Free Retirement Classes. What You Need To Know To Retire Successfully

Social Security

Social Security FAQs

How Social Security Is Taxed

Pensions Impacting Social Security

Boost Your Social Security

Taking Social Security Early?

Understanding Social Security

Questions about Social Security?

Should I rollover my TSP? Answer: Your individual circumstances determine whether it’s in your best interest to rollover a TSP account to an IRA

Social Security FAQs

1. What is Social Security?

Social Security is the foundation of economic security for millions of American retirees, disabled persons, and families of retired, disabled, or deceased workers.

Social Security is a pay-as-you-go program which means that today’s workers pay Social Security taxes into the program and money flows back out as monthly income to beneficiaries. As a pay-as-you-go system, Social Security differs from company pensions, which are pre-funded retirement programs, where the money is accumulated in advance so and paid out to the worker when they retire. Company plans such as this are funded in advance to protect employees in case the company enters bankruptcy or goes out of business.

2. Will Social Security be there for me?

It’s now projected that the trust will no longer be able to fully fund benefits starting in 2033. That’s more than two decades from now, but the new depletion date, does not mean Social Security will be bankrupt.  It simply means that if no action were taken before then, beginning in 2033 benefits will be paid at a reduced rate of about 75%. 

3. Am I eligible for Social Security?

As long as you’ve worked for at least 10 years (for those born in 1929 or later). Ten years is the minimum amount of time required to earn the mandatory 40 credits. Even if you have accumulated your 40 credits, however, you can’t start collecting retirement benefits until you are 62 or older.

4. How much can I draw from Social Security

As explained in the previous section titled “AIME and PIA”, the exact amount you’ll get every month depends on how much you’ve earned over your lifetime and how old you are when you start collecting Social Security.  Workers are encouraged to utilize the calculator on the SSA website to get a better understanding of their benefit amounts.  Social Security’s online tools are found at www.ssa.gov/planners/benefitcalculators.htm. These tools include the Quick Calculator, which provides an instant but rough estimate, and the Retirement Estimator, which is based on your actual earnings record on file with Social Security.  The AARP also offers a calculator www.aarp.org/work/social-security/social-security-benefits-calculator and offers additional options, such as clarifying how earned income may affect your benefit before you reach your full retirement age and offering guidance for married couples.  The SSA also offers a tool for estimating the effects of taking benefits pre and post FRA which can be found at  www.ssa.gov/OACT/quickcalc/early_late.html.  To estimate the impact working will have while collecting benefits, the SSA also offers a tool that calculates the impact of the earnings test which can be found at www.ssa.gov/oact/cola/rtea.html.

5. Can I collect Spousal Benefits?

As a spouse, you can claim a Social Security benefit based on your own earnings record, or collect a spousal benefit in the amount of 50 percent of your husband/wife’s Social Security benefit, but not both. You are automatically entitled to receive the higher monthly amount. In order to qualify for Social Security spousal benefits, you must be at least 62 years old and your husband or wife must also be collecting his or her own benefits, unless they reached FRA on or before April 1, 2016 and filed then suspended receipt of their benefits at that time.   If you were 62 on or before January 1, 2016, you may be entitled to file a restricted application for spousal benefits only, subject to certain conditions.

6. Can I collect Survivor Benefits?

The spouse of a deceased worker who is entitled to benefits is entitled to a survivor benefit.  The amount of the benefit paid varies and will depend on 1) whether the deceased spouse had begun to collect benefits prior to his death, 2) the time at which the deceased spouse first began to collect his Social Security benefits, and 3) the age of the surviving spouse when she begins to collect Survivor Benefits.

Typically, both spouses begin taking benefits at full retirement age (66 for those born between 1943 and 1954). After the first spouse dies, the survivor can then collect 100 percent of the deceased spouse’s benefit as long as she is also at full retirement age. The surviving spouse will not continue to receive the benefits she had previously received. Only one benefit amount will be paid, resulting in a reduction of benefits paid into the household after the death of the first spouse.

7. Should I start collecting at age 62?

The timing of when a worker begins taking benefits is critical to the success of their overall retirement income plan and depends on a variety of factors including health, other assets, the importance of the survivor benefit for the surviving spouse, to mention a few.  Every individual at or nearing retirement should consult a trained professional to determine the most optimal time to begin collecting their retirement benefit.

8. What is my Full Retirement Age (FRA)?
FRA is determined by birth year as follows:

Year of Birth *                              Full/Normal Retirement Age

1937 or earlier                               65
1938                                              65 and 2 months
1939                                              65 and 4 months
1940                                              65 and 6 months
1941                                              65 and 8 months
1942                                              65 and 10 months
1943—1954                                  66
1955                                              66 and 2 months
1956                                              66 and 4 months
1957                                              66 and 6 months
1958                                              66 and 8 months
1959                                              66 and 10 months
1960 and later                              67

*Individuals born on January 1st of any year you should refer to the previous year for purposes of calculating FRA. Further, those individuals born on the 1st of the month are assumed to have achieved FRA the month prior.

9. What is the definition of PIA?

PIA is the acronym for Primary Insurance Amount which is the foundation upon which a retirement income benefit is built.  The PIA is derived from a calculation that takes into account the highest 35 years of indexed earnings a worker has had in their lifetime and averages those earnings to arrive at the retirement benefit payable to the worker when benefits begin at FRA.

10. What are the rules for divorced spouses collecting on ex-spouses’ earning records?

In order to be entitled to collect benefits on a former spouse’s record, the applicant must be at least age 62 and have been married to the worker for a minimum of 10 years.  If the divorce has not been final for more than 24 months, the applicant will only be eligible for benefits on their former spouse’s record if the former spouse has filed an application for the same. 

11. Does a divorced spouse have to wait until his or her former spouse files for Social Security benefits before collecting on an ex-spouse’s earnings record?

Once a couple has been divorced for 2 or more years, calculated from the date of the final divorce decree, each spouse becomes independently entitled to receive benefits on the other spouse’s record.  Independent entitlement means that the spouse seeking benefits on the former spouse’s record does not have to wait until the former spouse begins taking benefits in order for the benefit to be payable to them. 

12. Does the earnings test apply to survivor benefits?

The earnings test applies to ALL retirement benefits paid to individuals who are under FRA.

13.  If an individual never applied for Social Security and is well past the age of 70 can he or she apply for retroactive benefits?

The maximum amount of time an application can be backdated is 6 months.

14. How does the government capture the benefit reduction if someone is collecting Social Security before FRA and is working?

Beneficiaries are obligated to report their earnings to Social Security.  Further, the IRS and SSA share data so that if an individual inaccurately reports their earnings, the inaccuracy will be recognized at some point in the future and the SSA will withhold benefits at that time if it is deemed that an overpayment was made.  Similarly, if the benefit withholding as a result of the earnings test was inaccurate and too much was withheld, the SSA will correct that once it is recognized in their system.

15. If you are working while receiving Social Security benefits, do you continue to pay Social Security Payroll Tax?

Yes.

16. Can a person who is not eligible for Social Security benefits under his or her own work record begin collecting spousal benefits at age 62?

If their spouse has previously filed for benefits and been deemed eligible for the same, the non-worker or otherwise ineligible spouse, would be entitled to file on the working spouse’s record and would be paid a spousal benefit equal to 50% of the working spouse’s PIA.  If the benefit begins at 62, it will be reduced prior to FRA.  For an individual whose FRA is 66, taking at 62 would result in a 30% reduction in payment.

17. Can distributions from certain pensions reduce the amount of Social Security a worker will receive? 

Yes.  The Windfall Elimination Provision is a rule that reduces the Social Security benefit of workers who are receiving a pension from employment that was not covered by Social Security, which in most cases comes from government work, at the same time as they are receiving a Social Security benefit for worked that was covered by the Social Security system.  The reduction depends on the number of years the worker has within the Social Security system, with the greater number of years work resulting in the least amount of reduction to the Social Security retirement benefit. 

18. Can distributions from certain pensions reduce the amount of Social Security Survivor Benefits a person will receive?

Yes.  The Government Pension Offset is a rule that reduces the Social Security survivor benefit of those individuals who are receiving a pension from employment that was not covered by Social Security, which in most cases comes from government work, at the same time as they are receiving a Social Security survivor benefit.  The reduction to the Social Security in these cases is equal to 2/3 of the government pension the individual is receiving.

19. How did the Bipartisan Budget Act affect Social Security benefits?

The Bipartisan Budget Act, which became effective in April of 2016, changed two main components of Social Security claiming.  First, the Act eliminated the ability of an individual whose own benefits were in suspension from collecting a benefit based on the record of anyone else, which thereby eliminated the strategy of a worker suspending their own record and filing a restricted application at FRA based on their spouse’s record, thereafter collecting 50% of their spouse’s PIA.  Second, the Act eliminated altogether the ability of a worker to restrict an application to one particular benefit if more than one type of benefit was available to them at the time of their initial filing.  In essence, the rule eliminated a common strategy known as “restricted application” wherein applications who were entitled to both their own benefit and a benefit based on their spouse’s record, filed an application for one or the other as part of their claiming strategy.  This was most often utilized in the case of a spouse who filed only for the spousal benefit and did not take their own personal benefit based on their own employment an action which would result in the crediting of delayed retirement credits to the personal benefit equivalent to 8% per year, thus increasing the benefit amount they would be entitled to at age 70.  While this strategy was eliminated, Congress did include an exception which allows individuals who were 62 on or before January 1, 2016 to continue to elect the restricted application at their FRA and therefore be able to pick and choose between the types of benefits they wish to collect once they file.  For those not 62 by January 1, 2016, the strict prohibition against restricting an application applies.