| SEARCH OnWEAC |
|---|
Social Security Questions & Answers
Q.1 What benefits are available to my dependents if I am "fully insured" when I die?
A.1. 1. A lump sum death payment of $255 to surviving spouse or eligible child.
2. Monthly payments to your surviving spouse during the time your children are under age 16.
3. Monthly payments to your surviving children under age 18, or age 18 if a full-time student.
4. Monthly payments to your surviving spouse at 65 years of age, or 60 if he/she elects reduced benefits; or 50 if he/she is disabled), and
5. Monthly payments to your dependent father/mother at age 62.
Q.2 At what age do retirement benefits start?
A.2 You may start withdrawing reduced benefits at age 62. The retirement age when non- reduced benefits are available (now 65) will be increased to age 67 in very gradual steps starting in the year 2000 as follows:
| Full Retirement Age by Year of Birth | |
| 1937 and prior - 65 years | 1943 through 1955 - 66 years |
| 1938 - 65 years, 2 months | 1955 - 66 years, 2 months |
| 1939 - 65 years, 4 months | 1956 - 66 years, 4 months |
| 1940 - 65 years, 6 months | 1957 - 66 years, 6 months |
| 1941 - 65 years, 8 months | 1958 - 66 years, 8 months |
| 1942 - 65 years, 10 months | 1959 - 66 years, 10 months |
| 1960 and after - 67 years | |
Q.3 How are retirement benefits computed?
A.3 Benefits are based on average yearly earnings indexed to inflation over a number of years, which vary with your year of birth and age at retirement. If born after 1928, 35 years of earnings will be used. Fewer years are used for people born in 1928 or earlier. For early retirement, benefit reduction is based on the number of months you are starting before eligible for non-reduced benefits. Reduction factor is 5/9 of 1% per month. As the full retirement age increases, the reduction in benefits payable at age 62 will also increase. A worker born in 1940 would realize a 23.33% reduction at age 62 compared to a 20% reduction if born in 1930.
By delaying your retirement benefits past age 65, you can increase your unreduced benefits. If you were born in 1917-24, the increase is 3% for each year that you delay receiving your benefits, up to age 70. For members born in 1925-26, the increase is 3 1/2% per year. For persons born after 1926, the percentage increase is larger, rising gradually to 8% per year of delay for those born after 1942.
Q.4 What amount of work credits are needed to draw on your own record (worker)?A.4 Maximum ever needed for retirement is 40 quarters (10 years).
Q.5 Can I lose Social Security benefits by working?
A.5 Yes. There is a limit on how much earned income you can have each year and still receive your full Social Security benefits. The retirement test exemption amount for 2007 is $12,960 ($1,080/mo) for persons age 62 to full retirement age. There is no limit once you are at full retirement age. The amount of loss depends on the amount of earnings in excess of these earning limits. Benefits are reduced by $1 for every $2 you earn over the earnings limitation during the year.
In the initial year of retirement, income before retirement date will not reduce benefits after retirement. You can receive full benefits for any month that you earn 1/12 of the earnings limitation or less. If your total earnings for the calendar year are not more than the earnings limitation, you will get benefits for all months in which you are at least age 62.
Q.6 How much of my Social Security benefit is taxable income?
A.6 A portion of your Social Security benefit is included in taxable income if your adjusted gross income plus non-taxable interest income and half of your Social Security benefits are more than a base amount. The base amount for an individual is $25,000; for a couple filing jointly it is $32,000; for a couple filing separately it is 0. The amount of benefits to be included in taxable income will be the lesser of:
l. One-half of the benefits for the year, or
2. One-half of the excess of your combined income - adjusted gross income plus one-half of benefits - over the base amount.
A second threshold ($44,000 for joint, $34,000 for single) is created that includes all income. Since 1994, up to 8.5% of Social Security benefits could be taxed. The effective federal tax rate for seniors above this new threshold is 51.8% since each $1.00 of earned income above this threshold also causes an additional $0.85 of Social Security to be taxed.
Q.7 Can a husband and wife both receive retirement benefits?
A.7 Yes! If each is entitled to receive benefits based on his/her own earnings record, each can receive retirement benefits independently of the other's benefits. Or if half of one spouse's benefit is greater than the other spouse's own earned benefit, spouse can get the higher amount. (Also see Q.8)
Q.8 Is the spouse benefit always 50% of the worker's retirement benefit?
A.8 No! At full retirement age, the spouse's unreduced benefit is 50%. Benefit reduction is based on the number of months the spouse's benefits began before full retirement age. The reduction factor is 25/36 of 1% per month. A spouse at age 62 would receive 37.5%.
A spouse, any age, with eligible child under age 16 or disabled will receive 50%.
Q.9 What are the benefits of a divorced spouse?
A.9 Must have been married to "worker" 10 years; must have been finally divorced from "worker" at least 2 years prior to filing; must have attained age 62 and be currently unmarried; and must not be eligible to a higher benefit on own record. A divorced spouse can receive benefits when the worker reaches age 62 whether retired or not.
Q.10 Am I better off with my own benefits or my spouse's benefits?
A.10 If you qualify for benefits on more than one record, you'll get an amount equal to the larger of the two amounts.
Q.11 When should I apply for benefits?
A.11 If applying for benefits at age 62, apply no earlier than 4 months before 62nd birth month. Otherwise, you can apply up to 3 months before your expected retirement date.
Q.12 If I am receiving retirement benefits, will my dependents also receive benefits?
A.12 Your spouse will receive a monthly benefit at age 62 or older. A wife of a retired worker is entitled to a monthly benefit if she has a child under 16 in her care. Children under 18, or age 18 if a full-time high school student will also receive monthly benefits.
Q.13 What should I do to make sure I will receive the benefits I am entitled to?
A.13 1. Be prepared to offer proof of age and relationship.
2. Be sure your employer has your Social Security number recorded correctly.
3. Consult the Social Security office when:
You near age 60, if you are a widow or widower;
You near age 62;
You reach normal retirement age, and;
You reach age 70.