Will Baby Boomers Get Social Security
Current retirees probably have the least to worry about when it comes to receiving Social Security. Older adults are also due to receive a pay bump in January, thanks to a cost-of-living adjustment, making payments higher by 8.7%. For the average beneficiary, that’s an extra $146 for a total of $1,827 per monthly check. This hopefully means that your Social Security dollars can retain their purchasing power against inflated prices on everything from food to gas and travel. Beneficiaries should learn about their specific benefit rates by mail in December. You can also verify your new total on the Social Security website.
If you’ve yet to reach retirement age, but that day is approaching, know that if you wait until age 70 to claim Social Security, your benefit jumps by about 8% a year beyond your full retirement age.
Medical Improvement Can Stop Both Ssdi And Ssi
The rules surrounding cessation of benefits for medical improvement are the same for Social Security disability and SSI.
If your disabling medical or mental/psychiatric condition improve, the SSA can find that you’re no longer disabled and stop your benefit payments. The SSA periodically reviews the case of all beneficiaries to determine whether they are still disabled.
The standards used in “continuing disability reviews” for determining whether someone has improved enough to return to work are tough for the SSA to meet, and most disability beneficiaries continue to receive benefits after their review. For more information, see our article on Continuing Disability Reviews.
When Would You Choose To Suspend Benefits Past Full Retirement
Example: John was born in July of 1955. His full age of retirement for collecting Social Security Retirement benefits is age 66. He will reach full retirement age in July of 2021. However, John is still working full time as a CPA and has no plan to retire. Is it worthwhile for John to delay retirement until age 70? The answer depends on his earnings and his life situation.
Suspending benefits past age 66 means John will earn delayed retirement credits with the Social Security Administration. The delay will boost his monthly benefit amount by 2/3 of 1% for each month benefits are suspended or 8% for each suspended year. If he waits to collect Social Security Retirement until age 70, his monthly benefit may be 32% higher than the amount he would receive at age 66. He does not have to repay the one month of benefits he already received.
Important Things to Keep in Mind if You Decide to Suspend:
How Suspending Benefits Can Impact Your Family
A voluntary suspension means family members who have claims based on your work record cannot collect benefits. This is not the case for ex-spouses who are entitled to collect benefits based on your work record their benefits can continue while your benefits are suspended.
For more information about suspending social security retirement benefits, .
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Social Security Disability Vs Ssi
What can cause your benefits to stop differs between the two separate disability benefit programs that the Social Security Administration operates, so let’s take a brief look at the two programs.
Social Security Disability Insurance is based on an individual having paid enough in Social Security taxes to be eligible for benefits. Someone who hasn’t worked long enough, or recent enough, to have sufficient “work credits” isn’t eligible for SSDI regardless of their disability.
Supplemental Security Income is a needs-based program. It isn’t necessary to have paid Social Security taxes, or to have even worked, to be eligible for SSI. However, there are strict limits on the amount of income or assets that someone can have to qualify for SSI benefits.
Reason #: Social Security Stopped My Benefits Because I Got Better
If the disabling condition that qualify you for SSD benefits improve, then your payments may stop. The SSA has strict rules about who qualifies for benefits and who doesnt. Whats more, they also periodically review cases to ensure payments only go to eligible beneficiaries. This is called a continuing disability review , and it typically happens every 3-7 years. If symptoms from your mental or physical condition improve enough for you to start working again, the SSA may stop your benefits.
Generally, its easier to pass a CDR than it is get approved for benefits the first time. If you got approved within the last three years, though, your payments likely stopped suddenly because of unreported health changes. If your doctor said youd improve when the SSA first approved you , they may review your case even sooner. And if you have a severe disabling condition, your reviews may happen once every seven years . Theres not an exact science to CDRs, but SSI beneficiaries stop having them once theyre 65 years old. If your disability benefits stopped suddenly, the SSA likely thinks youre well enough to work again. If you feel you still cannot work, you may need a Social Security attorney.
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What If I Receive Both Social Security And Ssi
If you received Social Security benefits before May 1997, or if you receive both Social Security and SSI, the payment schedule is different. Instead of getting your payments on a Wednesday, you’ll receive your Social Security payment on the third day of each month and your SSI on the first day of each month.
However, those payment dates change if the first or third day of the month falls on a weekend. For instance, Oct. 1 fell on a Saturday this year, so SSI recipients received their October payments a day early on Sept. 30 and their Social Security payment on Monday, Oct. 3. The same will apply in December for January 2023 payments.
Suspending Social Security Retirement Benefits
My client, who is 62 years old, just lost his job. He wants to file for Social Security retirement benefits and look for new employment. A friend told him he could suspend his Social Security benefits at a future date if he found new employment and, by suspending his benefits, he would not need to repay Social Security benefits already received. Is that correct?
ERISA consultants at the Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare. We bring Case of the Week to you to highlight the most relevant topics affecting your business.
A recent call with a financial advisor from Ohio is representative of a common inquiry related to Social Security benefits.
Highlights of the Discussion
No, that is not correct. The friend, although well-meaning, is mixing up a couple of key Social Security concepts.
Social Security retirement benefits can be stopped in two ways. The first method is referred to as the withdrawal of application and the second is suspension of benefits. Each has unique rules as noted below.
- Can occur only after reaching full retirement age and before age 70
- No repayment is required
- Delayed retirement credits are available prospectively until age 70
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Suspension Of Social Security
If youve reached full retirement age which varies based on the year you were born and are not yet 70, then you can suspend your retirement benefits. The key phrase here is if youve hit full retirement age. If you havent, then you cannot suspend your benefits.
Suspending your benefits can provide advantages, all revolving around increasing your income.
If you continue to work or have other income sources and do not need the Social Security benefit, it can be beneficial to suspend them so that you will earn a higher amount in future years when it may be needed, says Shelli Woodward, a tax analyst at Merchant Maverick, an advisor for small businesses.
For every year that you suspend benefits, the monthly payout will increase 8 percent, for those born in 1943 or later, says Andrew Latham, CFP, managing editor of SuperMoney.com.
For example, lets say you were born on New Years Day in 1955, says Latham. You could have started receiving your regular benefits in December of 2020. However, you could increase your benefits by up to 132 percent if you suspended benefits until December 2024.
Its key to know that suspending your benefit to get that 8 percent annual increase works only until you turn age 70. So the most you could receive is 132 percent of your full retirement benefit.
Additionally , you dont need to pay back the money youve already received from Social Security.
Lay Evidence Of Capability
- When there is no evidence of legal incompetence, SSA must always develop and consider lay evidence of the persons capability.
- Examples of lay evidence: SSAs observations made during interviews with the person, , statements made by the person about their ability to manage or not manage their benefits, statements from third-party sources with direct knowledge of facts or circumstances regarding the persons daily living , the opinions of the Disability Determination Services and/or the Administrative Law Judge, etc.
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Retroactive Ssi And Ssdi Payments
When claimants are approved for either SSI and/or SSDI benefits they may also be eligible for Retroactive benefits. Retroactive SSI benefits may be paid from the month after the Protective Filing Date and Retroactive SSDI benefits may be paid from the established date of onset of disability plus the 5-month waiting period. However, exceptions to this do exist. For questions about a specific SSI and/or SSDI beneficiarys Retroactive benefits we encourage you to contact the their local SSA field office.
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Laurence Kotlikoff Laurence Kotlikoff
Laurence Kotlikoff is a William Fairfield Warren Professor at Boston University, a Professor of Economics at Boston University, a Fellow of the American Academy of Arts and Sciences, a Fellow of the Econometric Society, a Research Associate of the National Bureau of Economic Research, President of Economic Security Planning, Inc., a company specializing in financial planning software, and the Director of the Fiscal Analysis Center. Kotlikoff’s columns and blogs have appeared in The New York Times, The Wall Street Journal, The Financial Times, the Boston Globe, Bloomberg, Forbes, Vox, The Economist, Yahoo.com, Huffington Post and other major publications.
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How Free Food And Shelter Affect Your Ssi
If you receive free food and shelter, the SSA will count it as “in-kind” income, and it can affect your benefits. For example, if you live with your adult child who pays your living expenses, the food and shelter provided to you would be counted as in-kind income, and your SSI benefits would be reduced by one-third.
Being Incarcerated Or Institutionalized
If you are sent to prison or other penal institution after being convicted of a crime, your benefits will stop for your period of incarceration.
The SSDI benefits will be suspended after 30 days of incarceration and are reinstated the month after your release.
Sometimes a felony conviction will cause the benefits to end even without incarceration, but misdemeanours won’t affect your SSDI benefits.
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Your Medical Condition Improves
You are only eligible to continue receiving benefits so long as you are disabled. If your condition improves, benefits may stop.
After youre approved for Social Security Disability, the Social Security Administration periodically reviews your case. This is called a Continuing Disability Review. In this review, the SSA determines whether or not you are still disabledand whether or not youll get SSDI benefits.
Depending on your age and your particular condition, the SSA may review your case once every three to seven years.However, the SSA may review your case sooner in certain circumstances. For example, a review might happen if they find that you have returned to work, if a new treatment for your condition is introduced, or if evidence suggests that youve experienced medical improvement.
If the SSA decides to stop your benefits on the basis of medical improvement, all is not lost: youre allowed to appeal their decision if you dont agree.
Who Is Disqualified From Social Security
You Earn Too Much Income For SSDI, which is the benefit program for workers who have paid into the Social Security system over multiple years, one of the most basic reasons you could be denied benefits is that, when you apply, you are working above the limit where it is considered “substantial gainful activity” .
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Changes In Living Situation
If you enter or leave an institution such as a nursing home or halfway house, this will affect your eligibility. If you move in with friends or relatives and they pay for your room and board, your SSI payment will be lowered. Finally, if you leave the U.S. for 30 days or more, your SSI benefits will stop.
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Why More Seniors Could Owe Benefit Taxes In 2023
With Social Security benefits increasing next year, more seniors are going to encounter these benefit taxes for the first time. It can lead to a surprise tax bill that could derail your budget pretty quickly. But if you’re aware of how the government taxes benefits, you can anticipate what you’ll owe, and you might even be able to avoid benefit taxes altogether.
One way to do this is by relying upon Roth savings as you near the thresholds for taxation outlined above. You generally don’t owe any taxes on your Roth retirement withdrawals because you paid taxes on your contributions when you made them. So they enable you to spend more money while your tax liability remains the same.
Sometimes, avoiding these benefit taxes isn’t possible, though. If you have to pay, you can choose to make quarterly estimated payments each year or have federal taxes withheld from your benefits. Choosing one of these options can help you avoid a big shock at tax time.
One final thing worth noting is that it’s not only the federal government that taxes Social Security benefits. Twelve state governments tax some of their seniors’ benefits as well. If you live in one of these states, check with your Department of Taxation to learn whether you could owe these taxes. Then, plan accordingly, so you know how this will affect your budget for next year.
The $18,984 Social Security bonus most retirees completely overlook
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How Work Affects Ssi Benefits
The SSA handles its two disability programs, Social Security Disability Insurance and Supplemental Security Income , somewhat differently. Unlike SSDI recipients, people who receive SSI can work at the SGA level without losing benefits. However, you must:
- earn less than the SSI income limit
- get benefits for at least a month before returning to work, and
- still be disabled.
How To Suspend Social Security Benefits And When It Makes Sense To Do So
- Getting Ready to Retire
- Living in Retirement
Social Security doesnt usually offer a do-over, but retirees can turn to this option in a few select cases. For those who find they can get by without their monthly benefit check, for now, suspending it could help secure a larger payout later. But dont get this strategy confused with a withdrawal of Social Security benefits, a strategy that operates in other circumstances.
Heres what to know about suspending Social Security benefits and when someone might want to.
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