If you are among the millions of Americans who plan to apply for a pension, disability allowance or any other form of social security, it would be wise to consider all options of what can go wrong. About it writes USA Today.
The support representatives are not consultants
You may think that the customer service representative social security Administration, you are talking to, will help to determine the best strategy of application. But this is a mistaken assumption.
In the System policy manual in the field of social security (POMS) States that the support representatives can “provide enough information so the applicants could make an informed decision, but have no right to give advice”.
For example, many applicants don’t know what, if they have not filed for your own retirement benefit and have lost a spouse, they can in turn use for their own retirement benefits and allowance for the survivor, getting first less and then more. But in the absence of correct information, users can decide that they must apply for both benefits at the same time and in the end choose one that offers a large amount.
If the use of retroactive benefits
The social security administration can offer you a lump sum payment (the so-called retroactive benefits). A lump sum payment may be an amount equivalent to the benefits for six months if the application was filed after reaching full retirement age (FRA). But the trick is that when you select a retroactive payment of your monthly benefit will be reduced.
Is common, and representatives of the client support welfare Services actively advertise it to applicants.
For example, the applicants propose to defer the start date of benefits, and in return they will receive a retroactive payment equal to approximately $25 000. However, their further monthly benefit will be reduced by approximately $135 per month. For many, such a proposal seems very reasonable.
Indeed, to pay $135 a month for a check for $25 000 here and now — good prospect. To raise $25 000 for $135 per month, it will take about 15 years. Therefore, everyone should look at your situation, evaluating what is more important to him: a large sum now or small, but noticeable increase in their pension monthly.
How work affects your social welfare payments
Applicants who decide to apply for benefits before reaching full retirement age and continue to work, should know about the special limit of earnings.
For example, assume that John plans to apply to receive benefits at age 62 and expects to earn another $30,000 a year as salary. Restriction of revenue in 2020 is $18 240 for a person who receives social benefits. This means that our John has $11 760 above that limit, and the social security Administration will withhold 50% of this sum (i.e. 5 $ 880) to send the remaining monthly benefits to John.
Very often people do not know about this rule. It is important to note that the income limit applies only to earned income of the applicant and not the income of his spouse. In addition, this income limit does not apply to working retirees who have reached full retirement age.
The impact of taxes on social security
Most consumers understand that their work probably had to pay taxes on social security when they are received, however, they often do not realize that some of them receive social benefits may be subject to Federal income taxes.
In determining whether part of your benefits are taxable, you must first look at your provisional income — the sum of your adjusted gross income, plus 50% of your social security benefits plus tax-free interest.
For example, if you are married and submit a joint return and your provisional income is less than $32,000 dollars, your benefits are not subject to Federal income tax.
However, if your provisional income is between $32 000 to $44 000, up to 50% of your benefits may be taxable and if your income is more than $44 000, up to 85% of your social benefits may be taxed.
Thus, it is important to consider all sources of income at retirement, when you take a decision on the appointment of age.