continue working after reaching your FRA, the SSA will automatically recalculate your benefits each year you continue to work. If your current income is greater than any of your previously calculated best 35 years, your benefits will be adjusted upward. The increase generally will be made in October of the following year but will be retroactive to January 1.

Social Security retirement benefits are automatically modified each year for cost-of-living adjustments , which are either positive or zero never negative. COLAs are based on the Consumer Price Index and have averaged between 1% and 2% over the past 10 years.

For more information, the SSA offers a helpful Social Security retirement calculator.

Lost Or Stolen Federal Payments

Report your lost, missing, or stolen federal check to the agency that issued the payment. It’s usually one of these paying agencies. If your documentation indicates it’s a different agency, and you need its contact information, look in the A-Z Index of U.S. Government Departments and Agencies.

To get an update on your claim, contact the Treasury Department Philadelphia Financial Center at 1-855-868-0151, option 1.

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How Does Social Security Work 12 Questions Answered

Social Security isnt just a retirement program. It also provides for people who are disabled, the survivors of workers who have died, and the dependents of recipients.

However, because retirees are by far the largest group of people to receive benefits, were focusing on Social Security retirement benefits in this article.

Your Monthly Social Security Benefits Increase The Longer You Wait To Claim

How Do Spousal Social Security Benefits Work?

You can collect Social Security benefits as soon as you turn 62, but taking benefits before your full retirement age means a permanent reduction in your payments of as much as 25% to 30%, depending on your full retirement age.

If you wait until you hit full retirement age to claim Social Security benefits, youll receive 100% of your earned benefits. But you can also get a big bonus by waiting to claim your Social Security benefits at age 70 your monthly Social Security benefit will grow by 8% a year until then. Any cost-of-living adjustments will be included, too, so you don’t forgo those by waiting.

Waiting to claim your Social Security benefits can help your heirs as well. By waiting to take her benefit, a high-earning wife, for example, can ensure that her low-earning husband will receive a much higher survivor benefit in the event she dies before him. That extra income of up to 32% could make a big difference.

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If You’re Already Receiving Retirement Benefits

For those already being paid retirement benefits, they can only apply for benefits as a widow or widower if the current retirement benefit being received is less than the survivor benefit. In other words, they’ll pay you the higher of the two benefits. However, both benefits cannot be combined and taken at the same time.

Estimated Net Benefits Under Differing Circumstances

In 2004, Urban Institute economists C. Eugene Steuerle and Adam Carasso created a Web-based Social Security benefits calculator. Using this calculator it is possible to estimate net Social Security benefits for different types of recipients. In the book Democrats and Republicans âRhetoric and Reality Joseph Fried used the calculator to create graphical depictions of the estimated net benefits of men and women who were at different wage levels, single and married , and retiring in different years. These graphs vividly show that generalizations about Social Security benefits may be of little predictive value for any given worker, due to the wide disparity of net benefits for people at different income levels and in different demographic groups. For example, the graph below shows the impact of wage level and retirement date on a male worker. As income goes up, net benefits get smaller âeven negative.

However, the impact is much greater for the future retiree than for the current retiree . The male earning $95,000 per year and retiring in 2045 is estimated to lose over $200,000 by participating in the Social Security system.

The next image shows estimated net benefits for married men and women at different wage levels. In this particular scenario it is assumed that the spouse has little or no earnings and, thus, will be entitled to collect a spousal retirement benefit. According to Fried:

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Three Simple Steps To Estimate Your Benefits

  • Go to www.ssa.gov/estimator/. Click on “Estimate your full retirement benefits.”
  • Enter your full name, Social Security number, birth date mother’s maiden name and state where you were born. Hit Submit. Enter last year’s wages. Hit Submit again. The Retirement Estimator calculates your benefits based on actual earnings history.
  • Check the estimates for reduced benefits at age 62, your full benefits at normal retirement age and your maximum benefits at age 70.

Is It True That Social Security Is Going Broke

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Not exactly.

Whats really going on is that Social Security is at a tipping point. Midway through 2021, the program began taking in less money than it pays out, thanks mostly to longer life expectancies and people having fewer children which means fewer workers paying into the system. The economic shock of the coronavirus pandemic accelerated that pace by about a year.

While Social Security has a $2.9 trillion trust fund it can dip into, the funds are expected to be depleted by 2034. But that doesnt mean the program is doomed. Social Security is funded on a pay-as-you-go basis.

Even as it starts depleting its trust fund, it will still be collecting payroll taxes from workers and employers. If the trust were to run dry in 2034, payroll taxes would still generate enough to pay for about 79% of the programs obligations if Congress does nothing.

But there are plenty of actions Congress could take to avoid Social Security cuts. For example, it could increase the tax rate, eliminate the wage cap or raise the full retirement age, as it did in 1983.

Its pretty unlikely that Congress wont take action. A 2019 Pew Research Center poll found that 74% of Americans oppose cutting benefits. Lawmakers on both sides of the aisle are keenly aware of the programs popularity among voters.

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The Social Security Landscape For Current 25

If you’re decades away from retirement, this is where things get dicey in terms of your Social Security benefits. This is the primary focus of the current debate taking place on Capitol Hill. It is very likely that those currently entering the workforce will see a very different Social Security system than the one that’s in place now — absent some sort of drastic change in the numbers.

Unless changes are made, current 25-to-35-year olds face an over 25% reduction in benefits once the Social Security trust fund is gone. The response to this problem varies among politicians, educators, and economists. Some believe that though recovery will be slow, it will happen in time to fix the shortfall in the benefit system by the time this younger generation is ready to retire. Others warn that drastic reform must occur to prevent the inevitable bottoming out of the Social Security system.

For Help Applying For Social Security Disability Benefits For Covid

While dealing with COVID-19 can be unpredictably unpredictable, your financial security does not have to be one of them. Allowing the uncertainties of your disability insurance claim to add to your concerns about the coronavirus is a bad idea. To discuss your eligibility for disability insurance benefits related to coronavirus, contact Disability Associates today.

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Court Interpretation Of The Act To Provide Benefits

The United States Court of Appeals for the Seventh Circuit has indicated that the Social Security Act has a moral purpose and should be liberally interpreted in favor of claimants when deciding what counted as covered wages for purposes of meeting the quarters of coverage requirement to make a worker eligible for benefits. That court has also stated: “… he regulations should be liberally applied in favor of beneficiaries” when deciding a case in favor of a felon who had his disability payments retroactively terminated upon incarceration. According to the court, that the Social Security Act “should be liberally construed in favor of those seeking its benefits can not be doubted.” “The hope behind this statute is to save men and women from the rigors of the poor house as well as from the haunting fear that such a lot awaits them when journey’s end is near.”

Your May Have To Pay Taxes On Social Security Benefits

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

It doesn’t take a lot of income for your Social Security benefits to be taxed. 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 12 States That Tax Social Security Benefits.

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How Does Coronavirus Affect My Current Disability Claim

In almost every way, the coronavirus pandemic has disrupted life as we knew it. The pandemics most visible effect is the closure of businesses, offices, and other services. Unfortunately, this includes the Social Security disability division as well as the insurance companies that oversee disability claims. If you have a pending disability claim or are appealing a decision, you may face delays in receiving benefits. A may be able to assist you if you have additional questions about the status of your claim.

How Much Are Social Security Benefits

Because your Social Security benefits are unique to your financial situation, you have to calculate them to figure out what youll eventually receive. Throughout your lifetime, you collect one Social Security credit for every $1,470 you earn. These credits max out at four credits annually.

Those born after 1929 must have 40 credits to be eligible for Social Security benefits when they retire. If you work full-time for 10 years, you can receive the benefits. This amount is decided according to your highest earnings over 35 years, as well as other factors.

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Claim Of Discrimination Against The Poor And The Middle Class

Workers must pay 12.4 percent, including a 6.2 percent employer contribution, on their wages below the Social Security Wage Base , but no tax on income in excess of this amount. Therefore, high earners pay a lower percentage of their total income because of the income caps because of this, and the fact there is no tax on unearned income, social security taxes are often viewed as being regressive. However, benefits are adjusted to be significantly more progressive, even when accounting for differences in life expectancy. According to the non-partisan Congressional Budget Office, for people in the bottom fifth of the earnings distribution, the ratio of benefits to taxes is almost three times as high as it is for those in the top fifth.

Eligible For Benefits In The Last 12 Months

How Do Social Security Retroactive Benefits Work?

There’s an exception for those who recently applied for retirement benefits. If you became entitled to retirement benefits less than 12 months ago, you might be allowed to withdraw your retirement application and apply for survivor benefits only. You can then reapply for your retirement benefits later when the benefits will be a higher amount.

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A You Can Continue Working And Start Receiving Your Retirement Benefits

If you start your benefits before your full retirement age, your benefits are reduced a fraction of a percent for each month before your full retirement age.

You can get Social Security retirement benefits and work at the same time before your full retirement age. However your benefits will be reduced if you earn more than the yearly earnings limits.

After you reach your full retirement age, we will recalculate your benefit amount to give you credit for any months you did not receive a benefit because of your earnings. We will send you a letter that explains any increase in your benefit amount.

If you delay filing for your benefits until after full retirement age, you will be eligible for delayed retirement credits that would increase your monthly benefit. If you also continue to work, you will be able to receive your full retirement benefits and any increase resulting from your additional earnings when we recalculate your benefits. Once you reach full retirement age, your earnings do not affect your benefit amount.

If you start receiving retirement benefits before age 65, you are automatically enrolled in Original Medicare when you turn 65. If you or your spouse are still working and covered under an employer-provided group health plan, talk to the personnel office before signing up for Medicare Part B. To learn more, read our Medicare publication.

Are There Retirement Benefits For My Family Members

Once you start collecting Social Security, other family members may be entitled to collect benefits as well, based on your work history. If youve been married for at least one year, your spouse may be entitled to collect spousal benefits. Under certain conditions, your children may also be entitled to benefits.

There is a limit on the amount of benefits that family members receive on the earnings record of one worker. The limit varies between 150% and 188% of the workers PIA. If the total benefits owed to your spouse and children push your familys benefits above the limit, their benefits will be reduced proportionately to bring the total within the limit. Your benefits will not be affected. Any benefits payable to an ex-spouse arent included in the family maximum.

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