Another thread about money......for those receiving S.S.

[MOSESS]

I may get the increase ,I will be paying taxes on it here in nj. The fed will get some back as well...ho well there goes the increase....

[wyliec]

Idaho,

I continue to work after full retirement age, so I can continue putting into the coffers of S.S., so they don't go bust.

[IdahoMtnSpyder]

Idaho,

I continue to work after full retirement age, so I can continue putting into the coffers of S.S., so they don't go bust.

Thank you. I need the money!!!!

[IdahoMtnSpyder]

While we're on the topic of SS let me clear up a common misconception, one that is often espoused by politicians. SS program is NOT a retirement savings program. It is not, never has been, and never will be. It IS an insurance program.

The official title is Old Age, Survivors, and Disability Insurance program. Like all insurance programs it operates on the principal that all current contributors into the fund are the ones who pay the benefits that the beneficiaries are currently receiving. And, like all insurance funds, if the income exceeds the payout, the surplus is invested to cover future shortfalls, or is returned to the payers. Of course, with SS the latter never happens. As with all insurance funds you must satisfy the requirements for receiving a benefit. For fire insurance you don't receive a benefit unless your home burns down. For car insurance you have to have automobile damage to receive benefits. A primary requirement for all insurance funds is you must be currently contributing to the fund in order to receive benefits. Note that employment taxes that you see taken out of your paycheck are taken in accordance with the Federal Insurance Contributions Act, or FICA. It's not called a retirement fund!

In order to collect SS benefits you must have, 1) contributed into the fund for at least 40 quarters of credits, or be the spouse of one who has; 2) and have reached the specified retirement age; or, 3) be disabled in accordance with certain criteria; or 4) be a surviving unremarried spouse of a worker who is deceased; or 5) be a child of a deceased worker under the age of 16 (18 if a student) or be disabled. There are variations of these beneficiary qualifications. In short, no one is entitled to SS benefits UNLESS they meet the established criteria for receiving benefits. You have no claim on the contributions you made while working. When you pay it in it's gone, being used to pay benefits for current beneficiaries.

When SS was established in 1935 most families had only one income earner with all the members dependent upon that income. That is why the survivors provision is a part of it. Since the '60s many families have become 2 income households. SS benefits are determined for each earner according to their individual incomes, but always increased (never decreased) if the benefit as a spouse would be greater. No one collects full benefits under both earnings profiles, as a spouse and as a worker. This aspect of SS benefits does run contrary to the current reality of family earnings. But if the benefits were restricted to only the earner, then how do you provide for surviving spouses or children of a single income family? If SS were a retirement fund then a beneficiary could collect on both income contributions, but since it's an insurance program they collect from the fund as a whole only. Are the rules for collecting benefits fair? If you visualize it as a large tank of water that only beneficiaries are drinking from, and non-beneficiaries are the ones pouring water into it, then the only fairness question is, "Does the water being poured in equal or exceed the amount of water being drunk." That was the question the Reagan administration addressed back in 1984.

Originally, the Social Security Act included unemployment insurance. That was later moved into its own program as all states passed unemployment insurance laws.

[canamjhb]

For a few years, I went back to work part-time after I started drawing SS. This is what I found. I was still required to contribute to SS even though I was a recipient. The amounts I contributed from my PT work would (did) have no effect upon how much I get. This is due to the fact that when I worked FT previously, I maxed out my contributations. The amount contributed from my PT work did not exceed (and never would) the amount of my yearly contributations when I was FT. So....... my required PT work contributations went down a rat hole...... and into the big SS pot to be realized only by bean counters...... Jim

[IdahoMtnSpyder]

I was still required to contribute to SS even though I was a recipient. The amounts I contributed from my PT work would (did) have no effect upon how much I get.

That's also an effect of the indexing of earnings where earnings in early years of work have a much greater impact on your benefit than earnings in years closer to retirement. It's an effort to compensate for the impact inflation has had on the value of wages then and now. If you look at the numbers closely you'll find your earnings just before retirement have minimal impact on your benefit level. That is also another disincentive to work longer rather than retire early. Another miscalculation by the Reagan administration in their SS reform law.

[Cavman]

Because I got dividends and and such in 2017 in retirement, mine is going down. So I’m not getting the 2.8% raise.

[wyliec]

Because I got dividends and and such in 2017 in retirement, mine is going down. So I’m not getting the 2.8% raise.

If you were at full retirement age when receiving the dividends, the 2.8% is not affected. Once full retirement age is reached, there is no cap on your amount of earnings, like I said above. What say you Idaho? Also, when I first went on S.S. I sat down with a S.S. rep, and asked about how much I could earn, and if I went over how would that affect my S.S. As she explained it to me, my S.S. would be reduced for a certain period of time until the penalty was paid back to the S.S., and then my S.S. check would go back to what it was before the penalty.

[IdahoMtnSpyder]

Because I got dividends and and such in 2017 in retirement, mine is going down. So I’m not getting the 2.8% raise.

If you were at full retirement age when receiving the dividends, the 2.8% is not affected. Once full retirement age is reached, there is no cap on your amount of earnings, like I said above. What say you Idaho? Also, when I first went on S.S. I sat down with a S.S. rep, and asked about how much I could earn, and if I went over how would that affect my S.S. As she explained it to me, my S.S. would be reduced for a certain period of time until the penalty was paid back to the S.S., and then my S.S. check would go back to what it was before the penalty.

You get the full 2.8% increase in the base amount of SS benefit. It's the deductions from that that can change, and in an uncommon case, actually reduce your final check size. SS also operates in kind of a time delay system. For example, if you had earned income in 2016 that exceeded the threshold for reducing your benefit payments, it didn't affect your benefit until 2018. That's because your income wasn't reported until you filed your taxes in 2017 which would be after your 2017 benefit had been determined. So, the excess benefit you received in 2016 is withheld in the next full year of benefits, 2018. So it's really not a penalty per se, even though it feels like it! It's a pay back of excess benefit payments. I believe if you inform SS before you earn the excess amount they will adjust your benefit at that time.

The Medicare Part B premium has been subject to a 'hold harmless' provision for several years, i.e., your total SS benefit could not be reduced even if the Medicare premium increase was greater than your annual benefit increase. That expired in 2017 I think it was. So premiums for many people really jumped up last year, and some people saw a reduction in their total benefit. The Medicare premium is, or at least has been, tied to your income level. Here again the delay factor comes into play. If your income took a jump two years ago so that your premium would go up, the increase become effective when your benefit is recalculated as I explain above. All of the above is based on being enrolled in Original Medicare. If your are in a Medicare Advantage plan your premium is determined by the insurance company. Their premium is the original Medicare premium plus whatever additional they want to charge. That can vary year to year and so the deduction from your SS benefit can vary year to year. If you change Medicare Advantage plans your premium can change, hence your benefit can change.

The only true penalty that SS has, that I'm aware of, is related to Medicare Part B. If you are covered by an employer based insurance plan because you are working, you do not have to sign up for Medicare Part B right away after you reach 65. But, as soon as you are eligible to sign up, i.e., 65 or over and not covered by employment based insurance, you must sign up or face a penalty. I think the penalty is a 10% increase in your Part B premium for every year you delay signing up. In my case my wife is 4 years older than me, and her SS benefit is based entirely on my work history. She reached 65 8 months before I retired. Since she was covered my insurance plan she did not have to sign up for Medicare right away. But as soon as I retired at 62 she had to sign up since she was 65. Had I not started receiving SS benefits right away we would have had to pay SSA the Part B premium for her or face a penalty premium increase later. Of course I wasn't covered by Medicare until I reached 65.

[SPECTACUALR SPIDERMAN]

While we're on the topic of SS let me clear up a common misconception, one that is often espoused by politicians. SS program is NOT a retirement savings program. It is not, never has been, and never will be. It IS an insurance program.

The official title is Old Age, Survivors, and Disability Insurance program. Like all insurance programs it operates on the principal that all current contributors into the fund are the ones who pay the benefits that the beneficiaries are currently receiving. And, like all insurance funds, if the income exceeds the payout, the surplus is invested to cover future shortfalls, or is returned to the payers. Of course, with SS the latter never happens. As with all insurance funds you must satisfy the requirements for receiving a benefit. For fire insurance you don't receive a benefit unless your home burns down. For car insurance you have to have automobile damage to receive benefits. A primary requirement for all insurance funds is you must be currently contributing to the fund in order to receive benefits. Note that employment taxes that you see taken out of your paycheck are taken in accordance with the Federal Insurance Contributions Act, or FICA. It's not called a retirement fund!

In order to collect SS benefits you must have, 1) contributed into the fund for at least 40 quarters of credits, or be the spouse of one who has; 2) and have reached the specified retirement age; or, 3) be disabled in accordance with certain criteria; or 4) be a surviving unremarried spouse of a worker who is deceased; or 5) be a child of a deceased worker under the age of 16 (18 if a student) or be disabled. There are variations of these beneficiary qualifications. In short, no one is entitled to SS benefits UNLESS they meet the established criteria for receiving benefits. You have no claim on the contributions you made while working. When you pay it in it's gone, being used to pay benefits for current beneficiaries.

When SS was established in 1935 most families had only one income earner with all the members dependent upon that income. That is why the survivors provision is a part of it. Since the '60s many families have become 2 income households. SS benefits are determined for each earner according to their individual incomes, but always increased (never decreased) if the benefit as a spouse would be greater. No one collects full benefits under both earnings profiles, as a spouse and as a worker. This aspect of SS benefits does run contrary to the current reality of family earnings. But if the benefits were restricted to only the earner, then how do you provide for surviving spouses or children of a single income family? If SS were a retirement fund then a beneficiary could collect on both income contributions, but since it's an insurance program they collect from the fund as a whole only. Are the rules for collecting benefits fair? If you visualize it as a large tank of water that only beneficiaries are drinking from, and non-beneficiaries are the ones pouring water into it, then the only fairness question is, "Does the water being poured in equal or exceed the amount of water being drunk." That was the question the Reagan administration addressed back in 1984.

Originally, the Social Security Act included unemployment insurance. That was later moved into its own program as all states passed unemployment insurance laws.

one other thing on ss, it was designed for when you retire you would probably only collect for 5 or 7 years and then be DEAD. shorter life span back then.

[Bob Denman]

I guess it's a good thing for all of us that our average lifespans have started dropping a little bit...

[IdahoMtnSpyder]

one other thing on ss, it was designed for when you retire you would probably only collect for 5 or 7 years and then be DEAD. shorter life span back then.

Very true. Also the ratio of workers to retirees was MUCH higher back then. These were the issues the Reagan administration addressed in their reforms, but that was over 30 years ago. He also was smart to delay the most negatively impacting aspects for years, or reform wouldn't have happened. These issues still vex the SSA trustees today. They could do a lot to prop up the system if politics were not involved.

[Cavman]

All I know is that I’ll be getting about $329 less per month starting next month which sucks!

[IdahoMtnSpyder]

All I know is that I’ll be getting about $329 less per month starting next month which sucks!

It sure does! I big chunk of your 2017 income must have been employment earnings. Dividends are unearned income and don't count toward reducing your SS benefit. It's to avoid gotchas like that why everyone needs to become familiar with SS before they retire.