Monday, May 16, 2022

How To Find My Social Security Benefit Amount

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What Are Social Security Credits How Are They Earned

How to Calculate Your Social Security Benefits

Social Security credits determine eligibility and benefit amounts in retirement. In 2021, earning $1,470 in income qualifies as earning one Social Security work credit.2 You are eligible to earn up to four credits per year. Most people need 40 credits to qualify for Social Security benefits though younger individuals require fewer credits for disability benefits or for their family members to receive survivors benefits.

Claiming Social Security Benefits At The Right Time Means More Money In Your Pocket Here’s A Guide To Everything From Knowing Your Full Retirement Age To Taking Social Security Spousal Benefits

For many Americans, Social Security benefits are the bedrock of retirement income so maximizing this stream of income is critical.

The rules for claiming Social Security benefits can be complex, but this guide will help you successfully navigate the details. Educating yourself can ensure that you claim the maximum amount to which you are entitled.

Here are 12 essential details you need to know.

Is There A Maximum Benefit

Yes, there is a limit to how much you can receive in Social Security benefits. The maximum Social Security benefit changes each year. For 2021, itâs $3,895/month for those who retire at age 70 . Multiply that by 12 to get $46,740 in maximum annual benefits. If that’s less than your anticipated annual expenses, youâll need to have additional income from your own savings to supplement it.

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You can access this information in early December prior to the mailed notice, the SSA wrote in a blog post.

Also, to make things easier, you can push notifications meaning youll get a text on your phone or an email when you have a new message waiting in your inbox.

However, if you dont have an account yet the deadline, unfortunately, passed to receive the COLA notice online.

That means youll have to wait patiently until your notice arrives at your door.

You can also calculate it yourself to get a rough estimate. For instance, a 5.9% increase of $2,000 is $2,118.

The new checks will go into effect in January 2022.

How Do I Know If I Will Have Money Taken Out Of My Social Security Check

Calculating Taxable Social Security Benefits

If you receive Social Security retirement benefits, your Medicare benefits will be deducted automatically. This means that you do not have to do anything to make this happen it will be automatic when you enroll in Medicare.

If you sign up for Original Medicare during your Initial Enrollment Period and already receive Social Security retirement benefits, you should not expect to receive a bill for your premiums. Instead, your Social Security benefit will be smaller, since the money is taken from there.

If you want to find out for sure whether this applies to you, your best bet is to contact the Social Security Administration . They will look up your current status to determine whether payments will be taken out automatically.

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What If You Live Abroad

Most U.S. citizens who live in foreign countries after they retire can receive Social Security benefits. However, the U.S. government will not send Social Security payments to those living in Cuba or North Korea. Additionally, Americans living in Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan and Uzbekistan must qualify for an exception in order to receive benefits while living abroad.

Who Is Eligible For Social Security Benefits

Anyone who pays into Social Security for at least 40 calendar quarters is eligible for retirement benefits based on their earnings record. You are eligible for your full benefits once you reach full retirement age, which is either 66 and 67, depending on when you were born. But if you claim later than that – you can put it off as late as age 70 – youâll get a credit for doing so, with larger monthly benefits. Conversely, you can claim as early as age 62, but taking benefits before your full retirement age will result in the Social Security Administration docking your monthly benefits.

The bottom line: Youâre eligible for Social Security Benefits if youâve paid into the system for at least a decade, but your actual benefits will depend on what age â between 62 and 70 â you begin to claim them.

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Children Can Also Collect Social Security Benefits

Minor children of Social Security beneficiaries can be eligible for benefits. Children up to age 18 and disabled children older than 18 may be able to receive up to half of a parent’s Social Security benefit. The disability must have occurred before the age of 22. The adult child can continue collecting the benefit even after the parent has died, as long as the disability prevents them from working.

Why Are My Social Security Benefits Potentially Reduced Or Eliminated

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Originally, the State of Louisiana was not allowed to participate in Social Security to provide coverage for its public employees. When Social Security was later open to public employees, Louisiana did not opt into coverage.

Both WEP and GPO are designed to offset the amount of Social Security benefits paid to those eligible to receive some other type of public pension in this case your LASERS retirement. The type of Social Security benefit a LASERS member is eligible to receive determines how Social Security reductions will be applied.

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Don’t Forget The Social Security Earnings Test

The only important caveat to the strategy of receiving Social Security benefits and working at the same time is the Social Security Earnings Test – where ongoing earned income can partially or fully reduce retirement benefits if they are taken early. So you cannot retire at 62 and still work, or earned income above the Earnings Test threshold will reduce the retirement benefits. The strategy of working while getting Social Security benefits is only viable after reaching full retirement age . On the other hand, beyond that point, it really is possible for each subsequent year of work in someone’s late 60s or even 70s and beyond, to be receiving Social Security benefits while working and have those benefits recalculated for the future based on another year of work !

So what do you think? Have you ever counseled a prospective retiree to keep working after 66 not just to delay Social Security benefits, but to increase their earnings in order to be eligible for a higher calculated benefit? Would you consider the strategy in the future? Please share your thoughts in the comments below!

How Is My Social Security Benefit Amount Calculated

Another common Social Security benefits question is how payments are calculated based on your lifetime earnings. To account for changes in average wages each year, the Social Security Administration , indexes your income using the national average wage index.

The SSA calculates your average indexed monthly earnings based on the 35 years in which you earned the most. A formula generates your basic benefits, otherwise known as your primary insurance amount. This primary insurance amount is what you would receive at your full retirement age. If you were born between 1955 and 1959, full retirement age is between age 66 and 67. For those born in 1960 or later, full retirement age is 67.5

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If You’re Not Sure Why You Received A Payment

If you receive a check or direct deposit payment from the Treasury Department and do not know what its for, contact the regional financial center that issued it.

If you received a check, look for the RFCs city and state at the top center. Then contact that RFC to find out which federal agency authorized the payment. It will be one of these:

If you received payment byelectronic funds transfer , or direct deposit, follow the directions under Find Information About a Payment.

Use the Treasury Check Verification System to verify that the check is legitimate and issued by the government.

Is There Anything That I Can Do Now To Help Ensure That My Benefits Will Continue

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The very best thing you can do is to continue seeing your doctor. A lot of people with long-term chronic medical problems stop seeing their doctors because no treatment seems to help. This is a mistake for two reasons. First, it means that when the Social Security Administration conducts a review, no medical evidence will exist to show that your condition is the same as it was when you were first found disabled. Second, and perhaps even more importantly, doctors recommend that even healthy people after a certain age periodically have a thorough physical examination. This is even more important for people who already have chronic medical problems.

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Will I Receive A Notice From The Social Security Administration Explaining My Benefits

Yes. That notice is usually called a Notice of Award. This notice will show the date of entitlement and the amounts of benefits for all months of back benefits. It will show the total amount of benefits to be paid to you. It will show the amount of benefits withheld for direct payment of attorneys fees. It may also give you information about your Medicare eligibility and monthly Medicare premium. It may also give you some information about when to expect a continuing disability review.

Are Social Security Benefits Taxable

If you have a lot of income from other sources, up to 85% of your Social Security benefits will be considered taxable income. If the combination of your Social Security benefits and other income is below $25,000, your benefits wonât be taxed at all. The amount of your benefits that is subject to taxes is calculated on a sliding scale based on your income. Money that Social Security recipients pay in income taxes on their benefits goes back into funding Social Security and Medicare.

If your retirement income is high enough that your benefits are taxable, how do you pay those benefits? You can ask Social Security for an IRS Voluntary Withholding Request Form if youâd like the government to withhold taxes from your Social Security benefits. Otherwise, youâre expected to file quarterly tax returns to pay these taxes over the course of the year.

That covers federal income taxes. What about state income taxes? That depends. In 13 states, your Social Security benefits will be taxed as income, either in whole or in part the remaining states do not tax Social Security income.

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If Youre Not Sure Why You Received A Payment

Contact the authorizing agency directly to find out why they sent the payment. You may be able to find the authorizing agency in the memo line of the check. View this diagram of a sample Treasury check to help you locate the authorizing agency contact information on your own check. Scroll about half way down the page to see the diagram.

If youre unable to find which agency authorized the payment, . They can help you determine which government agency you need to contact. To find which RFC you need to call, look for its city and state at the top center of the check.

Use the Treasury Check Verification System to verify that the check is legitmate and issued by the government.

Social Security Calculation Step : Adjust All Earnings For Inflation

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So lets jump in with calculating your AIME. To do this, youll need to get use a notepad or a tool like Excel/Google Sheets.

Youre going to need six individual columns with plenty of room underneath for your information. Set up your columns with the following headings: Year, Age, Actual Earnings, Indexing Factor, Indexed Earnings, Highest 35 Years.

The first two headings are the year and your age. Go all the way back to the first year you had earnings that were taxed for Social Security. You can find a complete record of this by going to your online SSA account and click the link that says view earnings record. If you dont have an online account, its very easy to set one up.

This may seem a little redundant to put the year and your age, but itll make another step a little easier.

Now you just need to copy down the information from the SS earnings history. Youll want to use the part that says your taxed Social Security earnings. Dont skip a year, even if there were no earnings. Just put a zero in.

Once you have all of your historical earnings recorded, its time to adjust them for inflation. The SSA uses an indexing factor to make sure your future benefit has kept up with inflation, but still based on your earnings.

Important note hereonly your earnings through age 59 are indexed. All earnings at age 60 and beyond are used in the calculation at face value with no inflation adjustment applied.

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There Are Social Security Survivor Benefits For Spouses And Children

If your spouse dies before you, you can take a Social Security survivor benefit. However, that won’t be 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. However, the payment will be reduced because it’s taken before full retirement age. If you remarry before age 60, you are not eligible for a survivor benefit. If you remarry after age 60, you may be eligible for a survivor benefit based on your former spouse’s earnings.

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

How Are Social Security Survivor Benefits Calculated

To understand Social Security benefit calculations, you first need to understand one piece of jargon: primary insurance amount . A persons primary insurance amount is the amount of their monthly retirement benefit, if they file for that benefit exactly at their full retirement age.

If your spouse has died and you file for a benefit as their survivor, your benefit will depend on:

  • Your deceased spouses PIA,
  • Whether your deceased spouse had already filed for his/her retirement benefit ,
  • The age at which your spouse died, and
  • The age at which you file for your benefit as a surviving spouse.

Lets first assume that you have reached your survivor full retirement age by the time you file for your survivor benefit.

If your spouse had not filed yet for his/her own retirement benefit by the time he/she died, then:

  • If your spouse died prior to his/her full retirement age, your benefit as a surviving spouse will be your deceased spouses PIA.
  • If your spouse died after reaching his/her full retirement age, your benefit as a surviving spouse will be whatever he/she would have received as a retirement benefit, if he/she had filed on his/her date of death.

If your spouse had filed for his/her own retirement benefit by the time he/she died, then your benefit as a surviving spouse will be the greater of:

  • The amount your deceased spouse was receiving at the time of his/her death, or
  • 82.5% of your deceased spouses PIA.

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How Cola Increases Evolved Over Time

Each year, the SSA announces any increases to Social Security benefits, known as COLA, to help recipients keep up with rising prices. The increases are tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers , which is the official measure of the monthly price change in goods and services. Annually, the SSA compares the CPI-W for the third quarter of the previous year and current year to determine the COLA increase.

While COLA adjustments are now automatic, this was not always the case. Beneficiaries received their first COLA adjustment in October 1950. A second increase was made in September 1952 through legislation. For the next 20 years, recipients only saw their benefits increase if Congress approved it.

In 1972, Congress passed legislation to provide automatic increases linked to a rise in consumer prices. Recipients would no longer have to wait for Congress to take action to receive an increase. The first automatic increases to Social Security benefits took effect in 1975. After 1982, COLA adjustments were effective for December of each year and received by beneficiaries in January.

Here is a history of COLA increases from 1975 to 2021:

Social Security Cost-Of-Living Adjustments

People Enrolled In Both Social Security And Medicare Have Their Premiums Automatically Deducted From Their Monthly Check

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If you receive Medicare health insurance benefits and Social Security retirement benefits at the same time, you can have your Medicare premiums automatically deducted from your Social Security check each month. This can save a lot of time and energy, as you wont have to worry about paying your premiums manually. This option is available for every part of Medicare, including private plans like Medicare Advantage and Medicare Part D.

This article explains everything you need to know to understand how much will be deducted from your Social Security benefits.

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Social Security Calculation Step : Aime Calculation

Now, all you have to do is extract the highest 35 years of indexed earnings.

If youre still working and dont have 35 years, youll need to estimate what your future earnings will be and apply the indexing factors just as you would for actual historical earnings. This is where you can start to play around with the numbers to see the various impacts of retiring early, or working later or maybe having variable earnings close to retirement.

Once you have your highest 35 years in the last column, you just need to sum them up and divide by 420. You divide by 420 because thats the number of months in 35 years and we need to get your average earnings expressed as a monthly number.

Once you do this, congratulationsyou have your AIME and have finished the first step of the calculation. Its downhill from here.

NOTE: If you die before accumulating 35 years of earnings, there is an alternate calculation. See my article If You Die Early: How To Calculate Social Security Survivors Benefits.

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