Online Social Security benefits

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estimate

On July 22, 2008, the Social Security Administration introduced a new online benefits estimator.[41][42] A worker who has enough Social Security credits to qualify for benefits, but who is not currently receiving benefits on his or her own Social Security record and who is not a Medicare beneficiary, can obtain an estimate of the retirement benefit that will be provided, for different assumptions about age at retirement. This process is done by opening a secure online account called my Social Security. For retirees who have non FICA or SECA taxed wages the rules get complicated and probably require additional help.


Normal retirement age

The earliest age at which (reduced) benefits are payable is 62. Full retirement benefits depend on a retiree's year of birth



Year of birth Normal retirement age
1937 and prior 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 to 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
This table was copied in November 2011 from the Social Security Administration web site cited above and referenced in the footnotes. There are different rules for widows and widowers. Also from that site, come the following two notes: Notes: 1. Persons born on January 1 of any year should refer to the normal retirement age for the previous year. 2. For the purpose of determining benefit reductions for early retirement, widows and widowers whose entitlement is based on having attained age 60 should add 2 years to the year of birth shown in the table.

Those born before 1938 have a normal retirement age of 65. Normal retirement age increases by two months for each ensuing year of birth until 1943, when it reaches 66 and stays at 66 until 1955. Thereafter the normal retirement age increases again by two months for each year until 1960, when normal retirement age is 67 and remains 67 for all individuals born thereafter.

A worker who starts benefits before normal retirement age has their benefit reduced based on the number of months before normal retirement age they start benefits. This reduction is 5/9 of 1% for each month up to 36 and then 5/12 of 1% for each additional month. This formula gives an 80% benefit at age 62 for a worker with a normal retirement age of 65, a 75% benefit at age 62 for a worker with a normal retirement age of 66, and a 70% benefit at age 62 for a worker with a normal retirement age of 67. The 2008–2012 global recession has resulted in an increase in long-term unemployment and an increase in workers taking early retirement.
A worker who delays starting retirement benefits past normal retirement age earns delayed retirement credits that increase their benefit until they reach age 70. These credits are also applied to their widow(er)'s benefit. Children and spouse benefits are not affected by these credits.

The normal retirement age for widow(er) benefits shifts the year-of-birth schedule upward by two years, so that those widow(er)s born before 1940 have age 65 as their normal retirement age.

Spouse's benefit and government pension offsets[edit]
The spousal retirement benefit is one-half the PIA benefit amount of their spouse or their own earned benefits, whichever is higher, if they both retire at "normal" retirement ages. Only after the working spouse applies for retirement benefits may the non-working spouse apply for spousal retirement benefits. The spousal benefit is the PIA times an "early-retirement factor" if the spouse is younger than the "normal" full retirement age. The early-retirement factor is 50% minus 25/36 of 1% per month for the first 36 months and 5/12 of 1% for each additional month earlier than the "normal" full retirement date. This typically works out to between 50% and 32.5% of the primary workers PIA benefit.[45] There is no increase for starting spousal benefits after normal retirement age. This can occur if there is a married couple in which the younger person is the only worker and is more than 5 years younger. Any current spouse is eligible, and divorced or former spouses are eligible for spousal benefits if the marriage lasted for at least 10 years. It is arithmetically possible for one worker to generate spousal benefits for up to five of his/her spouses that he/she may have, each must be in succession after a proper divorce for each after a marriage that lasted at least ten years each.

The spousal survivor benefit is the full PIA benefit of the working spouse (reduced if the deceased was receiving a reduced benefit)[46] or their own benefit, whichever is higher.

There is a Social Security government pension offset[47] that will reduce or eliminate any spousal (or ex-spouse) or widow(er)'s benefits if the spouse or widow(er) is also receiving a government (federal, state or local) pension that did not require paying Social Security taxes. The basic "rule" is that Social Security benefits will be reduced by 2/3's of the spouse or widow(er)'s non-FICA taxed government pension. If the spouse's or widow(er)'s government (non-FICA paying) pension exceeds 150% of the "normal" spousal or widow(er)'s benefit the spousal benefit is eliminated. For example, a "normal" spousal or widow(er)'s benefit of $1,000/month would be reduced to $0.00 if the spouse or widow(er)'s if already drawing a non-FICA taxed government pension of $1,500/month or more per month. Pensions not based on income do not reduce Social Security spousal or widow(er)'s benefits.[clarification needed]

The passage of the Senior Citizens' Freedom to Work Act, in 2000, allows the worker to earn unlimited outside income without offsets in the year after they reach full retirement. It also allows the spouse and children of a worker who has reached normal full retirement age to receive benefits under some circumstances while he/she does not. The full retirement age worker has to have begun the receipt of benefits, to allow the spousal/children's benefits to begin, and then subsequently suspended his/her own benefits in order to continue the postponement of benefits in exchange for an increased benefit amount (5.5-8.0%/yr increase)[48] up to the age of 70. Thus a worker can delay retirement up to age seventy without affecting spousal or children's benefits.[49]

Delayed Social Security Benefits[edit]
[hide]Delayed Social Security Increases
for retiring after full retirement age[48]
Year
of birth Yearly
% increase Monthly
% increase
1933-34 5.5% 11/24 of 1%
1935-36 6.0% 1/2 of 1%
1937-38 6.5% 13/24 of 1%
1939-40 7.0% 7/12 of 1%
1941-42 7.5% 5/8 of 1%
1943+ 8.0% 2/3 of 1%
If a worker delays receiving Social Security retirement benefits until after they reach full retirement age[48] there is a Social Security benefits increase by a certain percentage—depending on date of birth. After age 70 there are no more increases in retirement benefits allowed. Social Security uses an "average" survival rate at your full retirement age to prorate the increase in the amount of benefit increase so that the total benefits are roughly the same whenever you retire. Women may benefit more than men from this delayed benefit increase since the "average" survival rates are based on both men and women and women live approximately three years longer than men. The other consideration is that workers only have a limited number of years of "good" health left after they reach full retirement age and unless they enjoy their job they may be passing up an opportunity to do something else they may enjoy doing while they are still relatively healthy.

Social Security Benefits while continuing work

Due to changing needs or personal preferences, a person may go back to work after retiring. In this case, it is possible to get Social Security retirement or survivors benefits and work at the same time. A worker who is of full retirement age or older may (with spouse) keep all benefits, after taxes, regardless of earnings. But, if this worker or the worker's spouse are younger than full retirement age and receiving benefits and earn "too much", the benefits will be reduced. If working under full retirement age for the entire year and receiving benefits, Social Security deducts $1 from the worker's benefit payments for every $2 earned above the annual limit of $15,120 (2013). Deductions cease when the benefits have been reduced to zero and the worker will get one more year of income and age credit, slightly increasing future benefits at retirement. For example, if you were receiving benefits of $1,230/month (the average benefit paid) or $14,760 a year and have an income of $29,520/year above the $15,120 limit ($44,640/year) you would lose all ($14,760) of your benefits. If you made $1,000 more than $15,200/year you would "only lose" $500 in benefits. You would get no benefits for the months you work until the $1 deduction for $2 income "squeeze" is satisfied. Your first social security check will be delayed for several months—the first check may only be a fraction of the "full" amount. The benefit deductions change in the year you reach full retirement age and are still working—Social Security only deducts $1 in benefits for every $3 you earn above $40,080 in 2013 for that year and has no deduction thereafter. The income limits change (presumably for inflation) year by year.[50]

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