By Carol Lasek, CLU, CHFC,
Partner, Bienenfeld, Lasek & Starr, LLC
It’s no secret.
The Social Security system is complex. Even the Social Security administration admits it.
The good news is the contents of the Social Security Handbook [i] are available online and updated regularly.
But there is even better news. We have shared the answers to your questions, or at least to the top 10 we are frequently asked in our office.
Here are ten surprising facts about Social Security: (Each heading is hyperlinked to the source for easy reader reference)
1.Your SS ID: [i] Your ID is unique to you and is never assigned again to anyone else — ever. Since the first social security number was issued sometime in mid-November 1936: [ii] more than 453 million numbers have been issued; Social Security claims it has enough numbers to last several more generations without changes to the system.
2. Retirement Benefits: [iii] According to research conducted by the Federal government, Social Security retirement benefits comprise more than one third of the income of Americans age 65 or older.
3. Your Age: [iv] Did you know you can choose the age at which you collect social security? Age 62 is generally the earliest you can collect Social Security retirement benefits. However, you can increase your benefits substantially by delaying retirement or receipt of Social Security benefits up to age 70.
4.The Point System: [v] Social Security works on a point system. To receive Social Security benefits, you must accrue 40 credits (most people earn about four credits per year) or at least six credits [vi] within the last 13 calendar quarters.
5. Taxing Your Benefits [vii]: Paying taxes on your Social Security benefits? There is that possibility. Up to 85 percent of your benefits could be taxed, depending on your income [viii]. The income limits haven't changed for decades but our wages have gone up which increases the probability you may possibly owe taxes on your benefits.
6. Corrections of Earnings Record: [ix] The Social Security Administration is a well-oiled machine. But like any system, there can be glitches and errors. Your earnings record is an up-to-date account of your recorded income. If there are errors on the record, you only have up to, “3 years, 3 months, and 15 days after the year in which the wages were paid or the self-employment income was derived” to make the correction by completing the Request for Correction of Earnings Record [x]. Checking your account once a year is a good proactive measure with long term benefits.
7. Your Gross Salary Base [xi]: Your salary is not the only factor in the social security equation but is one of three factors which determine the amount of your social security benefit at retirement. How is your salary for social security benefits determined? It’s based on your top 35 years of earnings. If you have worked less than 35 years, the years you did not work are counted as zeros. The other factors are the number of years you worked and paid into the system and the age at which you decide to receive benefits.
8. Spousal Benefits: [xii] There are many different scenarios. Here are a few: If you are married, never worked and you turn 62, you could be eligible to receive up to 50% of your spouse’s benefits if your spouse is receiving Social Security disability or retirement benefits. If you are divorced but were married at least 10 years, and are currently not married, you may be entitled to the same benefit. If your spouse dies, you may be eligible for survivor’s benefits which may be 100% of your deceased spouse’s social security benefits.
9. The Medicare Connection: [xiii] Conventional wisdom is Medicare is automatic and [1]free. Here is the official word: “Some people get Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) automatically and other people have to sign up for it. In most cases, it depends on whether you’re getting Social Security benefits.” [xiv] There is generally no premium for Medicare Part A, the hospital insurance, if you are 65 or older. However, there is a premium for part B, the medical insurance, and that premium is deducted automatically from your social security check. The standard Part B premium for 2020 is $144.60 but there could be a small adjustment for higher incomes.
10. Annual Raise: [xv] Yes! The monthly benefit check does increase annually, though the percentage is anything but standard and varies from year-to-year. For 2021, the raise is 1.3%; in 2020, it was 1.6%. Your maximum earnings subject to Social Security tax was also increased in 2021 from $137,000 to $142,800. One thing did remain the same: the tax rate which is 7.65% for employees and 15.30% for those who are self-employed.
Social Security is everyone’s concern; but it is our business.
Call my office and ask for me 954.689.9484 to continue the conversation.
[i] The Story of the Social Security Number (ssa.gov)
[ii] Social Security History (ssa.gov)
[iii] Fact Sheet: Social Security (ssa.gov)
[iv] Increase in Retirement Age (ssa.gov)
[v] How You Earn Credits 2020 (ssa.gov)
[vii] Benefits Planner | Income Taxes And Your Social Security Benefit | SSA
[viii] The IRS and Social Security Benefits (aarp.org)
[x] Request For Correction of Earnings Record (ssa.gov)
[xi] Social Security increases--COLA & wage-indexed amounts (ssa.gov)
[xii] Benefits for Spouses (ssa.gov)
[xiii] Benefits Planner: Retirement | Medicare Premiums | SSA
[xiv] How do I get Parts A & B? | Medicare
[xv] Cost-of-Living Adjustment (COLA) Information | SSA
Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. www.SIPC.org on electronic advertisements. BLS Wealth Management is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. 1000 Corporate Drive, Suite 700, Fort Lauderdale, FL 33334, 954-938-8800. Estate Planning services are provided working in conjunction with your Estate Planning Attorney, Tax Attorney and/or CPA. Consult them for specific advice on legal and tax matters. The views and opinions expressed are those of Kevin Milgram and my not necessarily reflect those of MML Investors Services, LLC CRN202212-276110
