Beware The Social Security Earnings Test
Bringing in too much money in earned income can cost you if you continue to work after claiming Social Security benefits early. With what is commonly known as the Social Security earnings test for annual income, you will forfeit $1 in benefits for every $2 you make over the earnings limit, which in 2021 is $18,960. Once you are past full retirement age, the earnings test no longer applies, and you can make as much money as you want with no impact on benefits.
Any Social Security benefits forfeited to the earnings test are not lost forever. At your full retirement age, the Social Security Administration will recalculate your benefits to take into account benefits lost to the test. For example, if you claim benefits at 62 and over the next four years lose one full years worth of benefits to the earnings test, at a full retirement age of 66 your benefits will be recomputed — and increased — as if you had taken benefits three years early, instead of four. That basically means the lifetime reduction in benefits would be 20% rather than 25%.
Eligibility Requirements For Divorced Spouses
Before knowing the answer to the question, how much social security does an ex-spouse get? it is vital to know the social security spousal eligibility. Collecting spouse social security does not come on a platter of gold.
Since there might be a chance for ex-spouses to receive spousal social security, many people try to know their social security spousal eligibility. So, to answer the question, Can a divorced woman collect her ex-husbands social security? or Am I entitled to my ex-spouses social security? Yes, only if you meet the following social security spousal eligibility criteria:
- your ex-partner is eligible for social security benefits or unemployed benefits
- your marriage was at least ten years
- youre at least 62 years
- you are not married
- Your work record benefit is lower than your exs record benefits.
Suppose your ex-husband hasnt applied for the social security benefits but is eligible and is up to 62 years or older, you can receive the social security benefits after divorce from him.
Remember that the divorce must be at least two years, and you must meet all of the requirements above. The earliest time to apply for spousal social security is three months before your 62nd birthday, and you can do so online on your My Social Security account.
How Does The Spousal Benefit Work
The Bipartisan Budget Act of 2015 tightened some of the rules on spousal benefits, eliminating several strategies that couples once used to maximize how much they received. However, spouses can still claim benefits regardless of whether they ever held paid jobs, based on their partners record. To qualify, the spouse with a work record must already be receiving retirement or disability benefits, and the non-working spouse must be at least age 62.
As with other Social Security benefits, spousal benefits are permanently reduced if the nonworking spouse starts to collect before reaching full retirement age. If the non-working spouse waits until full retirement age, then they will receive a spousal benefit of up to 50% of their partners full retirement benefit.
Spouses who are widowed become eligible for 100% of their partners full benefit unless they also had a job and the benefit theyve earned through their income is higher. Generally, the widowed spouse must be at least 60 years of age to receive benefits from the deceased spouses record, and the amount will be reduced if the surviving spouse elects to receive benefits before their full retirement age.
In addition, should the surviving spouse remarry before age 60, they will forfeit the deceased spouses benefit. In some cases, divorced spouses are also eligible for spousal benefits based on their former partners record.
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How Does Social Security Know
You might wonder how the Social Security Administration keeps track of your work and your earnings. The answer: It doesn’t. It’s your responsibility to report how much you’ve made.
“The biggest thing to remember if you are working is to notify the Social Security Administration if you’re going to earn wages in excess of the earnings threshold,” says Matt Ahrens, an associate financial advisor at Integrity Advisory Group.
Otherwise, he notes, “They will not be notified of your earnings until you file your taxes the following year. And if you were receiving excess benefits, you can be fined, forced to pay back the excess, or receive lower future benefits.”
Get Help Qualifying For Disability Benefits
The truth is, applying for disability can be a long and sometimes frustrating process. Most first-time applicants are denied, and appeals can take months. However, this doesnt mean you should give up hope. With the help of an experienced Social Security disability lawyer, you can increase your odds of being approved the first time and strengthen your claim should you need to go through the appeals process.
To find out the difference having dedicated representation on your side can make, contact us at Social Security Disability Advocates USA today. Well arrange a free, no obligation consultation with our legal team to review your disability claim and help you make the right decision for you and your family. Get in touch 24/7 by calling , connecting with one of our LiveChat agents, or by filling out this form to request your complimentary case review.
This is attorney advertising. SSDA, LLC is a group of attorneys that pursues claims for Social Security Disability benefits on behalf of its clients against the Social Security Administration. SSDA, LLC is in no way a part of the Social Security Administration. Further, the information on this blog is for general information purposes only. Nothing herein should be taken as legal advice. This information is not intended to create, and receipt or viewing does not constitute, a representative-client relationship.
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Fact #: Social Security Provides A Foundation Of Retirement Protection For Nearly Every American And Its Benefits Are Not Means
97% of the elderly either receive Social Security or will receive it.
Almost all workers participate in Social Security by making payroll tax contributions, and almost all elderly Americans receive Social Security benefits. In fact, 97 percent of the elderly either receive Social Security or will receive it, according to Social Security Administration estimates. The near-universality of Social Security brings many important advantages.
Social Security provides a foundation of retirement protection for people at all earnings levels. It encourages private pensions and personal saving because it isnt means-tested in other words, it doesnt reduce or deny benefits to people whose income or assets exceed a certain level. Social Security provides a higher annual payout than private retirement annuities per dollar contributed because its risk pool is not limited to those who expect to live a long time, no funds leak out in lump-sum payments or bequests, and its administrative costs are much lower.
Indeed, universal participation and the absence of means-testing make Social Security very efficient to administer. Administrative costs amount to only 0.6 percent of annual benefits, far below the percentages for private retirement annuities. Means-testing Social Security would impose significant reporting and processing burdens on both recipients and administrators, undercutting many of those advantages while yielding little savings.
When Will Social Security Run Out Of Money
The Old-Age and Survivors Insurance Trust Fund, which is the retirement benefits funding account managed by the Social Security Administration, is on track to run out of money in 2034.
The cost of the program is projected to exceed income in 2020. In 2034, the programs income will be enough to pay about 77 percent of scheduled benefits.
Congress is considering various proposals to shore up Social Security, including increasing the amount of income that the program taxes, hiking payroll taxes and cutting benefits.
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What Is The Best Age To Start Taking My Benefits From Social Security
When it comes to Social Security Benefits it is always better to wait as long as possible to take your benefits but you will have to weigh out your personal situation. If you are in poor health, then you should take your benefits as soon as you are eligible. If you are in better health then waiting can add an additional 25-35% to your monthly payments.
Everyone is eligible to receive their benefits starting at age 62. Your full retirement age will depend on your birth year. The full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67. For anyone born 1960 or later, full retirement benefits are payable at age 67. If you can wait until age 70 you will receive the highest amount available from Social Security.
How Social Security Works
If you ever want to finish working and enjoy a well-funded retirement, then youll need to save for retirement. Usually this is done through a pension plan or a 401 account both of which are investment funds that your beef up over the course of your career and cash in on after you retire.
However, people dont always save up as much as they should. Sometimes its because we dont have careers that pay well enough to fund our lifestyles in the present and save for the future at the same time. At other times, the temptation to put money towards improving your life right now is more powerful than the voice of reason telling you to save for retirement instead.
Whatever the reason, people dont always save for retirement as well as they need to. This is where Social Security comes in. Instead of waiting for people to either have enough income to save on their own or make the difficult choice to save, the government will take a portion of each paycheck and put it into the Social Security fund.
While youre still in the workforce, the money that you put into the fund goes to people who are currently in retirement. The expectation is that, when it comes time for you to retire, the money in the Social Security fund will start to return to you in amounts that correspond to how much you put in.
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Spouses And Social Security Retirement Benefits
Your spouse can also claim up to 50 percent of your benefit amount if they dont have enough work credits, or if youre the higher earner. This doesnt take away from your benefit amount. For example, say you have a retirement benefit amount of $1,500 and your spouse has never worked. You can receive your monthly $1,500 and your spouse can receive up to $750. This means your household will get $2,250 each month.
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:
- Direct Express debit card – a pre-paid debit card. Get help by calling the Go Direct Helpline at .
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.
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Social Security For Married Couples
The key difference is for couples in which one person earns less than the other and wants to base his or her benefits on the higher-earning spouse. In such cases, the limit on the lesser-earning spouses benefits is 50 percent of the higher-earning spouses benefit amount.
This holds true even if the lesser-earning spouse didnt hold a job outside the home.
This option makes sense if the difference between the couples income and subsequently their benefits is significant. If the lesser-earning spouses benefits equate to more than half of the higher-earning spouses benefits, he or she can claim based on their own income.
In other words, the lesser-earning spouse can claim the greater of these two possibilities.
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Heres How Working After 62 Can Change Your Social Security Benefits
Continuing to work after age 62 can affect your level of Social Security retirement benefits, whether you are receiving benefits at the time or not. Knowing how continuing to work might change benefit levels can lead to better decisions about when to claim benefits and whether to continue working.
You can begin claiming Social Security retirement benefits as early as age 62, whether you are working or not. You know that the level of benefits increases for each year you wait to claim them through age 70. Theres no benefit for delaying claiming past age 70. In addition, the level of benefits might increase if you continue working after 62, whether you claim benefits at 62 or later.
Social Security retirement benefits are calculated using your 35 highest-earning years. If you dont have 35 years of earnings, youll be assigned an income of $0 for each of the missing years. After you turn 62, Social Security recalculates your benefits every year that you dont claim benefits. It will take your earnings for the latest year, add that to your record of lifetime earnings and select the 35 years with the highest inflation-adjusted earnings. Those are the only details of how benefits are calculated you need for this discussion.
When claim Social Security retirement benefits and continue to work, the effects are more complicated.
Can You Get Social Security If You Havent Worked
You can still get Social Security retirement benefits based on a current, former or deceased spouses record even if youve never worked. Otherwise, youll need to pay into the system to collect benefits.
Children of a deceased worker qualify for survivors benefits until theyre 18 or 19 if theyre still enrolled in high school full time. If the child is over 18 but has a disability that began before age 22, they can also qualify for survivors benefits.
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Can You Continue To Work After You File For Social Security
Now for the final question. What if you file for social security and decide youll continue to work?
If you are full retirement age or older, you can file for Social Security retirement benefits and continue to work. You wont receive a reduction to the benefit, no matter how much you earn.
However, if you file for Social Security benefits before your full retirement age, you are subject to an earnings test. If you earn more than about $18,000 a year your Social Security benefits. The following year will be reduced. That reduction is $1 less of social security benefits for every $2 you earn over the limit of approximately $18,000.
Benefits withheld are not lost. According to the SSA website, when you reach full retirement age, your earnings no longer reduce your benefits, no matter how much you earn. They will recalculate your benefit amount to offset the earnings they withheld while you worked before retirement age and give you credit for the reduced or withheld benefits.
When Can I Claim My Benefits
According to the Social Security Administration, full retirement age is when a person is eligible for full or unreduced retirement benefits. The current full retirement age for people born in 1960 or later is 67.15
Work until age 67? Apparently, some Americans are okay with it. A recent survey showed that nearly two-thirds of workers expect to work past age 65.16 While working longer is a wise goal, it might not be realistic for everyone. A report from the National Institute on Aging showed more people stop working due to poor health than because they have sufficient money to retire comfortably.17
Unexpected life changes could derail your good intentions to work longer, so prepare in advance for that real possibility.
Start by calculating your full retirement age. That number will tell you when you can apply for Social Security benefits. It will also give you a date to work with as youre planning your strategy for your 401 and Roth IRA.
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Social Security Benefits If Youre Married
Determining Social Security calculations is a bit more complicated if you are married because you have the option to base benefits on your spouses salary history.
If the lesser earning spouses benefits are based on the higher earning spouses, then the limit of those earnings will be 50 percent of the higher earning spouses benefit amount.
To illustrate this, lets talk about A and B, a married couple.
- A makes significantly more money than B.
- A makes so much more money that As monthly Social Security benefits are going to be more than twice of Bs, based on Bs salary history.
- The good news for B is that they can choose to have their Social Security benefits based on As salary history and can receive as much as 50 percent of As monthly benefit. This is the case even if B didnt hold a job outside the home.
On the other hand, if Bs monthly benefit would have been more than half of As, based on Bs salary history, then B can claim that amount.
In short, B can claim the higher of these two possibilities: Bs own Social Security earnings or half of As.
This all assumes that B doesnt begin claiming benefits until B reaches full retirement age. If B begins claiming earlier, then Bs benefits will be less. In addition, if B is claiming benefits based on As earnings, then B does not benefit by waiting later than full retirement age.
B will not be given more monthly benefits if B waits until age 70, for example, based on As earnings.