Dinner Table Talk

Question : Mr. Tomkiel,

Your Social Security Benefits Handbook has generated some interesting conversations at our dinner table. The father of my wife's cousin died when his daughter was 2 1/2 years old. If I correctly understand Section 404.3 on page 81, The application for Survivors' Benefits for that daughter "usually should be filed within six months of the date of death." Her mother was unaware that her daughter might have been eligible for benefits, so has not applied for benefits. The daughter is currently more than 40 years old. Is there any possibility of collecting any of the monies that probably would have been paid many years ago if an application had been submitted, or have benefits been lost due to the elapsed time?

I look forward to your response.

Jack from New York State

Answer: Sorry, but the six-month limitation applies. The time has long passed to apply for those benefits. But it never hurts to ask. I must say though that I am flattered that my book has generated dinner table conversation at your house!

Caregiver Benefits

Question: My parents are 80 and 85 years of age. I have recently had to consider moving in with my parents to become a full time caregiver as their health has declined very rapidly in the last two months. My parents’ doctors are aware that they are not capable of living alone. In a case such as this, are there any provisions given for caregivers as I need to work full time and will have to give up any outside employment. Other than my plan to take care of them, the only other option would be nursing homes. Thank you for this consideration.

Brenda from Kentucky

Answer: Sorry Brenda, there are no such provisions under Social Security.

I don’t know if they would qualify, and apparently it is a very difficult and time-consuming process, but your parents may qualify for some cash assistance from the Veteran’s Administration to help cover the cost of home care attendants. This program is called Aid & Attendance benefits. To be eligible, a veteran must have at least 1 day of wartime service, and the assets, not counting a home and a car, must be under $80,000. There are also income restrictions, but the cost of medical and health care assistance is deducted from income. Before contacting the VA, see the very helpful website VeteranAid.Org.

Earnings At Age 69

Question:
I would appreciate your reply to my question, for I do not wish to break any laws and forfeit my social security benefits. I am a 69-year old small business owner, currently working in my business. Beginning September 2004, I receive $650 per month social security money. Because of the economy, I am considering applying for a part-time job which will pay me $500 per month. If I accept this job, will I be required to forfeit my social security earning? How much, if any, over my monthly $650 benefit may I earn? Please reply.

Thank you,

Erma from California

Answer:
Don’t worry Erma. Good news! You can earn as much as you are able without any SS penalty because, at 69 you are well over Full Retirement Age. Earnings have no effect on your benefits at your age so go ahead and take that job. You will not forfeit even 1 cent of your social security benefits. I sincerely hope that all goes well for you, and your business picks up too, God willing.

Vacation Pay & Waiting Till 66

Question:
I am planning to retire on August 1, 2008. I am 64 yrs old and not planning to collect social security benefits for another 2 yrs. If I get paid in lieu of my unused vacation time, would it affect my social security payments?
Jitendre from New Jersey

Answer:
Unused vacation time is counted as earnings, but there are limits on this for purposes of the “retirement test.” Any payments made on account of retirement are counted as earnings in the month last worked, unless they are earned in a prior year, in which case that portion of the vacation pay attributable to the prior year does not count in the current year’s earnings for “retirement test” purposes. If you don’t plan to apply for benefits until 2010, the 2008 earnings will have no effect for the “retirement test” in 2010. If the unused vacation time is paid out to you after you retire this year, and you have accumulated so much time that it extends into 2010, it still doesn’t affect 2010 benefits.

In fact, no matter how high your 2008 earnings, you could collect reduced retirement benefits for August through December. Because your earnings in these months will be under the monthly limit of $1,130 applicable to you this year, benefits for these months cannot be withheld. These are called “non-service” months. I discuss this in Chapter 8, Social Security Benefits Handbook. Click on the link and scroll down to Section 804, The Monthly Earnings Test.

But Jitendre, your plan to wait till age 66 to collect benefits even though you are retiring now may not be in your best interest. The only reason to forego benefits now would be to get an unreduced benefit at age 66. As I have discussed in an article which was published on the Basil & Spice blog, this may not pay off for you. You may read my article that was posted on April 20, 2008. Click the title "Social Security Benefits, Now Or Later?"

You may want to reconsider passing up two years of benefits, or at least figuring out how long it will take to recover them after 66.

What Happens If An SSI Disabled Person Marries?

Question:
Could you tell me what happens to SSI benefits if the disabled person marries? Do the benefits become affected if one marries someone who is not on SSI, and is working full time?
Mara from Washington State

Answer:
To answer your second question first: yes. SSI payments are affected by the income and resources of an ineligible spouse. This is because such payments are based on need rather than your earnings record, as in the case of regular social security disability benefits (SSD benefits).

So, effective with the first day of the month you marry, your husband’s income and assets will be deemed to be yours. Depending on the amount of the earnings and assets, you may become ineligible for SSI, or your monthly payment amount may be reduced.

As an SSI recipient you are required by law to report any change in your marital status.

Contrariwise, regular SSD benefits, based on your earning's record, are not affected by your husband’s income at all because they are not based on need. Many people confuse SSI disability payments with SSD benefits, but they are very different, one being a federal welfare program, the other a social insurance program paid for by the worker’s prior payroll taxes. Some people receive payments under both programs, if the amount of the SSD is smaller than the SSI payment. In such a case only the SSI payment is affected.

Deferring Benefits To Get Delayed Retirement Credits at 70

Question:
On the PBS Nightly Business Report show on Memorial Day, they did a "Retirement Special", as markets were closed.
They briefly passed by on a retiree (believe close to 70) that decided to return what benefits he had received, to restart his SS LATER, at a higher amount..
We have your 8th Edition, don't believe I ran into what rules exist, like how long one has to do this, etc..
Thanks,
Roland
PS: My Mom, now 92 was a SS Claims Rep, and I was a Fellow of the Society of Actuaries in my younger days, and Enrolled Actuary, but have moved on into retirement investment management business.
My wife turned 62 May 31st, so that's why we have the book!

Roland from Illinois

Answer
A beneficiary can withdraw an application. All benefits, including those of dependents, must be returned. I discuss the process in Section 414 of the Social Security Benefits Handbook. I recently did any article about deferring benefits till age 70. The reason to do so, or to withdraw a previous application and return benefits, as in the example you provide, is to get the advantage of the Delayed Retirement Credits, which now come to 32%.

Look for the article which will be posted soon at Basil and Spice, a very helpful blog for improving your life. Click the My Article on Basil and Spice in the resources box at the top right.

I posed a question to financial types in that article. You seem to be a likely candidate based on your background and current position. Can one buy a lifetime annuity at age 70 for $98,000 (the benefits received from age 66 to age 70 at the approximate current maximum rate) that will pay more than $640 per month plus annual COLA increase? This would be the approximate gain from the maximum Delayed Retirement Credits for deferring benefits till age 72. So is it worth it?

P.S. God bless your mom! Maybe working for SSA had some long-term benefits.

Wife's Benefits- Husband's Earnings

Question:
My wife will turn 62 in September. I am 62 but am also still working. My income level is in the low 6 digits, hers is zero. I have been unable to find any references to the impact of my income on her benefit. We generally file 1040 as MFJ. Is my wife's benefit impacted by my income and if so what publication would you recommend I review for details. Thank you.
John from South Carolina

Answer- Your wife cannot collect as your spouse on your account if you don’t also apply for benefits. But if your wife has worked the required 40 quarters and is eligible on her own account, your income will not impact your wife’s benefit. However keep your eye on that taxman (“’Cause I’m the taxman, Oh Oh the taxman” as George Harrison put it). The benefits may be subject to taxation as per the usual rules for taxation of SS benefits. When your joint income exceeds $32,000 (this is the limit for married filing a joint return), you pay tax on 50% of the excess income over $32,000 up to $44,000, then 85% of the excess income over $44,000.

And hey John, keep in mind the “non-service” month provision. If your earnings are under the monthly limit for any calendar month you’re over 62, you can get the monthly benefit for any such month. It doesn’t matter whether or not you are retired, only what your earnings are for that particular month or months (including sick and vacation pay).

When you become eligible for benefits, your wife may be entitled to some additional benefits as a spouse on your account, but only if her primary insurance amount (her benefit before the age reduction) is less than one-half of yours. If so, then she can receive the difference up to that one-half amount. But if she is under full retirement age when she becomes entitled to that, the wife’s portion will be reduced for age too, at the wife’s reduction rate, which is a bit greater than the retirement reduction.