The Social Security Administration Offices in Charleston South Carolina, Charlotte North Carolina, Miami Florida, Atlanta Georgia and across the USA cannot offer you advice. Before you make any decisions, consider the answers to these seven important questions.
- What are Delayed Retirement Credits and how do Delayed Retirement Credits affect my retirement benefit? They are additions to benefits if retirement benefits are delayed beyond full retirement age. Delayed credits may accrue up to age 70. The Delayed Retirement Credit provisions allow for any month for which a worker was at least full retirement age, was insured for retirement benefits, and did not receive retirement benefits. The amount of the delayed retirement credit depends on when you were born, currently anyone born after 1-1-1943, receive a monthly credit of 2/3% or .0066667. That's equates to a yearly credit of 8%.
- What is the deeming provision? Are there any exceptions? If you file for benefits prior to full retirement age, you are deemed to have filed for all benefits for which you are eligible. A Claimant who is entitled to reduced retirement benefit and a reduced spouse's benefits must file for both benefits if eligibility for both benefits exists in the first month of entitlement.The deemed filing rule applies to:
- All reduced spouse's benefits, including independently-entitled divorced spouse's benefits, on all Social Security Numbers.
- Certificate of Election for Reduced Spouse's Benefits.
Exceptions include child in care, if you are between the age of 62 and full retirement age and have a child under the age 16 in your care or a disabled adult child. - Am I able to work while receiving Social Security Retirement benefits?Yes, you can work while receiving retirement benefits. However, Social Security Retirement benefits are meant to replace, in part, earnings lost to an individual due to retirement. So, under the law, those benefits could be reduced if earnings exceed certain amounts. These amounts are listed on the Social Security website.For beneficiaries who are younger than FRA, deduct $1 from benefits for each $2 earned over the annual exempt amount (2014 - $15,480). In the year in which full retirement age is attained, deduct $1 from benefits for each $3 earned over the full annual exempt amount in the months prior to FRA (2014 – $41,400). This is referred to as the earnings test.
- How much will my Social Security Retirement be reduced if I elect benefits early?If you elect your retirement benefits early they will be reduced by 5/9 of 1% for the first 36 months prior to full retirement age. Any month in excess of 36 months will be reduced by 20%, which is the total reduction for the first 36, plus 5/12 of 1% for each month in excess. For example, if full retirement age is 66 and you elect benefits at 62 then your benefits will be reduced by 20% for the first 36 months and 5% for the 12 month after, for a 25% reduction for electing early. Once you elect reduced benefits you will receive a reduced benefit for the entire time you collect Social Security.
- Are retirement benefits guaranteed to keep up with the cost of inflation? Yes, Congress enacted the cost of living adjustment or COLA provision in 1972. This provision provided for automatic cost of living adjustments if there was an increase in the Consumer Price Index for Workers of at least 3%. In 1986, Congress eliminated the three percent requirement due to waning inflation. Currently there is a cost of living adjustment if there is an increase in the average consumer price index for workers. If however, the increase is by less than .05 percent or there is a decrease there will not be an adjustment for that year.
- I'm getting divorced, how will this affect my retirement benefits? What if I did not work? In the event of a divorce, the lower earning spouse will be eligible for spousal benefits under the higher earning spouse's record if they have been married for more than 10 years. This does apply to a spouse that has insufficient work credits or no work credits. However, this benefit can be terminated under multiple situations:
- If the lower earning spouse is eligible for benefits on their own earnings record of more than or equal to half of the higher earning spouse's benefit,
- at the death of the spouse receiving the spousal benefit,
- marriage to someone other than the beneficiary they are claiming under,
- the beneficiary dies,
- if the workers entitlement to disability insurance benefits terminates and they do not become entitled to retirement benefits.
- The divorced spousal benefit is not available until two years after the divorce if the insured individual is age 62 but not yet entitled.
- Are my retirement benefits taxable?Yes, Social security retirement benefits are taxable in certain situations. Taxpayers must include benefits in the gross income in an amount equal to the lesser of:
- One-half of the net benefits received during the taxable year, or
- One-half of the sum derived by subtracting a base amount from the taxpayers modified adjusted gross income plus one-half of the social security benefit received.
This applies to any earnings in excess of income limits determined by the IRS.Up to 50% Taxed Up to 85% Taxed Individual 25,000-34,000 34,001+ Joint 32,000-44,000 44,000+
Disclosure: By law, we we are required to disclose that we are not endorsed by any government agency, or part of any government agency such as the Centers for Medicare and Medicaid Services or the Social Security Administration Offices in Charleston South Carolina, Charlotte North Carolina, Miami Florida or Atlanta Georgia. Thank you.
The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Social Security Timing.
Connect and Read More About Us
Hedges Wealth Management LLC - A Registered Investment Adviser
Hedges Insurance Agency LLC
Tax, Financial Planning, Investments and Insurance Advisors
1279 Dingle Road | Mt Pleasant | SC 29466
T
If you are looking for more information on any subject in this Blog, please Contact Us directly electronically or via phone. Thank you.
