Mar 13, 2023
If you are turning 70 at any time from March through January 1, 2024 and have never claimed Social Security benefits of any kind there may be an opportunity for you that you didn’t know about or expect. Drilling down a little further: are you currently married or widowed? If not, were you divorced after a marriage that lasted at least 10 years?
Depending on how many of those boxes you were able to check, there is a real possibility that you might be eligible for some unexpected but meaningful benefits.
Even if you have received some Social Security benefits, and especially if you began receiving those benefits recently, there is still some chance that you could qualify.
After reviewing your Earnings Record and your answers to a few questions the Social Security Maven can usually determine pretty quickly if you are eligible for extra benefits. Sometimes a few additional pieces of information are required. If you do qualify for extra benefits, the exact dollar amount will depend on your individual circumstances, but it typically runs into the thousands. Here is an example of what I’m talking about.
On Wednesday, March 1, 2023, I received an email from a person named Bob, who had a simple question. “When I claim my benefits this coming December at age 70, they will be more than twice as much as my wife is receiving. I’ve heard that she can get half of mine, and I would like to set up an appointment to confirm my thinking.”
I asked for and received a few additional items of information, but then had to tell Bob that his wife would not be eligible for any benefits on his record while he is living. But then I realized:
1. Bob will turn 70 between now and the end of 2023.
2. He has never received any Social Security benefits.
3. He is currently married.
That opened up a whole new way of looking at Bob’s situation. By the time we finished our conversation, in less than an hour, it became clear that Bob could get an additional $15,000 in benefits by using a different strategy. He walked away with a short list of action steps, and less than 48 hours later his online application had been submitted, with his extra benefits scheduled to begin arriving in April.
The question that prompted Bob to contact me did not turn out to be the highlight of our discussion, but our conversation was easily the financial highlight of Bob’s week. Sometimes the simplest questions or most obvious conclusions turn out to be neither simple nor obvious when viewed by an experienced eye.
Call or email today to see if the Social Security Maven can make a difference for you.
Nov 20, 2021
Less than a month after the historically high 5.9% COLA was announced for Social Security benefits in 2022, two pieces of unwelcome news arrived in rapid succession.
- On November 10, the U.S. DOL Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers (CPI-U) for the previous 12 months ending in October increased by 2%. In other words, the purchasing power of Social Security benefits had already eroded before the new COLA went into effect, and it will likely decrease even further over the next 12 months.
- On November 12, the Centers for Medicare and Medicaid Services announced that the basic Medicare Part B monthly premium will jump from $148.50 in 2021 to $170.10 – an increase of just over 5%. The annual Part B deductible increases from $203 to $233 (14.78%).
- For joint filers who had more than $182,000 of Modified Adjusted Gross Income (MAGI) in 2020 – and for individual filers who had more than $91,000 of MAGI in 2020 – the Income-Related Monthly Adjustment Amounts (IRMAA) increase as well. See https://www.medicare.gov/your-medicare-costs/part-b-costs for details.
Oct 14, 2021
The bad news is that inflation is up – way up – year over year. The good news is that yesterday SSA announced a 5.9% Cost of Living Adjustment (COLA) for 2022. This is the largest increase since the 7.4% COLA in 1982 and, more recently, the 5.8% adjustment in 2009.
The Social Security Act provides a formula for determining each COLA, based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The just-announced 5.9% COLA was determined by the percentage increase in the average CPI-W for the third quarter of 2021 over the average for the third quarter of 2020.
The increase is applied to all Primary Insurance Amounts, and thus all Social Security benefits, beginning with the December 2021 benefit, which shows up in the recipient’s bank account in January 2022. The COLA also applies to Supplemental Security Income (SSI) benefits for January 2022.
The contribution and benefit base (aka the “wage base”), which is the maximum amount of earnings that is subject to Social Security taxes in a given year, has also increased: from $142,700 in 2021 to $147,000 in 2022. The wage base is tied to changes in the National Average Wage Index rather than to the COLA. This is another bad news/good news situation for high wage earners: yes, $4,300 more in earnings will be subject to OASDI taxes, but potential benefits will also be higher.
Here is a link to the 2022 Social Security Fact Sheet, which shows year over year increases in a variety of automatic adjustments. Medicare premium adjustments have not yet been announced, but that information should be available in the coming weeks.
Sep 22, 2020
Until mid-March of this year there were three ways of applying for Social Security benefits, or for enrolling in Medicare:
- In person at your local SSA office:
- By telephone, using either the national toll-free number (1-800-772-1213) or calling your local office (https://secure.ssa.gov/ICON/main.jsp); or
- Online through the ssa.gov website
On March 16, 2020, SSA announced that as of the following day local offices would be “closed to the public for in-person service.” https://www.ssa.gov/news/press/releases/2020/#3-2020-2 As a result, since March 17 anyone wishing to apply for benefits has been limited to telephone or online filing.
FILING ONLINE FOR RETIREMENT (INCLUDING SPOUSAL) OR DISABILITY BENEFITS[1]
You must have established a “my Social Security” account before you are permitted to file online. The advantages of filing online are: (1) you can do it when it’s convenient for you; (2) you do not have to travel to the local office; (3) you don’t need an appointment; and (4) you will not have to wait for a claims rep to answer the phone. On the other hand, there is no claims representative to speak with if you get stuck in the middle of the application.
I filed online for my own benefits several years ago. The process went smoothly and took less than 40 minutes: far less time than most folks spend getting to their local office and finding a parking space, or waiting on the telephone to reach a claims representative.
On the other hand, my wife filed her application (pre-COVID) online, with me at her side. Although we did everything correctly, a poorly trained representative in our local office reviewed the online submission and made a mess of the process: it took several phone calls and three subsequent trips to the local office to set things straight.
If you are reasonably confident in your ability to apply online, I suggest you give it a shot. If you run into difficulty during the process, take a break and look for help, rather than submitting an application that may be problematic. I increasingly refer clients to a professional service where, for a very modest fee, an experienced professional will (by phone) walk you through the online application line by line as you make the entries on your computer. Virtually everyone who has used this service has indicated they were glad they did.
RESTRICTED APPLICATION FOR SPOUSAL BENEFITS ONLY: if you were born before January 2, 1954 and are eligible to file a restricted application, be sure to make it absolutely clear that you are not applying for your own benefits, but rather for spousal benefits only.
- Be sure to check “Yes” next to the following question: “If you are eligible for both retirement benefits and spouse’s benefits, do you want to delay the start of retirement benefits?”
- You might also say something in the Remarks section like: “I am restricting the scope of my application to spousal benefits only. I want to delay receipt of my own retirement benefits to earn Delayed Retirement Credits.” or “I wish to exclude my own retirement benefits from the scope of this application.”
Before you actually hit the submit button, be sure to print out a copy of the application. This enables you to make sure the application accurately reflects what you intended to do. It will also serve as evidence of what you did in case there is a dispute down the road.
APPLYING FOR BENEFITS BY PHONE
You may call the national toll-free number (800-772-1213), or you may call your local office after first locating a phone number at https://secure.ssa.gov/ICON/main.jsp. Whichever number you call, expect a lengthy wait. Eventually you will be rewarded when a live person answers the phone. This is generally not a cause for celebration, as it is likely that all you will be able to do at the moment is to make an appointment to speak with a claims representative at a later date.
Even if you cannot get an appointment for the month in which you planned to begin benefits, calling for the appointment should entitle you to a “protective filing.” This means, for example, that if you call SSA in April to claim benefits that month and they can’t give you an appointment until June or July, once you do complete the application SSA will backdate it to be effective as of the month in which you called for the appointment (i.e., April). Be sure to ask for the protective filing when you call for the appointment, and try to get a written confirmation if possible, to avoid having to fight for it several months later.
When the actual filing appointment begins, a claims representative will ask questions, you will answer them, and the rep will record your answers on the application. Some claims representatives are excellent, but others may be inexperienced and/or inadequately trained – and you might not be able to tell the difference. Many applicants have received information and/or recommendations from claims representatives that was either not in the applicants’ best interest, was flat-out wrong, or both.
When you have completed the application over the phone, be sure to ask for a written copy of the document if the representative does not offer it.
PREPARING TO FILE AN APPLICATION
The most important preparation you can undertake is to decide on your claiming strategy before beginning the application process. It may be a “no-brainer” as far as you are concerned, but you should fully understand the range of claiming strategies available to you before making your decisions, ideally with input from a Social Security expert and your financial planner.
Some representatives may try to talk you out of what you’ve already decided upon by insisting that you should do something that will produce a higher immediate monthly payment. This can happen during a phone application session, or even several days after you have submitted an online filing. I recommend that you decide on your strategy in advance, go in well prepared, and then hold your ground if the rep suggests something different. At least do yourself the favor of getting a second opinion from a Social Security expert before allowing yourself to be persuaded to change course by a stranger who knows little about your situation.
SSA suggests that you gather certain information and have it on hand when you file no matter which method you use. https://www.ssa.gov/forms/ssa-1.html One of the more important items is “Your bank or other financial institution’s Routing Transit Number and the account number.” Benefits are paid by direct deposit into an account you designate, so it’s critical to get this piece right the first time.
I found one “trick” question when I applied for benefits: “Have you used any other names?” My first reaction was “of course not.” Then I recalled that when I got my first Social Security card at age 14 I used my full middle name. Somewhere along the way I dropped the middle name and began using just my middle initial, which appears on my current Social Security card.
Finally, remember that just before you sign you will have to attest, under penalty of perjury, that everything in the application is true and correct to the best of your knowledge, and declare your understanding that “anyone who knowingly gives a false statement about a material fact in this information … commits a crime and may be subject to a fine or imprisonment.”
Keep in mind that if you do make a mistake SSA will make you pay for it, and if SSA makes a mistake, SSA will still make you pay for it. Sometimes the mistake is discovered several years after you have begun receiving benefits. More often than not, SSA discovers that they have overpaid you and they want their money back NOW. If you cannot pay them in a lump sum, they have the power to collect their pound of flesh out of your benefit payments until the over-payment is recovered.
At some point the pandemic will end and in-person filing will be added back to the menu of claiming options. However, online filing will continue to provide the most convenient and reliable method of applying for the benefits you have paid for over your decades-long working career.
Peter M. Weinbaum
The Social Security Maven®
[1] As of this writing (September 22, 2020), SSA does not accept online applications for survivor benefits.
For assistance in identifying your claiming options and advice on filing, fill out the online questionnaire and submit it after attaching the requested earnings information. Clicking on the services page will lead you to a description of the various ways I work and the fee structure.
Oct 11, 2018
The Social Security Administration has announced a Cost of Living Adjustment (COLA) of
2.8% in 2019. The increase affects all retirement, disability, and survivor benefits beginning with the December 2018 payments, which are received in January 2019. The COLA also affects “auxiliary benefits” paid to family members (for example spouses, minor children, and disabled adult children) based on the earnings records of a related worker.
This is by far the largest increase since the 3.6% COLA that was declared 2012 and the second largest since 2009. COLA increases are related to inflation in the economy, as measured by the CPI-W: the Consumer Price Index for Urban Wage Earners and Clerical Workers.
The Contribution and Benefit Base, also known as the “wage base,” will increase from $128,400 to $132,900 in 2019. This means that an individual’s earnings up to $132,900 will be subject to Social Security taxes next year. Changes in the wage base are related to increases in the National Average Wage Index.
Changes in other inflation-sensitive numbers for 2019, such as the exempt amount for the Earnings Test, have been announced as well. See https://www.ssa.gov/news/press/factsheets/colafacts2019.pdf
Jul 4, 2018
It is important to obtain a professional analysis of your Social Security options, but sometimes even more important to follow the advice to the letter. There are so many nuances within the Social Security system that one misstep can derail your entire plan.
In January 2014, Fred and Elaine retained me analyze their claiming options. I illustrated seven strategies for their consideration.
Fast forward to April 2016: legislation passed in November 2015 would affect some of the illustrated strategies. I spoke with Fred by phone on April 14 and sent him a follow-up email, explaining that if they wanted to implement Strategies 6 or 7 he must file and suspend within the next two weeks. I also said that if he filed and suspended, Strategy 4 would no longer be available , because once a husband has filed for his own benefits he cannot claim spousal benefits. The other four options would not be affected.
Fast forward to July 2018, when Fred calls me out of the blue. He tells me that they had settled on Strategy 4, and that he just went into his local SSA office to file for spousal benefits on Elaine’s record. There he was told that he was not eligible for spousal benefits. I pulled up their report, asked him a few questions, and learned the following.
Strategy 4 called for them to execute four steps:
- Elaine begins benefits based on her earnings record in March 2018 at age 66
- Fred files a restricted application for spousal benefits only in March 2018 at age 68-1
- Fred switches to benefits based on his earnings record in February 2020 at age 70
- Elaine switches to survivor benefits in February 2040 at age 87-11
The couple had indeed decided on Strategy 4. Fred, an astute and accomplished attorney, had read news stories about the demise of file and suspend, and he completed his filing and suspending before the April 29, 2016 deadline. Here’s what he failed to take into account: (1) there was nothing in Strategy 4 that called for him to file and suspend; and (2) I had cautioned him orally and and in writing that filing and suspending would eliminate Strategy 4 as an option. The combination of Fred filing in April 2016 and Elaine claiming her benefits in March 2018 leaves them in a position where none of the three strategies (4, 6, or 7) is available, and neither of them would be able to claim spousal benefits.
Epilogue. Fortunately there is an alternative that revives the availability of Strategies 6 and 7. Since Elaine claimed her benefits in March 2018, there is still time for her to withdraw her application, repay all the benefits she has received, and start over. Once her request for withdrawal is approved, she will be able to file for spousal benefits, retroactive to March, 2018. That will put them back on track for Strategies 6 and 7, as well as a host of other options that lie in between.
Moral. If there is a gap between the Social Security advice you receive and what your own research reveals, it is usually more prudent to ask questions than to rely on your own findings.
Jul 13, 2017
Over the past few years, the Social Security Administration (SSA) seems to have dramatically expanded its marketing budget. SSA is constantly putting out blog posts and other communications, primarily focused on enhancing its brand and trying to persuade us that it cares deeply about the members of the public they exist to serve.
The April 13, 2017, post was entitled What Every Woman Should Know About Social Security, written by “Suze Orman, Personal Finance Expert.” http://blog.socialsecurity.gov/suze-orman-what-every-woman-should-know-about-social-security/ Following is a verbatim quote from Ms. Orman’s article:
“Here’s what women need to understand about Social Security.
- You can claim a benefit based on your own work history, or on your spouse’s Social Security earnings record, if you are married for at least ten years.
- You are eligible for Social Security if you have worked (and paid into the system) for 40 quarters, which is 10 years.
- Your benefit is based on the highest 35 years of earnings. That’s where working through your 60s might be helpful, if it knocks out some of your lower-income years from your benefit computation.
- When your spouse dies, you won’t be allowed to keep collecting his/her benefit and you are entitled to just one benefit. But you will be able to claim the higher of the two benefits.
- If you were married at least 10 years before you divorce, you will be eligible to claim a benefit based on your ex’s Social Security record.”
What, you may ask, is so dangerous about that? The answer: taking it at face value and relying on it in your planning. Here are some observations and comments relating to her numbered paragraphs:
- You do not have to be married for 10 years to potentially be eligible to claim benefits on your spouse’s Social Security record. You are required to have been married for only one year. However, whether you have been married for 10 years or one year at the time you claim, there are a number of additional hurdles you must be able to clear in order to be eligible to collect spousal benefits.
- While it is true that you must have accumulated 40 credits of covered earnings to be eligible for benefits on your own record, you may still be eligible for benefits on the record of a spouse (or former spouse) even if you have never worked. In 2017, it takes earnings of $1,300 to generate one credit; and although the maximum number of credits you can earn in any given calendar year is four, you could theoretically earn enough ($5,200) in one quarter (or even in one day) to accumulate 4 credits. So you don’t actually have to have worked in 40 separate quarters to be eligible for benefits on your own record, although you must have earned credits over a minimum of 10 different years.
- It is essentially true that your benefits are based on your highest 35 years of earnings, but keep in mind that we are talking about inflation-adjusted However, the potential to increase your benefits by continuing to work is not limited to your 60s. For example, if your earnings during the year you turn 83 become part of your highest 35 years, your benefits will increase.
- It is true that you cannot receive spousal benefits after your spouse has died, because spousal benefits are available only during your spouse’s lifetime. Moreover you cannot collect your own benefits plus survivor benefits at the same time. However, there are circumstances under which it makes sense to claim benefits on your own record until you reach Full Retirement Age, and then switch to survivor benefits. In other situations, you might claim survivor benefits first and later switch to benefits on your own record.
- Yes, you must have been married for at least 10 years to have the possibility of claiming benefits on your divorced spouse’s record. However, there are many circumstances under which you will not be eligible to receive divorced spouse’s benefits despite having been married to your former spouse for at least 10 years.
By the way, to the extent that any of the above is applicable to women, it also applies to men.
I suspect that Ms. Orman was well compensated for bringing her name-recognition and celebrity status to the SSA’s online blog. However those who rely on these kinds of sound-bite articles do so at their peril.
Peter M. Weinbaum, J.D.
Jul 12, 2017
Over the past year I find myself increasingly being asked to assist in damage control. In many of those situations the damage has been inflicted by the Social Security Administration itself.
Case in point: having just read the May 31 SSA blog post entitled The Importance of Social Security Survivors Benefits http://blog.socialsecurity.gov/the-importance-of-social-security-survivors-benefits/, I sensed my blood pressure beginning to rise. Two different items set me off, one simply misleading and the other downright dangerous.
The misleading statement reads as follows: “The amount of benefits your family receives depends on your lifetime earnings. The higher your earnings are, the higher the benefits will be.” Obviously there is some truth to the foregoing statement, but it is misleading in at least two respects.
- If the worker died after claiming his or her benefits before Full Retirement Age, then his or her surviving spouse could receive significantly less than the surviving spouse of a lower earner. Survivor benefits are most often equal to the retirement benefits the worker was receiving at the time of death.
Example: Worker A had a Primary Insurance Amount (PIA) of $2,000. He died at age 71, having delayed claiming his benefits until age 70. His widow was potentially eligible for survivor benefits of $2,640.
Worker B had a PIA of $2,600. He died at age 71, having claimed his benefits at age 63. His widow was potentially eligible for survivor benefits of $2,145.
- The deceased worker’s earnings and date of claiming determine the maximum possible survivor benefits. However, the age at which the surviving spouse claims survivor benefits determines what percentage of the maximum possible benefit amount will actually be payable.
Example (continuing): Worker A’s spouse claimed survivor benefits at Full Retirement Age (66 in this case) and became entitled to receive $2,640 per month. Worker B’s spouse claimed survivor benefits at age 60 and receives $1,859 per month.
The dangerous statement reads this way:
“When a worker dies, we recommend that their survivors apply for benefits right away. You can apply by telephone or at any Social Security office. For more information about survivors benefits, visit www.socialsecurity.gov/survivors. If you think you qualify, please don’t wait. Apply today.”
Worker B’s surviving spouse did exactly what the SSA blog suggests. She applied for survivor benefits when she turned 60, which is the earliest age of eligibility. As a result, she received a benefit of $1,859, which amounts to 71.5% of Worker B’s PIA, the minimum possible based on a PIA of $2,600.
Worker A’s surviving spouse ignored the SSA advice, and waited until she reached Full Retirement Age to claim survivor benefits of $2,640, thus receiving 100% of the maximum possible based on a PIA of $2,000.
The bottom line: many factors can come into play when a person becomes eligible for survivor benefits. It is not always a foregone conclusion that one should “apply for benefits right away.”
The Coup de Gräce
Charlie was 67 in 2014 when he filed and suspended (a technique that is no longer available) to enable his wife, then 66, to claim spousal benefits on his record. His wife collected spousal benefits for about a year, and then died unexpectedly.
Shortly after she passed, Charlie contacted SSA to see if he would be eligible for survivor benefits on her record. The response was positive, so Charlie filed the application and began collecting survivor benefits of $2,373 per month while he waited to begin receiving his own higher benefits at age 70.
The monthly payments continued for a total of 11 months, then stopped abruptly in 2016. Shortly thereafter Charlie received a letter from SSA saying that they had made a mistake in approving his claim for survivor benefits and directing Charlie to immediately repay the $26,103 he had received due to their error.
Charlie doesn’t have that amount of cash readily available, and so he is now trying to negotiate a payment plan with SSA. He is also working with his tax preparer to amend his 2015 and 2016 federal income tax returns so that he can get a refund of the income taxes he paid on the survivor benefits he now must return.
If Charlie had called me before he filed for survivor benefits, I could have saved him a lot of trouble. However, by the time he contacted me there was nothing I could do but empathize, and then explain why he has no grounds to dispute the SSA’s latest decision. So much for the advice to “apply for benefits right away.”
Peter M. Weinbaum, JD
July 2017
Nov 29, 2016
Social Security Administration (SSA) representatives routinely dispense inappropriate advice and/or incorrect information to people like you and me. In the course of consulting with hundreds of couples and individuals, I have become personally aware of dozens of such instances. Sometimes the clients have come to me for a second opinion following an experience with SSA. Sometimes they report back after I have helped them make informed decisions about their benefit claiming. In either case, it’s a risky proposition to rely solely on advice or information received from SSA, either over the phone or in person at a local office.
Training and competence. SSA employees are primarily charged with processing applications for benefits. They are supposed to be trained to know, or be able to research, the rules that pertain to benefit claiming; to understand and explain how those rules operate in your particular situation; and to follow prescribed procedures to translate your application into benefits. As in most bureaucracies, not all representatives are equally well trained and knowledgeable. SSA reps run the gamut from highly trained, excellent public servants to inexperienced or incompetent functionaries – and everything in between. The problem is that it’s hard to assess the competency of the representative you are dealing with.
A very personal decision. Even the best SSA representatives are not trained to be claiming strategists, nor do they know enough about your particular circumstances to be able to give you reliable advice about which approach would be best for your situation. Heck, I am a very knowledgeable claiming strategist, and I don’t tell clients what they should do. I show them a range of strategies and encourage them to make claiming decisions that fit well with the rest of their financial situation.
True Story: I worked with a couple last February to help them figure out their Social Security claiming situation. John and Joan own a small business. They settled on a strategy that called for John to file and suspend before the end of April 2016, and for Joan to file a restricted application for spousal benefits when she turned 66 eight months later.
In mid-November I received the following email message from John:
“I just wanted to follow up with you since we last spoke. I did file and suspend last April, and Joan went into our local SSA office today to file a restricted application for spousal benefits. The representative at the window tried to talk her out of it! She wanted Joan to file for benefits under her own account since she’s turning 66 next month. Joan had your analysis with her and kept insisting that the clerk should proceed with the restricted application. The clerk kept saying: ‘Well, that may be what YOUR HUSBAND wants you to do, but what do YOU want to do? Don’t you realize that you could be getting twice as much by filing for your own benefits?’
What is the matter with these people? Joan finally had to tell her to just do what she was being told to do, and the rep relented, so it seems to have turned out OK: Joan will get half of my PIA for the next four years, while our own Social Security benefits will each continue to grow at 8% per year.”
True Story #2. I completed an analysis for Mike and Joanne back in March 2016. Mike was already 67 years old, while Joanne would turn 66 in October. They decided that Mike would claim his benefits in October to coincide with Joanne’s turning 66, when she would claim spousal benefits.
Around the middle of September he completed an application for his benefits online. However, the next day he got a call from an SSA representative who had read his application. The rep recommended that Mike should file for his benefits retroactive to March, pointing out that if he did that he would receive a lump-sum check for $18,000.
The $18,000 lump sum seemed attractive to Mike, so he contacted me immediately with two questions. He wanted to know (1) why he shouldn’t do the retroactive application, and (2) why I hadn’t notified him of this opportunity.
I told Mike that filing retroactively would cost him about $108 per month for the rest of his life as well as Joanne’s life. If getting $18,000 into his pocket by September had been important to them when I consulted with them back in March, Mike could have claimed his benefits at that time. But an extra $18,000 in early benefits was not important to them, and claiming his benefits in March would have been inconsistent with everything they had told me about their goals and priorities. Mike thanked me for “screwing my head back on straight” and the next day politely told the rep that he was going to follow through with the application as filed. The rep was incredulous and made one more attempt to convince Mike of the stupidity of his decision, but Mike stood his ground.
Have a plan and stick to it. If you don’t know what you’re doing and why you’re doing it when you seek help from SSA or file an application, you risk being talked into losing out on thousands of potential benefit dollars. What’s more, if the representative you deal with seems knowledgeable and acts in a friendly manner you may not know when you are being misled. In fact, you may even thank them profusely and tell your friends how helpful those folks at SSA really are! If you have a well thought out plan, great! Execute your plan and don’t get derailed. If you don’t, fill out this questionnaire and get started.
Many SSA representatives appear to believe that they are only doing a good job if they can (1) turn an inquiry into an application, and/or (2) persuade an applicant to adopt a strategy that will maximize their benefits on that day, regardless of the long-term consequences.
The moral of these stories: taking advice from Social Security representatives may be hazardous to your wealth!
Peter M. Weinbaum, JD
Oct 27, 2016
On October 18 the Social Security Administration announced a Cost of Living Adjustment (COLA) of 0.3% for 2017. Aside from the three years in which there was no COLA (2010, 2011, and 2016), this is by far the smallest percentage COLA since these automatic increases were first introduced in 1975.
How does this translate into extra dollars? It amounts to a $3 monthly increase for every $1,000 of monthly benefits. So if you’re receiving a monthly benefit amount of $2,000, you would expect a gross benefit increase of $6. The COLA takes effect beginning with December 2016 benefits, which are payable in January 2017.
But don’t spend it all in one place: if you are paying Medicare Part B premiums it is quite likely that the entire COLA increase, and possibly more, will be consumed by higher Part B premiums. We will know more when Medicare releases its premium schedules for 2017.
The real impact of this miniscule COLA will be felt in other areas that, while not affected by the size of the COLA percentage increase, depend on the declaration of a COLA of any size to trigger a change. Here are some of the affected numbers:
Social Security Contribution and Benefit Base. Also known as the “taxable wage base,” the ceiling on earnings subject to Social Security taxes grew to $118,500 in 2015, and remained at that level in 2016 because there was no COLA in 2016, and the wage base cannot increase unless there is a COLA declared for a particular year.
The 0.3% COLA for 2017 has allowed the wage base to spike upward, based on a formula that tracks the National Average Wage Index. In 2017 that ceiling has been raised to $127,200 – the largest year-over-year dollar increase in the history of Social Security. Translation: if your earnings as an employee are at or above the new wage base you will pay $539 more in Social Security taxes than you would have paid in 2016 with identical earnings.
Social Security Earnings Test. In 2016, the “exempt amount” under the Earnings Test was $15,720; in 2017 the exemption increases to $16,920.
Credits or Quarters of Coverage. 40 credits are needed to qualify to receive retirement benefits under one’s own record. In 2016, a credit required earnings of $1,260; in 2017, $1,300 of earnings is required to accumulate a credit.
Maximum Primary Insurance Amount. The highest possible benefit for a person retiring in 2016 at Full Retirement Age was $2,639, which was down from $2,663 the previous year. The maximum benefit for someone retiring at FRA in 2017 is $2,687.
Peter M. Weinbaum, JD
