Earnings Limits For Disability Benefits
If you continue to work while receiving disability benefits, you may qualify for unlimited earnings and full Social Security benefits during a trial period of up to nine months. After this nine-month period, the Social Security Administration will re-evaluate your status to determine whether you continue to qualify for disability benefits or other benefits as you transition back to working. Contact the Social Security Administration by visiting SSA.gov or calling 1-800-722-1213 to determine your eligibility for disability benefits.
What Is The Future Of Social Security
If youre skeptical about the;future of Social Security;or wary of potential changes such as means testingwhich could reduce or eliminate benefits for the wealthy, or an increase in the full retirement ageyou may be tempted to start benefits early, under the assumption that its better to have something than nothing.;The;2020 annual report;from the Social Security Trustees, released in April, projects that the Social Security Trust Fund has enough resources to cover all promised retirement benefits until;2035,;and will cover 79% of scheduled benefits for new retirees thereafter without changing the current system. The 2020 report does not include an adjusted projection due to impacts, if any, from the pandemic.
Over the longer term, changes such as later benefit dates or means testing may be considered.
In any situation, if youre particularly concerned about the future prospects for Social Security, thats a good reason to save more, and earlier, for your retirement.
Can A Person Who Is Due A Public Pension Also Collect Social Security Benefits
Two rules could reduce benefits for people who are also entitled to a public pension on earnings not covered by Social Security.
One rule is the windfall elimination provision , which applies to people who worked at jobs covered by Social Security but also worked as noncovered government employees and are due a pension.
When it is time to claim benefits, many people are unprepared for these cuts, Mr. Blair said. Possible W.E.P.-related reductions are not reflected in the workers Social Security statement, which shows the history of annual earnings and estimates of future benefits only for jobs covered by Social Security.
You can have someone who looks at the Social Security statement and it shows a benefit of $1,000 at full retirement age, Mr. Blair said. But the individual a teacher who is due a public pension, for example may be surprised later if the benefit is much lower, he said.
In addition to W.E.P. reductions, a government pensioner who applies for a Social Security spousal or survivor benefit can face reductions. The government pension offset reduces those benefits by two-thirds of the government pension.
Pensioners are exempt from the W.E.P. offset if they paid into Social Security for 30 years or more in jobs with substantial earnings .
Gaining Back The Reduction In Benefits From Working
The amounts of early retirement benefits you lose as a setoff against your earnings are not necessarily gone forever. When you reach full retirement age, Social Security will recalculate upward the amount of your benefits to take into account the amounts you lost because of the earned income rule. The lost amounts will be made up only partially, however, a little bit each year. It will take up to 15 years to completely recoup your lost benefits. And remember, none of this readjustment will change the permanent percentage reduction in your benefits that was calculated when you claimed early retirement benefits .
Whats Your Social Security Break
If youre looking to maximize your total lifetime Social Security payout, youll want to conduct a break-even analysis to determine when you should start drawing your benefits.
Your break-even age occurs when the total value of higher benefits starts to exceed the total value of lower benefits .
For example, if you are eligible to collect a reduced $900 benefit at age 62 plus 1 month, and your benefit would increase to $1,251 at age 65 and 10 months, your estimated break-even age is 75 years and 5 months.
If you expect to live beyond that age, it could make financial sense to delay drawing benefits. The Social Security Administrations life expectancy calculator can help you decide.
When it comes to calculating a start date for Social Security benefits, however, theres not an age thats appropriate for everyone. Consider your own financial needs, health and other retirement plans before making the call. If you cant reasonably afford to live without taking benefits, it may make little sense to delay taking your benefit.
Earnings Limits For Retirement Benefits
- Full retirement age. Beginning with the month that you reach full retirement age, which depends on your birth year, you can make unlimited income without any reduction in your Social Security benefits. You will continue to pay Social Security taxes on your earnings, even if you’re receiving benefits.;
- Under full retirement age for the entire year. If you haven’t yet reached full retirement age, you can earn up to $17,640 in income each year without any reduction in benefits. But for each $2 you earn above this limit, the Social Security Administration deducts $1 from your benefit payments.
- Under full retirement age for part of a year.;If you will reach full retirement age in 2019, you can earn up to $46,920 with no benefit reductions in the months leading up to the month you reach full retirement age. If you exceed this income limit, the Social Security Administration will deduct $1 for each $3 you earn above the limit. Beginning with the month in which you reach full retirement age, you can make unlimited income and receive full Social Security benefits without any reduction.
Change In How You Report Earnings
The Social Security Administration bases its benefit calculations on earnings reported on W-2 forms and on self-employment tax payments. Most individuals are not required to send in an estimate of earnings.
However, the Social Security Administration does request earnings estimates from some recipients: those with substantial self-employment income or those whose reported earnings have varied widely from month to month, including people who work on commission. Toward the end of each year, Social Security sends those people a form asking for an earnings estimate for the following year. The agency uses the information to calculate benefits for the first months of the following year. It will then adjust the amounts, if necessary, after it receives actual W-2 or self-employment tax information in the current year.
Once a beneficiary reaches full retirement age, his or her income will no longer be checked. Because there is no Social Security limit on how much a person can earn after reaching full retirement age, there is nothing to report.
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Theres An Annual Social Security Cost
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%
Spouses And Social Security
You can claim Social Security benefits based on your spouse’s work record. If claiming spousal benefits provides more, claiming before your FRA on a spouse’s record means you’ll lose even more than claiming on your own recordthe benefit reduction for a spouse is up to 35% while the reduction for claiming your own benefit is up to 30%. For instance, if you’re the spouse of Colleen in the above example and you are the same age, you’d be eligible for only $650 a month at age 6235% less than the $1000 a month you would get at your FRA of 67.
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Your decision to take benefits early could outlive you. If you were to die before your spouse, they would be eligible to receive your monthly amount as a survivor benefitif it’s higher than their own amount. But if you take your benefits early, say at age 62 versus waiting until age 70, your spouse’s survivor Social Security benefit could be up to 30% less for the remainder of their lifetime.
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The Source Ofand Solution Tothe Problem
When the current Social Security formula was put in place in 1977, no provision was made for the contingency that economic conditions would be so dire that average wages would fall in any given year. This problem first surfaced in 2009 during the Great Recession. The AWI, however, fell by a relatively small amount, and policymakers chose not to do anything about it. As a result of the COVID-19 pandemic, however, the decline in the AWI is likely to be about four times as big now as it was during the Great Recession.
There is ample precedent for fixing this problem. The first precedent concerns Social Security cost-of-living allowances . As mentioned above, payments in years after beneficiaries first year of retirement are indexed to inflation using a version of the consumer price index . However, under the law, if prices fall in any year, benefits are not adjusted downward; rather, they remain the same. The second precedent concerns the Social Security contribution and benefit base, also known as the taxable maximum. The taxable maximum is the dollar amount of annual earnings above which the Social Security payroll tax does not apply. The taxable maximum is indexed to the AWIbut like COLAs, it is never adjusted downward.
Are Social Security Benefits Taxed After Age 66
Once you reach full retirement age, Social Security benefits will not be reduced no matter how much you earn. However, Social Security benefits are taxable. If your combined income is more than $44,000, as much as 85% of your benefits may be subject to income taxes.
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Social Security Benefits For Workers Turning 60 In 2020 Will Very Likely Drop Due To The Coronavirus Pandemic
As a result of the COVID-19 pandemic, about 3 million retired workers who turn 60 years old in 2020 will very likely have much lower lifetime Social Security benefits than previously expected. Without legislative changes, the average earner stands to lose nearly $1,500 per year for the rest of their life. Fortunately, there is a simple legislative changeexplored in detail belowthat would fix these problems without lowering the benefits of any other cohort of retirees. Chairman of the U.S. House Ways and Means Social Security Subcommittee, Rep. John Larson , has introduced such legislation*and Congress should fix this situation as soon as possible.
How Long Should I Work
There are so many benefits to work: staying engaged, social connection, mental stimulation and, of course, income.
You should work as long as you need to and as long as you want to.
A retirement planning calculator can be a helpful tool to help you assess how work income impacts your long term retirement plan.
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Timing And Your Health Coverage
Your health insurance coverage can also play a role in deciding when to claim Social Security benefits. Do you have a health savings account to which you would like to keep contributing? If so, note that if youre age 65 or older, then receiving Social Security benefits requires you to sign up for Medicare Part A, and once you sign up for Medicare Part A, youll no longer be allowed to add funds to your HSA.
The SSA also cautions that even if you delay receiving Social Security benefits until after age 65, you might still need to apply for Medicare benefits within three months of turning 65 to avoid paying higher premiums for life for Medicare Part B and Part D. If you are still receiving health insurance from your or your spouses employer, however, then you might not yet have to enroll in Medicare.
On March 17, 2020, all Social Security offices were closed completely due to the COVID-19 pandemic. As of Aug. 5, 2021, they are only open by appointment, and to get an appointment, you need to be in a limited, critical situation. Most people will have to transact their business online, by phone, or through the mail.
Costs Of The Solution
Two issues that are likely to arise in any discussion of fixing this problem are its cost to the Social Security trust fund and its cost to the federal budget. With regard to the cost to the Social Security trust fund, there are three ways to look at the issue.
One way is to view the cost relative to costs in a world in which no pandemic had occurred. For example, the cost could be measured using the economic assumptions in the most recent ;Social Security trustees report , which were formulated before the pandemic began. From this perspective, the cost would be zero because the legislative change would restore the world of Social Security benefits to what it would have looked like had there been no pandemic.
A second way of looking at the issue is to view the cost of the change relative to costs in a world that reflected economic assumptions indicative of the economic recession caused by the pandemic. From this viewpoint, there would be a cost associated with fixing the problem. For example, the chief actuary of the SSA estimates that if the AWI in 2020 were to fall 5.9 percent below its 2019 level, the AWI adjustments proposed by Chairman Larson would cost $90 billion in present-value dollars for the 75-year period from 2020 through 2094about 0.02 percent of taxable payroll over that period. . The cost over the 10-year period from 2020 to 2029 would be about $21 billion in nominal dollars.
Do You Qualify For Railroad Retirement Benefits
The high-level criteria for receiving railroad retirement from the RRB is relatively simple. You qualify for railroad retirement benefits if you:
- performed creditable railroad service for 10 years.
- performed creditable railroad service for five years, if that work occurred after 1995.
The RRB also breaks down the benefits into tiers and awards them based on employee and employer tax withholdings. All qualified beneficiaries enter Tier I, but not all Tier I recipients have enough creditable earnings to receive Tier II benefits.
Benefits arent limited to full-time, daily employees; workers get credit for a months worth of railroad service for any amount of time worked within that month, even if its a single days work. If you have any questions about your eligibility or benefits, contact your local RRB field office.
How The Ssa Defines Earnings
The Social Security Administration does not classify all sources of your income as “earnings” when calculating any potential benefit reduction.
- Considered earnings:;Wages from an employer , bonuses, commissions and vacation pay.
- Not considered earnings: Annuities, interest income, investment income, pensions and veterans, government or military retirement benefits.
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Can I Draw My Deceased Husband’s Social Security At Age 60
Hi. Larry..My husband passed away 7 years ago.I am age 58 1\2 . We were married 7 years. I have never remarried. can I draw his social security at age 60?
I’m sorry for your loss.
It sounds like you could potentially qualify for reduced widow’s benefits at age 60, which would be paid at a rate of 71.5% of your husband’s full retirement age rate . However, if you continue working your benefits could be subject to full or partial withholding until you reach your full retirement age depending on the amount that you earn .
Assuming that you will also qualify for retirement benefits on your own record, your best strategy is likely one of the following:1) File for reduced widow’s benefits at age 60 or as soon as your earnings will permit at least some benefits to be paid, then switch to your own record at age 70; or,2) File for reduced retirement benefits on your own record at age 62 or as soon as your earnings will permit at least some benefits to be paid, then file for unreduced widow’s benefits at your full retirement age. However, if your husband received reduced retirement benefits prior to his death that could affect the optimal time for you to claim widow’s benefits.
Normally, you would want to start out drawing the lower benefit first and then switch to the higher record when it reaches it’s highest potential rate. Our maximization software can sort all of this out for you and help you determine your best filing strategy.