Fortunately, if you worked only for private employers and paid Social Security taxes (FICA) at each job, you’ll get to keep your full pension and full Social Security benefits. You’ll only see a reduction in Social Security if you worked in the private sector and for the government or another employer who didn’t pay Social Security taxes.
Here’s how to know whether you’ll lose benefits because of your pension and how the benefit reduction works.
The 1983 Windfall Elimination Provision (WEP) requires the Social Security Administration (SSA) to reduce your benefits if you have a pension from any employer that didn’t withhold FICA taxes or pay into the Social Security system, such as:
If your pension comes from a job where you paid FICA taxes or self-employment taxes, the WEP won’t change your Social Security benefits.
Social Security calculates benefits so that low-wage workers receive a higher percentage of their lifetime earnings than high-wage workers. High-wage earners still get more benefits, but it’s a smaller portion of the wages they received when working.
Your Social Security disability or retirement benefits are based on your average monthly earnings over your lifetime (35 years). The SSA determines your benefit by dividing your average monthly earnings into three “bend points” (which change every year based on average wages). The agency then multiplies each bend point by a percentage (90%, 32%, and 15%) and then adds up the amounts to get your primary insurance amount (PIA). Your PIA is the amount of benefits you’re entitled to receive. (Learn more about how Social Security determines how much your benefits will be.)
For someone who becomes eligible for benefits in 2024, the bend point calculations would be:
Before the WEP, this resulted in people with full-time government jobs and relatively little private sector work receiving higher Social Security benefits because they were calculated as if they were long-term low-wage workers. So they could get a full government pension and Social Security benefits equal to 90% of their private sector earnings.
In 1983, the WEP changed that by requiring Social Security benefits to be offset based on pension amounts.
The formula used to calculate how big a bite will be taken out of your Social Security benefit due to the WEP is complicated. Basically, Social Security reduces the 90% multiple for the first bend point based in part on when you reached age 62 or became disabled. If it was in 1990 or later, the 90% factor could be reduced to as little as 40%.
If you have a very small government pension, however, Social Security won’t reduce your retirement or disability benefits by more than half the amount of your pension.
You can estimate how much your Social Security benefits will be reduced by your pension under WEP rules using the online calculator at SSA.gov.
Under a separate law, the Government Pension Offset (GPO) rule, your government pension will reduce any spouses, widows, or widowers benefits you can receive from Social Security. The GPO reduces Social Security spousal or survivor benefits by two-thirds of the amount of your pension. But there’s no reduction to your Social Security benefits if the government pension you’re getting isn’t based on your own earnings (for instance, if you inherited it from your late spouse).
For more information, see Social Security's brochure on the Government Pension Offset.
The WEP rules don’t apply if your only government work was under the Federal Employees’ Retirement System (FERS) or a similar program where you paid Social Security taxes on your income. But the WEP offset applies to any pension you earned as an employee of the federal government after 1956 under the Civil Service Retirement System (CSRS).
You also won’t have a WEP reduction of your Social Security benefits in the following situations:
The WEP offset rules also change if you worked for a number of years at jobs paying Social Security taxes.
Social Security won’t reduce your retirement benefits if you have 30 or more years of "substantial earnings" on which you paid Social Security taxes. The agency will continue to use the 90% factor in its monthly benefit formula.
What qualifies as substantial earnings changes each year, but for 2024, it’s $31,275. (See the table below.)
Year |
Substantial Earnings |
Year |
Substantial Earnings |
Year |
Substantial Earnings |
1937–1954 |
$900 |
1986 |
$7,875 |
2005 |
$16,725 |
1955-1958 |
$1,050 |
1987 |
$8,175 |
2006 |
$17,475 |
1959-1965 |
$1,200 |
1988 |
$8,400 |
2007 |
$18,150 |
1966-1967 |
$1,650 |
1989 |
$8,925 |
2008 |
$18,975 |
1968-1971 |
$1,950 |
1990 |
$9,525 |
2009-2010 |
$19,800 |
1972 |
$2,250 |
1991 |
$9,900 |
2011 | $19,800 |
1973 |
$2,700 |
1992 |
$10,350 |
2012 |
$20,475 |
1974 |
$3,300 |
1993 |
$10,725 |
2013 |
$21,075 |
1975 |
$3,525 |
1994 |
$11,250 |
2014 |
$21,750 |
1976 |
$3,825 |
1995 |
$11,325 |
2015 |
$22,050 |
1977 |
$4,125 |
1996 |
$11,625 |
2016 |
$22,050 |
1978 |
$4,425 |
1997 |
$12,150 |
2017 |
$23,625 |
1979 |
$4,725 |
1998 |
$12,675 |
2018 |
$23,850 |
1980 |
$5,100 |
1999 |
$13,425 |
2019 |
$24,675 |
1981 |
$5,550 |
2000 |
$14,175 |
2020 |
$25,575 |
1982 |
$6,075 |
2001 |
$14,925 |
2021 |
$26,550 |
1983 |
$6,675 |
2002 |
$15,750 |
2022 |
$27,300 |
1984 |
$7,050 |
2003 |
$16,125 |
2023 |
$29,700 |
1985 |
$7,425 |
2004 |
$16,275 |
2024 |
$31,275 |
If you have 20 or fewer years of substantial earnings, you'll still get hit by the offset, and the 90% factor will be reduced to 40% in determining your monthly benefit.
The good news is that if you have 21 years of substantial earnings or more (but fewer than 30), your benefits will still be reduced, but the percentage used to calculate your monthly benefit is reduced progressively. So, at 30 years or more, the percentage is 90%, but it drops 5% for each year less than 30, as follows:
Number of Years |
Percentage |
29 years |
85% |
28 years |
80% |
27 years |
75% |
26 years |
70% |
25 years |
65% |
24 years |
60% |
23 years |
55% |
22 years |
50% |
21 years |
45% |
20 years or less |
40% |
One more bit of good news: if your Social Security benefits are reduced due to WEP (or GPO), the offset won’t affect your eligibility for Medicare. You can still get Medicare based on your spouse’s work record, even if your pension makes you ineligible to receive any Social Security benefits.
For more information, see Social Security's brochure on the Windfall Elimination Provision.
Updated March 22, 2024
]]>The Social Security Administration (SSA) keeps a database of your earnings record and work credits, tracking both through your Social Security number. You can see this information on your Social Security Statement. The Social Security Statement also gives you an estimate of the benefits you'll receive at retirement age or if you become disabled, which can play an important role in your financial planning.
You can go online to get a copy of your Social Security statement or view it online. Go to www.ssa.gov/myaccount/ and open an account with Social Security to view your statement. (You can no longer request a printed statement using Form SSA 7004.)
The SSA mails out Social Security Statements only to seniors who are age 60 and over who don't have Social Security accounts (and who aren't already receiving Social Security benefits).
Your statement includes a record of the earnings on which you've paid taxes. It also includes an estimate of the benefits you'll receive at various retirement ages (62, 67, and 70), as well as your benefit amount if you become disabled at any age.
In addition, the statement will tell you if you've earned enough work credits to qualify for retirement benefits, disability benefits, and/or Medicare, and whether you've earned enough credits for your spouse and minor children to collect survivors benefits if you were to die.
When you check your record, make sure that the Social Security number noted on your earnings statement is your own, and make sure the earned income amounts listed on the agency's records mesh with your own records of earnings as listed on your income tax forms or pay stubs.
It's always wise for you to check the SSA's record of your earnings. Don't be surprised if you uncover an error. Some government-watchers estimate that the SSA makes mistakes on at least 3% of the total official earnings records it keeps.
If you have evidence of your covered earnings in the year or years for which you think Social Security has made an error, call Social Security's helpline at 800-772-1213, Monday through Friday. This is the line that takes all kinds of Social Security questions, and it is often swamped, so be patient. It is best to call early in the morning or late in the afternoon, late in the week, or late in the month. Have all your documents handy when you speak with a representative.
If you'd rather speak with someone in person, call your local Social Security office and make an appointment to see someone there, or drop into the office during regular business hours. If you drop in, be prepared to wait, perhaps as long as an hour or two, before you get to see a representative. Bring with you two copies of your benefits statement and the evidence that supports your claim of higher income. That way, you can leave one copy with the Social Security worker. Write down the name of the person with whom you speak so that you can reach the same person when you follow up.
The process to correct errors is slow. It may take several months to have the changes made in your record. After Social Security confirms that it has corrected your record, log in to your Social Security account to make sure the correct information made it to your file.
As your statement will show, your Social Security retirement benefits will vary depending on when you claim them before or after your full retirement age (66 or 67, depending on the year you were born). The longer you wait to start receiving payments, the higher your benefit amount will be.
However, it's not always better to wait until your full retirement age to claim your Social Security benefits. If you need your Social Security benefits for living expenses, or you have a health condition that makes it unlikely that you will live past age 75 or so, you may be better off collecting your benefits sooner rather than later. You can use a calculator at the Social Security website to see which retirement age makes the most financial sense for you (go to ssa.gov/benefits/calculators).
For comprehensive practical information about how and when to claim Social Security benefits, see Social Security, Medicare & Government Pensions, by Joseph Matthews with Dorothy Matthews Berman (Nolo).
]]>The Social Security Administration (SSA) has put an end to some of the strategies that married couples had used in the past, but spouses nearing retirement age still have many questions about how to get the highest possible joint Social Security benefits.
Here are some answers to your questions and a few tips on how to avoid mistakes that could reduce your benefits.
Yes, both spouses in a married couple can get full Social Security benefits at the same time. Married couples get two separate Social Security checks, and there is no “marriage penalty” for Social Security benefits.
The maximum Social Security benefit for an individual is $3,822 (in 2024), so the maximum Social Security benefit for a married couple is $7,644—but very few people get benefits anywhere close to the maximum. How much of a retirement benefit you'll receive depends on the amount of your salary or wages over your lifetime.
For most couples now reaching retirement age, both husband and wife, or both spouses, have earned some Social Security retirement benefits on their own earnings records. That means that each spouse can claim dependents benefits based on the other spouse’s work record, as well as survivor benefits based on the work record of the spouse who dies first.
Any time after each spouse reaches age 62, that spouse can claim retirement benefits. If one spouse claims retirement benefits, the other spouse may want to delay claiming their own retirement benefit, to let it grow. (Social Security penalizes people for collecting their retirement benefits early.) Sometimes couples can withdraw money from other retirement accounts, like IRAs and 401(k)s, to be able to delay collecting their Social Security benefit until age 67 or age 70.
In the past, once reaching full retirement age, a spouse could claim their spousal retirement (dependents) benefits without claiming their own retirement benefit. This was called "filing a restricted application." But that option is no longer available to people.
Today, when someone files an application for any type of retirement, spousal benefit, or dependent benefit, Social Security considers it to be an application for the highest benefit available. Often, the highest benefit is their own retirement benefit, but in some cases, the highest benefit might be their spousal retirement benefit (dependents benefit). Social Security will always pay you the highest benefit available when you file a claim.
No, your claiming early retirement benefits does not reduce the amount of your spouse’s spousal benefits or your child’s dependents benefit amount that they can collect on your work record. But your claiming early retirement benefits will reduce the amount you can collect from your own retirement benefits or from your own dependents benefits based on your spouse’s work record. (As we mentioned above, if you file an early claim for retirement benefits—or spousal retirement benefits—Social Security will permanently reduce your benefits.)
But, your collecting early retirement benefits does reduce the eventual survivor's benefit that your spouse could collect based on your work record, if you die before your spouse.
Note well, though: Your claiming early retirement benefits doesn’t affect the amount of the survivor benefits you can collect based on your spouse’s work record, if your spouse dies before you. The amount of survivors benefit you will get is equal to the amount of benefits that your spouse was collecting when they died.
Some spouses claim early retirement or early spousal retirement benefits but can then switch to higher survivor benefits when their spouse dies.
Claiming your early retirement or spousal retirement benefits doesn’t affect the amount of your survivor benefits (which are based on your spouse’s record). So if you have a considerably older spouse who has a higher earnings record, or your higher-earning spouse is in poor health, you could claim your early retirement or spousal retirement benefit, relying on the fact that you might be able to switch to full survivors benefits in the not-too-distant future.
Note that if your spouse claims early retirement benefits, however, your eventual survivors benefit will be reduced. The amount of the reduction depends on how early your spouse claims their retirement benefits. (And similarly, your claiming early retirement benefits will reduce your spouse’s or your child’s eventual survivors benefit based on your work record.)
This original version of this article was excerpted from Social Security, Medicare & Government Pensions, by Attorney Joseph Matthews (Nolo).
Updated January 19, 2024
]]>If you keep working at a high enough salary, you might increase your lifetime earnings average, thereby slightly increasing your retirement benefits for the years to come. But you also might get hit with Social Security's double early retirement penalty, depending on how much you earn. (Scroll to the end of the article to learn about Social Security's standard early retirement penalty for claiming benefits before full retirement age.)
Yes, you can work after you start collecting Social Security retirement benefits, no matter what your age. But, if you claim early retirement benefits at age 62 (or 63, 64, 65, or 66) and continue to work, be aware that the money you earn over a certain amount each year will reduce your Social Security retirement benefits (until you reach full retirement age).
The reduction in benefits applies only to the years you're working. Your earnings don't permanently lower the amount of benefits you’ll receive in future years (and you can even make back some of the reduction in future years—more on this below).
So you can earn any amount at age 62, but it might cause a reduction in your benefits.
How much you can earn when you retire depends on your age. Social Security has different rules for:
Until you reach full retirement age, the Social Security Administration (SSA) will subtract money from your retirement check if you exceed a certain amount of earned income for the year. This penalty limits the amount you can earn when you retire and still have it be worthwhile to work.
For the year 2024, the maximum income you can earn after retirement is $22,320 ($1,860 per month) without having your benefits reduced. The amount that's exempt goes up each year. (88 F.R. 7803.) The maximum income limit (what Social Security calls the "retirement earnings test") doesn't change depending on your age; in other words, it's the same whether you're 62, 63, 64, or 65.
If you're collecting Social Security retirement benefits before full retirement age and you make more than this amount, Social Security will reduce your monthly benefits by $1 for every $2 you earn over the limit. Once you reach full retirement age, you can make any amount of money and still receive your full Social Security retirement benefit.
If you're already receiving your retirement benefits, a special higher earnings limit applies in the calendar year you turn your full retirement age (67 for people born in 1960 or later).
If you'll reach full retirement age in 2024, you can earn up to $4,960 per month without losing any of your benefits, up until the month you turn 67. But for every $3 you earn over that amount in any month before you turn 67, you'll lose $1 in Social Security benefits.
Beginning in the month you reach full retirement age, you become eligible to earn any amount without penalty.
If you're self-employed, you can receive full benefits if, during the year you turn your full retirement age, there are any months in which you didn't perform what Social Security considers “substantial services.”
The usual test for whether you worked substantial services is whether you worked in your business more than 45 hours during the month (or between 15 and 45 hours in a highly skilled occupation). In other words, if you work in your business more than 45 hours in a month before you reach full retirement age, Social Security could reduce your benefit. (Read more about what Social Security considers substantial services for the self-employed.)
The SSA bases its retirement benefit calculations on earnings reported on W-2 forms and on self-employment tax payments.
But Social Security may request earnings estimates from some recipients, especially recipients of retirement benefits whp have substantial self-employment income or those whose reported earnings have varied widely from month to month, including people who work on commission.
Toward the end of each year, Social Security sends these people a form asking for an earnings estimate for the following year. The agency uses the information to calculate benefits for the first months of the following year. The SSA will then adjust the amounts, if necessary, after it receives actual W-2 or self-employment tax information in the current year.
Social Security doesn't count pension payments, money made through investments, interest earned on bank accounts, or government benefits as earnings. (20 C.F.R. § 416.1110.)
Once retirees reach full retirement age, Social Security will no longer check their income. Because there's no Social Security limit on how much a person can earn after reaching full retirement age, there's nothing to report.
The amounts of early retirement benefits you lose as a setoff against your earnings due to work aren't necessarily gone forever. When you reach full retirement age, Social Security will recalculate your benefits to make up for the reduction.
Using a complicated calculation, the agency will actually adjust upward the amount of your benefits to take into account the amounts you lost because of the earned income rule. The lost amounts will be made up gradually, a little bit each year. It can take up to 15 years to completely recoup your lost benefits.
The calculations are complicated, but, to increase your monthly benefit, Social Security actually reverses part of the reduction it made when you claimed early retirement benefits. (Note that this reversal doesn't apply if you worked while collecting early spousal or survivors benefits because you were caring for a minor or disabled child.)
If you claim Social Security retirement benefits before your full retirement age, which is 67 for those born in 1960 or later, the SSA will permanently lower your benefits. Social Security does this to try to make the amount you receive over your life expectancy equal whether you claim at age 62 and get a reduced amount, at age 67 and get the standard amount, or at age 70 and get an increased amount.
The SSA will reduce your benefits by 5/9 of one percent per month for each month you receive benefits before your normal retirement age. This reduction is roughly equal to roughly .556% per month. For example, if you start claiming benefits 27 months before you turn 67, your monthly benefit will be reduced by 15% (27 x .556%). The reduction is permanent.
If you claim retirement benefits more than 36 months early, the per-month reduction is not quite as harsh. The SSA has a different calculation for the months over 36. For example, if you start claiming benefits at age 62, 60 months before you turn 67, your benefit will be reduced by 30% (36 x .556% plus 24 x .417%).
The earliest you can claim retirement benefits is 60 months before your retirement age.
To learn more about collecting Social Security benefits, you may want to consider reading Nolo's book, Social Security, Medicare, & Government Pensions: Get the Most Out of Your Retirement & Medical Benefits.
Updated January 19, 2024
]]>I’m turning 62 this year and I'm considering claiming my retirement benefits early, since I was just denied disability benefits. If I do, will this lower my wife’s benefits too?
As you know, claiming Social Security before your full retirement age, which is 67 for those born in 1960 or later, will lower your monthly benefit amount permanently.
Social Security reduces your benefits using the early retirement penalty so that you'll receive the same amount between now and the average life expectancy, whether you claim at age 67 and get the standard amount, age 62 and get a smaller amount, or 70 and get an increased amount.
That said, if you claim benefits early but you live past a certain age—called your “break-even point”—you'll wind up collecting less in total lifetime benefits than if you had waited to claim them at full retirement age.
Now, to answer your question: your claiming retirement benefits early will affect some types of benefits but not others.
If you claim your Social Security retirement benefits early, this won't affect your wife’s dependents benefits, which are also called spousal retirement benefits. As long as your wife waits until her full retirement age to claim her spousal benefits, she can collect the full amount. That's because your dependents' benefits are always based on your primary insurance amount, which is based on your earnings record at your full retirement age.
Whether or not you claim benefits early doesn’t affect the amount of dependents benefits your spouse can collect.
If your wife claims her spousal retirement benefit at age 62, or at any time before her full retirement age, her spousal benefits will be lowered permanently.
Spousal retirement benefits are half of your primary insurance amount—50% of what you would have received if you had waited until full retirement age to claim benefits.
Survivors benefits are handled differently. If you claim retirement benefits early, this will lower your wife’s survivors benefits (also called a “widow’s benefit” or “deceased husband’s benefit"), should you die before her. This is because, at your death, your wife will be able to collect the same amount you were entitled to before you died.
If your retirement benefit was lowered because of early retirement deductions, or increased because of delayed retirement (up until age 70), your wife’s survivors benefit will be similarly decreased or increased.
If your spouse were to collect a survivors benefit before reaching full retirement age for survivors benefits, their survivors’ benefit would be decreased. Surviving spouses can collect benefits starting at age 60, but collecting them before full retirement age for surviving spouses still counts as claiming benefits early and is subject to the early retirement reduction.
So if you collected retirement benefits early and then your wife collected her survivors benefits early, she would only get a small portion of what your full retirement age benefit would have been.
Full retirement age for survivors will eventually be the same as for workers, age 67, but for the next five years, it's not. It's slightly different. For example, someone who was born in 1960 currently has a full retirement age of 67 for their own benefits, but a full retirement age of 66 years and 8 months for survivors benefits.
Here is full retirement age chart for surviving spouses now in their 60s and younger. By 2029, the full retirement age will be 67 for both workers and surviving spouses.
Year of Birth |
Full Retirement Age for Survivors |
1957 |
66 and 2 months |
1958 |
66 and 4 months |
1959 |
66 and 6 months |
1960 |
66 and 8 months |
1961 |
66 and 10 months |
1962 and later |
67 |
Source: Social Security Chart for Survivors Benefits
There is an exception here if your spouse is caring for your dependent minor or disabled children after your death. In this situation, your wife would not get an early retirement penalty regardless of the age she claimed this “mother’s benefit.”
To find out more about benefit amounts and when it makes sense to claim them, see Nolo’s article on how couples can maximize their Social Security benefits.
Updated January 18, 2024
]]>First, some background: Until you reach full retirement age, Social Security will subtract money from your retirement check if you exceed a certain amount of earned income for the year. For the year 2024, this limit on earned income is $22,320.
(Note, however, that any reductions taken from your retirement benefits for working are paid back to you over a 10-15 year period after you reach full retirement age. For more information, read our article on the penalty for working and collecting early retirement.)
Social Security has a special rule for small business owners because some people with their own businesses try to get around the income limit by continuing to work and paying a relative instead of themselves, or by continuing to run the business but being paid only for reduced work time, just to stay under the limit.
The rule is that, if you're self-employed, you can receive full benefits for any month in which Social Security considers you retired. To be considered retired, you must not have earned over the income limit and you must not have performed what Social Security considers substantial services.
The usual test for substantial services is whether you worked in your business more than 45 hours during the month (subject to some exceptions). For instance, if you worked between 15 and 45 hours per month and the work you did could be considered highly skilled, your work could be considered substantial services (more on this below).
But if you worked less than 15 hours, in no case will you be considered to have performed substantial services (you're considered retired, period).
When considering when services are substantial, Social Security will look at the following factors:
As mentioned above, if you worked between 15 and 45 hours in a month and the work you did could be considered highly skilled, your work will likely be considered substantial services. But where a person works from 15 through 45 hours in a month and can establish that the services weren't substantial, the person can be considered retired.
Services can be considered not substantial if both of the following are true.
The actual earnings limit varies depending on whether you’ll reach full retirement in that year. You’ll be considered retired this year if either of the following is true.
Social Security might require some extra information from you to prove you're not earning too much income or performing substantial services. The agency will want to see evidence that you're really giving up full-time work and not merely shifting your pay to someone else.
Social Security is likely to ask for information regarding your continuing involvement with your own business if any of the following are true:
Social Security might ask for some personal and business financial documents including:
Try to contact your local Social Security office several months in advance of applying for early retirement benefits so that you’ll learn what documents Social Security wants and you'll have time to gather the documents.
If Social Security determines that you provide services to the business with a value that exceeds the amount you're paid—based on the time you spend, the level of your responsibility, and the value of services you provide—Social Security might attach a dollar value to those services. If this dollar value, plus what you're actually earning, exceeds the amount of earned income permitted for your age, your benefits may be reduced.
If you're receiving early retirement and you receive substantial self-employment income, or you have income that varies widely from month to month, Social Security will request earnings estimates from you.
Toward the end of each year, Social Security will send you a form asking for an earnings estimate for the following year. The information you submit will be used to calculate your retirement benefits for the first few months of the following year, until they're adjusted with your actual self-employment tax information.
Once you reach full retirement age, you'll no longer need to report your earnings, because there's no Social Security limit on how much a person can work or earn after reaching full retirement age.
This original version of this article was based on an excerpt from Social Security, Medicare & Government Pensions, by Joseph Matthews (Nolo).
Updated January 18, 2024
]]>El Seguro Social reemplaza un porcentaje de sus ganancias cuando se jubila. Sus beneficios están basados en sus ganancias vitalicias. Escoger la fecha para jubilarse es una de las decisiones más importantes que usted tomará en su vida. Si decide jubilarse cuando cumpla la plena edad de jubilación, recibirá sus beneficios completos. Sin embargo, si se jubila antes de cumplir la plena edad de jubilación, recibirá beneficios reducidos.
Si nació antes del 1942, ya tiene derecho a los beneficios completos de Seguro Social. Si nació entre los años del 1943 hasta el 1960, la edad en que los beneficios completos son pagaderos comenzó a aumentar gradualmente hasta llegar a los 67 años de edad.
Si decide demorar el recibir beneficios hasta después de su plena edad de jubilación, su beneficio aumentará por un cierto porcentaje, según el año en que nació. El aumento se añadirá automáticamente desde el momento en que cumpla la plena edad de jubilación hasta que comience a recibir beneficios o cumpla los 70 años de edad, lo que ocurra primero. Si, nació en el 1940, por ejemplo, su beneficio aumentaría 7 por ciento por cada año, entre su plena edad de jubilación y los 70 años de edad, en que no reciba beneficios de jubilación.
Puede comenzar a recibir beneficios tan pronto cumpla los 62 años. Sin embargo, si comienza a recibir sus beneficios a una edad temprana, éstos serán reducidos. Sus beneficios son reducidos aproximadamente por la mitad de uno por ciento por cada mes que reciba beneficios antes de cumplir su plena edad de jubilación. Por ejemplo, si su plena edad de jubilación es 66 años y solicita beneficios de Seguro Social a los 62, sólo recibirá el 75 por ciento de su beneficio completo.
Nota Acclaratoria: La reducción será mayor en los años futuros, según continúe aumentando la plena edad de jubilación.
Usted puede seguir trabajando y aún recibir beneficios por jubilación. Sus ganancias en (o después de) el mes en que cumpla su plena edad de jubilación no reducirán sus beneficios de Seguro Social. De hecho, el trabajar después de su plena edad de jubilación puede aumentar sus beneficios. Sin embargo, sus beneficios serán reducidos si sus ganancias exceden ciertos límites en los meses antes de cumplir la plena edad de jubilación.
Si trabaja pero comienza a recibir sus beneficios antes de cumplir su plena edad de jubilación, se descuenta $1 de sus beneficios por cada $2 de ganancias sobre el límite anual. En el 2023, el límite es $21,240.
El año en que cumpla su plena edad de jubilación, se descuenta $1 de sus beneficios por cada $3 de ganancias sobre un límite anual diferente ($56,520 en el 2023) hasta el mes en que cumpla su plena edad de jubilación.
Una vez alcance su plena edad de jubilación, podrá continuar trabajando y su beneficio de Seguro Social no será reducido sin importar cuánto gane.
Nota Acclaratoria: Las personas que trabajan y reciben beneficios por incapacidad o pagos de Seguridad de Ingreso Suplementario son afectadas por diferentes reglas de ganancias. Ellos tienen que informar todas sus ganancias inmediatamente al Seguro Social, sin importar la cantidad que ganen.
Si recibe beneficios de viuda o viudo , puede solicitar recibir sus propios beneficios por jubilación tan pronto cumpla los 62 años, bajo la suposición que la cantidad de su propio beneficio por jubilación sea mayor que la cantidad que recibe en el registro de ganancias de su cónyuge fallecido. En muchos casos, puede empezar a recibir un beneficio a una tasa reducida y después cambiar al otro beneficio a una tasa completa una vez cumpla la plena edad de jubilación. Las reglas son complicadas y varían según su situación. Por eso, le recomendamos que hable con un agente del Seguro Social sobre las opciones que tiene a su disposición.
Para más información, visite el Sitio Web Oficial de la Administración del Seguro Social de los EE. UU.
]]>Many people think of retirement benefits when they think of Social Security (SS) benefits. But the Social Security Administration (SSA) actually offers four types of benefits to those who have paid into the Social Security trust fund over a number of years, or to their family members.
Workers who have worked in "covered employment" for a sufficient number of years are eligible for retirement benefits when they retire. Usually, you must work a total of at least ten years, either at a nongovernmental job, where you pay FICA taxes, or for yourself, paying self-employment taxes.
You may choose to begin receiving retirement benefits at any time after you reach age 62. But Social Security offers incentives to wait until your "full retirement age," which is between 66 and 67, depending on the year of your birth.
If you begin claiming benefits before you reach full retirement age, Social Security will reduce the amount of your benefits by a certain percentage. As a further incentive to keep working, the amount of your benefits will be slightly, but permanently, increased for each year you wait until age 70 to put in your claim.
But sometimes it doesn't make sense to delay collecting your benefits (see When to Claim Social Security Benefits?). Also, no matter how long you wait to begin collecting benefits, the amount you receive will be only a portion of what you were earning.
If you haven't reached full retirement age but you’ve worked enough to meet the requirements (usually five to ten years, depending on your age), you could be eligible for benefits from the Social Security Disability Insurance (SSDI) program.
To receive benefits, you must have a physical or mental impairment that prevents you from working full-time for at least a year. If Social Security considers you disabled under its medical guidelines, you can receive benefits roughly equal to what your full retirement benefits would be.
If you’re the spouse of a retired or disabled worker who qualifies for Social Security retirement or disability benefits, you may be entitled to benefits based on the worker's earnings record. This is true whether or not you actually depend on your spouse for your support.
Spousal benefits are available for those who reach age 62 or are taking care of the worker’s child age 16 or under. (Read about spousal dependents benefits.)
Minor children, and older children who became disabled before age 22, can also collect dependent benefits based on the worker’s earnings record. (Read about child dependents benefits.)
If you’re the surviving spouse of a worker who qualified for Social Security retirement or disability benefits, you and your minor or disabled children can be entitled to benefits based on your deceased spouse's earnings record.
As a widow or widower, you can begin to collect benefits once you reach age 60, or age 50 if you have a disability that prevents you from working. Survivors benefits are also available to minor children and older children who became disabled before age 22.
For more information, read our article on survivors benefits.
On June 26, 2015, the U.S. Supreme Court issued a decision in Obergefell v. Hodges holding that same-sex couples have a constitutional right to marry in all states. Since then, Social Security has granted eligibility for Social Security benefits to same-sex spouses who are married. For more information, read our article on how the law changed regarding Social Security benefits for same-sex spouses.
The average benefit for a person who retires at age 66 is $1,827 per month (in 2023)—a figure that changes based on the total amount of all benefits paid and the number of people receiving them. Whatever the amount of your retirement benefit, you will receive an automatic cost of living increase on January 1 of most years. This increase is tied to the rise in the Consumer Price Index, which measures the cost of basic goods and services.
Even if you have not worked for many years and you did not make much money in the years you did work, check your earnings record. You may be surprised to find you have quite a few quarters of credit from years gone by.
If you want to estimate the amount of Social Security benefits you are entitled to receive after you have retired from your job, you can view your Social Security Statement online by going to www.ssa.gov/mystatement/ (you'll need to create an account first).
Most Social Security retirement benefits are not considered taxable income by the Internal Revenue Service, although you do have to pay income tax on any interest you earn from saving your benefits. But, if your adjusted gross annual income—from a part-time job, for example—plus one-half of your year’s Social Security benefits adds up to $25,000 or more, then you must pay income tax on one-half of your Social Security benefits.
In January of each year, you will receive a statement from the Social Security Administration showing the amount of benefits you received in the previous year and an IRS form explaining how to report this income, if necessary.
For information on whether you qualify for these benefits, read Nolo's Social Security FAQ and visit our Social Security Disability section.
Updated February 13, 2023
]]>Here's how to determine what your Social Security retirement benefits will be at different ages and whether you should take early retirement benefits or not.
You may opt to receive benefits early (at age 62), at full retirement age, or after full retirement age. Your full retirement age varies between 66 and 67 depending on when you were born. (To determine your full retirement age, visit the Social Security Administration's website and use the Retirement Age Calculator.)
Almost 40% of retirees claim benefits as soon as they turn 62 (referred to as "early retirement"). If you claim early retirement, you'll receive up to 25% less than you would have if you'd waited until full retirement age (this number goes up to 30% for people born in 1960 or later).
Although claiming at full retirement age entitles you to "full" retirement benefits, you're actually given an incentive to wait even longer, as described next.
From your full retirement age until you reach age 70, the Social Security Administration (SSA) will increase your benefits by 8% per year.
Let's see how this plays out. Imagine that you'd receive $21,180 annually if you retired at your full retirement age (let's say it's 66). If you retired early, at age 62, you'd receive only about $15,885 in Social Security annually from retirement until the end of your life. If you waited to retire until age 70, you'd receive about $28,000 annually, an 87% increase in monthly payments over claiming them at age 62.
Curious about the grand totals?
If you lived to be 75, you would receive a total of:
But if you lived to be 85, you would receive a total of:
Of course, these annual amounts will vary based on cost-of-living increases built into the payment system.
To find out how much your benefits will increase or decrease depending on the age you retire, visit Social Security's Early or Late Retirement Calculator. The SSA also offers online calculators to help you estimate your retirement benefits at each age.
You can also see a personalized comparison of retirement benefits at age 62, at full retirement age, and at age 70 on your Social Security Statement. Go to www.ssa.gov/mystatement to view your statement (you'll need to set up a Social Security account).
Social Security no longer sends out printed statements to everyone; the agency only sends paper statements to those over 60 who don't have a Social Security account.
Should you take the money and run at age 62? Or hold out until you're 70? About 40% of people don't wait past age 62, usually because they need the money, are convinced that Social Security might collapse at a later date, or are fearful of a short life span.
But is early retirement a good option for you? The questions below will help you decide.
Some people, especially construction workers, movers, and other physical laborers, are less physically able to handle work at 62, even though they don't qualify for disability benefits. They may be good candidates for early retirement. But if you're still able-bodied and interested in working, you might want to avoid claiming early retirement benefits. If you're earning a high salary when you stop working, you'll miss the opportunity to boost your Social Security payment amount. (Your monthly payments are fixed based on the average of your top 35 earning years. Once you elect to receive benefits, your average stops increasing based on later Social Security contributions.)
Second, if you work while receiving benefits, you'll lose one dollar in benefits for every two dollars you earn over the SSA's earnings limit ($21,240 in 2023). There are no such deductions if you work after reaching full retirement age. The SSA provides an online earnings test calculator to determine whether working will lower your retirement benefits.
If you're convinced—either by genetics, research, or the amount of time you spend in doctors' offices—that you'll have a shorter lifespan than your peers, it doesn't make much sense to delay your retirement benefits.
If you had a good idea of when you were to die, you could compare your total benefit payments under all three common scenarios:
Financial planners prefer to calculate your break-even point—that's the age at which two of your total lifetime benefit amounts become equal to each other. (Social Security claims that if you live until your average life expectancy, your total lifetime benefit should be roughly the same whether you choose to retire at age 62, 66, or 70.)
Your personal break-even point will depend on a combination of factors, including your earnings record and when you were born. If you believe you'll live past this age (referred to as the "break-even" age), you should consider delaying claiming benefits until the later of the two dates, in order to give yourself an overall higher total.
To get specific information about your personal break-even point, you can call Social Security at 800-772-1213 and ask them to do the calculations for you.
Social Security has reduced a number of strategies that couples used to get higher lifetime benefits for one or both spouses. But carefully choosing when to claim benefits can make a difference in monthly payments and in one spouse's survivors benefits.
If one spouse has contributed far less to Social Security than the other, for example, the greater-contributing spouse should ideally wait longer to claim benefits—at least until full retirement age. Then if the higher-earning spouse dies first, the survivor can claim the spouse's full benefit.
And since, statistically, men die first, for some couples, it makes sense for the husband (or for a spouse with health problems), to wait to collect, while the other spouse begins collecting at age 62. When the first spouse dies, the widow can collect survivors benefits based on the higher benefit.
Read more at Nolo's article on how spouses can maximize their retirement benefits.
Keep this in mind: Your family's survivors benefits, which they can collect after your death, will be reduced if you claim early retirement benefits. But your family's spousal or dependent benefits, which they can collect while you're still living, won't be decreased if you claim early retirement benefits.
Claiming early benefits makes sense if you need the money for necessities—though that's also a sign that you're not saving enough and should continue working longer, if you're physically able to.
But claiming early benefits simply to augment an already-comfortable annual income doesn't make much sense. If you planned to invest the money, your investments would need to earn more than 7% annually to equal what you'd make by delaying benefits until full retirement age. If you can, withdraw money from tax-advantaged retirement accounts before starting to collect Social Security benefits.
Updated January 31, 2023
]]>The specific eligibility requirements for Social Security benefits vary depending on the type of benefits, the age of the person filing the claim and, if you are claiming as a dependent or survivor, the age of the worker.
There is one general requirement, however, that applies to all Social Security programs except for SSI (Supplemental Security Income): The worker on whose earnings record the benefit is to be paid must have worked in "covered employment" for a sufficient number of years. This means that the worker must have earned enough of what Social Security calls "work credits" by the time he or she claims retirement benefits, becomes disabled, or dies (usually a total of at least ten years of work).
For Social Security retirement benefits, you must be between the ages of 62 and 70 to start collecting benefits.
To check on your eligibility, see Nolo's article Checking you Social Security Earnings and Benefits or call the Social Security Administration at 800-772-1213.
The calculations are complicated. The amount of any benefit is determined by a formula based on the average of your yearly reported earnings since you began working.
But to complicate matters further, Social Security computes your average earnings differently depending on your age. If you reached age 62 or became disabled on or before December 31, 1978, Social Security averages the actual dollar value of your total past earnings -- and bases the amount of your monthly benefits on that amount.
If you turned 62 or become disabled on or after January 1, 1979, Social Security divides your earnings into two categories: Earnings from before 1951 are credited with their actual dollar amount, up to a maximum of $3,000 per year; and from 1951 on, yearly limits are placed on earnings credits, no matter how much you actually earned in those years.
Yes, and many people do just that. People who are past full retirement age may work and earn any amount without losing any of their Social Security benefits.
But before you reach full retirement age, Social Security will subtract money from your benefit check if you exceed a certain amount of earned income for the year ($14,160 in 2010). The limit applies only to earnings from work; it does not apply to income from such things as savings, investments, pensions, or rental property. In other words, earnings from these sources will not affect your Social Security benefits.
The Social Security Administration has added a special twist for the year in which you reach full retirement age. During the 12 months prior to your birthday, you will lose one dollar of benefits for every three dollars you earn over a set monthly limit ($3,140 per month in 2010). After your birthday, you can earn any amount of money without losing benefits.
To learn more about how and when to claim retirement benefits, see Social Security, Medicare & Government Pensions: Get the Most Out of Your Retirement & Medical Benefits, by Joseph Matthews with Dorothy Matthews Berman (Nolo).
The Social Security Administration used to consider 65 to be full retirement age for the retirement benefit. Benefits amounts were calculated on the assumption that most workers will stop working full time and will claim retirement benefits when they reach age 65.
Now that people are generally living longer, Social Security's rules about what is considered full retirement age have changed. Age 65 is still considered full retirement age for anyone born before 1938. But full retirement age gradually increases from age 65 to 67 for people born in 1938 or later. For anyone born after 1960, the full retirement age is 67.
Year Born | Full Retirement Age |
---|---|
1938 | 65 years, 2 months |
1939 | 65 years, 4 months |
1940 | 65 years, 6 months |
1941 | 65 years, 8 months |
1942 | 65 years, 10 months |
1943 - 1954 | 66 years |
1955 | 66 years, 2 months |
1957 | 66 years, 6 months |
1958 | 66 years, 8 months |
1959 | 66 years, 10 months |
1960 or later | 67 years |
The system does provide for early retirement at age 62, but also offers higher benefits for people who wait to make their claims after reaching full retirement age. For more information, see Nolo's article Social Security Benefits: Retirement, Disability, Dependents, and Survivors.
No. You may qualify for more than one type of Social Security benefit at a time, but you can collect just one. For example, you might be eligible for both retirement and disability, or you might be entitled to benefits based on your own retirement as well as on that of your retired spouse. You can collect whichever one of these benefits is higher, but not both.
You are eligible for dependents benefits if both you and your former spouse have reached age 62, your marriage lasted at least ten years, and you have been divorced for at least two years. This two-year waiting period does not apply if your former spouse was already collecting retirement benefits before the divorce.
You can collect benefits as soon as your former spouse is eligible for retirement benefits. He or she does not actually have to be collecting those benefits for you to collect your dependents benefits.
If you are collecting dependents benefits on your former spouse's work record and then marry someone else, you lose your right to those benefits. You may, however, be eligible to collect dependents benefits based on your new spouse's work record. If you divorce again, you can return to collecting benefits on your first spouse's record, or on your second spouse's record if you were married for at least ten years the second time around.
The amount of benefits to which you are entitled under any Social Security program is not related to financial need (except for SSI -- Supplemental Security Income), but is based on the income you have earned through years of working, through jobs and self-employment. Social Security keeps a record of these earnings over your working lifetime and pays benefits based on the average amount earned.
Your Social Security retirement benefits will vary depending on whether you claim them before or after your full retirement age (65-67, depending on the year you were born). The longer you wait to start receiving payments, the higher your benefit amount will be. However, it's not always better to wait until your full retirement age to claim your Social Security benefits. For information on estimating your benefits, see Nolo's article Social Security: Checking Your Earnings and Benefits.
An insurance policy or annuity is a contract between the company that sold it and the person who bought it. As a result, the proceeds don't go through the probate process (see How the Probate Process Works: Information for Executors), and the executor isn't in charge of them. It's common for the policy beneficiary, not the executor, to deal with the insurance company and collect the benefits directly. But executors may be called upon to help beneficiaries claim the payments they're entitled to.
Proceeds from life insurance policies can provide quick and welcome income for surviving family members after a death. The beneficiary will probably want to get the claim process started as soon as possible. You'll want to find out the answers to the following questions:
To claim life insurance benefits, the beneficiary should contact the insurance company's local agent or check the company's website. Some companies ask beneficiaries to start by sending in a form that merely reports the death; they then send the beneficiary a packet of forms and instructions explaining how to proceed. Generally, a beneficiary can apply for the proceeds simply by filling out the insurance company's claim form and submitting it to the company along with a certified copy of the death certificate.
If more than one adult beneficiary was named, each should submit a claim form. If the primary beneficiary died before the policyholder did, then the alternate (contingent) beneficiary can claim the proceeds. An alternate will need to submit the death certificate of the primary beneficiary in addition to the death certificate of the policyholder.
How long it takes to process an insurance claim can vary; a typical range is a several days to several weeks after you submit the claim.
Annuities, like life insurance policies, are contracts with insurance companies. Usually, annuities provide retirement income to the policy owner, but under certain circumstances they can result in payments to a beneficiary. Unlike most other nonretirement plan investments, the earnings on annuities are not taxed until they are distributed. As with life insurance policies, you'll want to find out some basic information on annuities:
To claim annuity benefits after the policy owner dies, the beneficiary should request a claim form from the insurance company that issued the annuity. The beneficiary will need to submit a certified copy of the death certificate with the claim form.
The Social Security death benefit is relatively easy for surviving family members to claim and quick to be paid, but it is currently a small lump-sum payment of $255 (assuming the deceased person had enough Social Security work credits). The surviving spouse or dependent children can claim this benefit. This payment is in addition to ongoing survivors benefits to which the spouse or children may be entitled.
Go to the local Social Security office to claim benefits. The staff can help with the paperwork and explain what information and documents—a certified copy of the death certificate, for example—are needed. To find the closest office, check the government listings in the phone book, use the "How to Find Your Local Office" service at www.ssa.gov, or call the SSA, toll-free, at 800-772-1213.
Family members may also be entitled to monthly survivors benefits. You don't have to be of retirement age to receive benefits: dependent children, surviving spouses, and even some ex-spouses may be eligible for survivors benefits. The more quickly family members apply for these benefits, the better, because some of them are not retroactive.
Applicants can start the application process over the telephone (800-772-1213) or online at www.ssa.gov, which may speed things up, but they won't be able to complete the process without a face-to-face meeting with a staffer at an SSA office. Generally speaking, the following family members may be entitled to monthly survivors benefits.
Surviving spouses. A surviving spouse who is already receiving Social Security benefits based on the deceased person's earnings just needs to report the death to the SSA at 800-772-1213. The SSA will change monthly benefits to survivors benefits. If the spouse is already getting benefits, the SSA will check to see whether or not the survivors benefit would be higher. The spouse will receive the higher amount.
A surviving spouse who is not already getting benefits or is receiving benefits based on his or her own earnings record will need to apply for survivors benefits. Eligibility for survivors benefits will depend on the survivor's age and family circumstances. Benefits are given to any surviving spouse who:
Former spouses. Generally, divorced spouses are eligible for benefits under the same rules as surviving spouses, if the marriage lasted at least ten years and the divorced spouse does not remarry before age 60. If, however, the ex-spouse is taking care of the deceased person's young or disabled children, it doesn't matter how long the marriage lasted.
Unmarried children. Dependent children of the deceased person are eligible for benefits if either of the following apply:
If children are already receiving benefits, the SSA will change the benefits to survivors benefits after the family notifies the SSA of the death.
Dependent parents. Parents who depended on the deceased worker for at least half of their support and who are at least 62 years old are also eligible for benefits.
Nolo offers several resources to help you pursue next steps. If you are looking for more information on survivors benefits, check out the book Social Security, Medicare & Government Pensions, by Joseph Matthews (Nolo). For more information on claiming insurance and Social Security benefits—and everything else you need to know about settling an estate—get The Executor's Guide: Settling A Loved One's Estate or Trust, by Mary Randolph (Nolo).
If your situation isn't very straightforward, consider getting help from an experienced estate planning lawyer in your area.
]]>This strategy was possible only for benefits suspended by April 29, 2016.
]]>This article describes how the Social Security benefit process works and explains how your Social Security benefits might be impacted by funding shortages.
When you work, you pay taxes into the Social Security system, usually in the form of deductions from your wages and other earnings. (You can see the amount withheld for Social Security by looking at your paycheck stub or accessing your direct deposit records.) Once you retire or are unable to work due to disability, you can apply for the benefits you've earned. The amount of your Social Security benefits will depend mainly on three things:
The longer you work -- and the more money you make -- the higher your Social Security benefits will be. Benefits don't kick in automatically, though. You need to apply for your benefits through an application process. You must also accumulate the appropriate number of credits (more on credits below) and reach the age of 62 before you can apply for any Social Security benefits. Your spouse, any dependent children, and eventually your survivors will also be able to receive your Social Security retirement benefits.
As you pay your Social Security taxes over the years, you accumulate credits that can be used towards your Social Security benefits. The number of credits you need before you can apply for your retirement benefits depends on your date of birth. For example, people born after 1929 currently need 40 credits to apply for their benefits. This is equivalent to ten years of work. You can't receive benefits if you stop working before you reach the required number of credits, but you don't lose those credits either. When you return to the workforce, your credits will begin accumulating again from the point at which you left off, until you have enough to qualify.
You can begin gauging what your retirement benefits might look like by carefully reviewing your Social Security Statement. You can view your statement online at www.ssa.gov/mystatement/. Social Security sends out printed statements every five years to those not receiving benefits, and every year to those over 60. For information on reviewing your statement, see Nolo's article Social Security: Checking Your Earnings and Benefits.
The short answer is "Somewhat." This is because the next decade will see the largest drop in worker-to-beneficiary ratios in history, as baby boomers begin to retire. The problem gets compounded when you consider that people's life-spans are growing longer, the birth rate is declining, and the cost of living is only going up.
When Social Security was first established, the worker to beneficiary ratio was over 15 to 1; today it's closer to 3 to 1, with odds that it will shrink even further over the next few decades. This means that less money will be put into the Social Security system, while more gets taken out. In fact, projections show the federal government paying out more money in Social Security benefits than it will take in via payroll taxes around the year 2020.
Economically speaking, this shortfall is not sustainable for the long term, and without an infusion of money from another source, the Social Security benefit retirement system will face problems within the next 20 or so years. Current predictions indicate that the Social Security trust fund will run out in 2035 if nothing is done. After this point, retirees can generally expect about 75 cents on every dollar of their scheduled benefits. Thats because once the trust fund is depleted, there will be no surplus left. From that point on, the amount thats paid out in the form of benefits can only match what's coming into the Social Security system through employment taxes.
If retirement is right around the corner, you probably have nothing to worry about when it comes to your Social Security benefits. The problems described above are highly unlikely to affect current retirees or even those who plan to retire in the next ten years. The SSA has also stated that it has no plans to cut current benefits.
If you're decades away from retirement, this is where things get dicey in terms of your Social Security benefits. This is the primary focus of the current debate taking place on Capitol Hill. It is very likely that those currently entering (or relatively new to) the workforce will see a very different Social Security system than the one that's in place now -- absent some sort of drastic change in the numbers.
Unless changes are made, current 25-to-35-year olds face an over 25% reduction in benefits once the Social Security trust fund is gone. The response to this problem varies among politicians, educators, and economists. Some (including the Chairman of the House Budget Committee) believe that though recovery will be slow, it will happen in time to fix the shortfall in the benefit system by the time this younger generation is ready to retire. Others (including various economic think tanks) warn that drastic reform must occur to prevent the inevitable bottoming out of the Social Security system.
In places like the United Kingdom, governments have begun to prefund their Social Security plans. In the United States, prefunding is being considered, and so are other solutions like infusions from general revenue and increases to payroll tax.
Social Security is seen as too important of a safety net for millions of American workers to risk losing. If small changes to the Social Security system are made now, they'll go a long way toward ensuring that drastic measures don't become necessary in the future.
To learn more about how Social Security benefits can affect your retirement plans, visit Nolos free legal information on Social Security and Retirement Planning. You will find all the latest information and instructions you need to get your retirement and disability benefits, and dependents and survivors benefits, in Social Security, Medicare & Government Pensions, by Joseph Matthews and Dorothy Matthews Berman (Nolo).
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