Ask Larry

Can you explain what the 8 percent yearly growth is for social security benefits

Hi. I assume what you're referring to are delayed retirement credits (DRC). Social Security increases a person's Social Security retirement benefit rate by 2/3rds of 1% for each month that they opt not to collect their Social Security retirement benefits from the month they reach full retirement age (FRA) until the month they reach age 70. Twelve months times 2/3rds of 1% per month amounts to an 8% increase for each 12 months of DRCs earned.

For example, say Bob's primary insurance amount (PIA) is $1000. A person's PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA). Bob's FRA is age 67, so if Bob chooses to wait until age 70 to start collecting his retirement benefits his benefit rate will increase by 24% (i.e. 2/3rds of 1% x 36 months). That would raise Bob's monthly benefit rate from $1000 to $1240 (i.e. $1000 x 1.24).

Best, Jerry

Will be 72 in Feb, 2023 and I've requested a lump sum payout for pension, commencement January 1, 2023, due to the rules of turning 72. In reading different article updates for 2023, (Secure Act 2.0) it looks like 401Ks, IRAs, pensions, etc., has been extended to 73yrs of age. To be honest, I had no idea that 401K, pension, etc., has age limits and thought I could cash out in my much older age for living care. Yes, I know, very ignorant!

SS 30,000 annual/ Pension 300,00 lump sum
Concerns and questions are:
1) Will or would taking the lump sum of my pension effect my monthly Soc Sec payout, including paying more for Medicare A&B ?
2) Should I or can I delay/stop my Soc Sec for one year for 2023 to avoid paying more taxes and receiving less Soc Sec and paying more for Medicare??
3) And will I be able to restart my Soc Sec Medicare back up in 2024?
4) I've read so many different articles and one of them mentioned that once you cash out a retirement fund, that only affects Soc Sec monthly payout for one year and then you go back to your initial amount before the cash out, but in reading one of your articles, you had wrote that it may be years before getting back to your Soc Sec initial was...? Which is correct? Please forgive me if I read your article incorrectly. I could be so so wrong in reading both articles.
Please know how thankful I am to you for sharing your knowledge.
Please feel free to delete anything above you deem necessary.

Hi. Receiving a lump sum pension payment won't affect your Social Security benefit amount assuming that you didn't work for an employer that was exempt from withholding U.S. Social Security taxes. It probably will raise your Part B Medicare premium rate, though, at least for one calendar year. Part B premium rates are adjusted annually based on a Modified Adjusted Gross Income (MAGI). Therefore, any Part B premium increase that results from a spike in your MAGI won't last for more than a year assuming that your MAGI drops back down in the following year. For more information on income-related Part B premium adjustments and exceptions, refer to the instructions on the following Social Security form: https://www.ssa.gov/forms/ssa-44-ext.pdf.

You can elect to waive your Social Security benefit payments and then withdraw the waiver request when you want to resume receiving your benefits (https://secure.ssa.gov/apps10/poms.nsf/lnx/0202409001). My expertise is limited to Social Security benefits, though, so I can't tell you how that might affect your taxes nor can I tell you whether or not it may be advisable. There's no specific form to use to request waiver of benefit payments should you choose to opt for that, but you could use a form SSA-795 (https://www.ssa.gov/forms/ssa-795.pdf).

There is no premium charge for Part A of Medicare if you receive Social Security benefits. That's true even if you waive the receipt of benefits. You could drop your Part B coverage (https://www.medicare.gov/basics/get-started-with-medicare/sign-up/ready-to-sign-up-for-part-a-part-b/how-to-drop-part-a-part-b), but then you'll have to pay out of pocket for any medical bills that Part B would have covered. Also, although you can re-enroll in Part B during the annual general enrollment periods (GEP) that last from January through March, your Part B coverage doesn't resume until July 1st of the year that you re-enroll. Furthermore, if and when you resume your Part B coverage a 10% premium surcharge would be applied for each 12 gap in your coverage. Therefore, dropping Part B coverage is usually not advisable for most people.

It sounds like you may want to consider signing up for our Maxifi planner software, or you may want to consult with a financial and/or tax expert for advice. For more information on Maxifi, you can go to the following website: https://maxifiplanner.com/.

Best, Jerry

Was born with a kidney condition. Father was active duty my entire life. I am currently 35 and on SSI. I will qualify for DAC benefits due to being disabled before the age 22. Father is currently disabled through military. Do I qualify for DAC now? Also, do I qualify for any other benefits through social security or military. Thank you.

Hi. The only way that you could qualify for disabled adult child's (DAC) benefits is if your father or mother are either deceased or drawing Social Security retirement or disability (SSDI) benefits. There isn't enough information in your question for me to know if you might qualify for any other type of Social Security benefits, but the following Social Security webpage has a summary of the various types of benefits available (https://www.ssa.gov/oact/progdata/types.html).

My expertise is limited to Social Security benefits, so I can't tell you whether or not you might qualify for any benefits from the military or VA.

Best, Jerry

My mom is 76 and is collecting her own SSA of $872.00 per month. My dad just passed recently but they have been divorced for 45 years and she was married to him for 12 years. We received a letter from SSA that her benefits will now increase by $931.00 on top of her $872 for a total of around $1700. This new amount will disqualify her for the special assistance she is receiving for an assisted living facility. Can we deny the extra benefits for ex spouses?

Hi. I'm sorry for your loss. If your mother wasn't already receiving divorced spousal benefits in addition to her own benefits then she would have been required to apply for survivor benefits in order to start receiving them. So, if your mother didn't recently apply for survivor benefits, she must have already been receiving divorced spousal benefits.

If your mother wasn't receiving divorced spousal benefits prior to your father's death then she could withdraw the survivor application that must have recently filed. But, if your mother was already receiving divorced spousal benefits prior to your father's death, then the conversion of her divorced spousal benefits to survivor benefits is automatic. In that case, the only way that she could avoid receiving survivor benefits is if she withdraws the application that she filed for divorced spousal benefits, which was likely filed long ago. And, in order to be allowed to withdraw that application, your mother would have to repay all of the divorced spousal and survivor benefits that she's been paid.

If you're unsure whether or not your mother was receiving divorced spousal benefits prior to your father's death, you'll probably need to contact Social Security to find out.

Best, Jerry

My friend applied for social security retirement benefits since he is turning 65 and has no money. He has paid into social security for over 40 yrs and has his card. He is being asked for a birth certificate for proof of date of birth and does not have a birth certificate. He was born on an airforce base in the UK and will have to file for a copy of his Consular Report of Birth Abroad (CRBA), which according to the State.gov website, may take over four months to receive the document. He needs to start receiving his benefit checks as soon as possible without having money. Is it possible for him to start receiving the checks while Social Security waits for his proof of age? Or is there anything else he can request to be done to move his benefits forward and receive them soon? Thank you.

Hi. Social Security normally doesn't require physical evidence of age unless there is an age discrepancy in the person's records. When proof of age is required, though, preferred evidence is either a public birth record (e.g. birth certificate) or a religious record of birth (e.g. baptismal certificate). For more information about acceptable forms of preferred evidence of age, refer to the following sections of Social Security's operations manual: https://secure.ssa.gov/apps10/poms.nsf/lnx/0200302054 & https://secure.ssa.gov/apps10/poms.nsf/lnx/0200302056.

Social Security can accept other types of age evidence, but only if preferred evidence is unavailable (https://secure.ssa.gov/apps10/poms.nsf/lnx/0200302100). That's true even if the person must obtain the evidence from the source that has the evidence. If your friend doesn't have a religious record or any other type of preferred evidence of age, Social Security probably won't approve his claim until it's determined if a public record exists. What I would suggest in that case, though, is for your friend to re-contact the Social Security representative who's handling to discuss his case. He may want to clarify what discrepant information is in his records that would require additional evidence of age.

Best, Jerry

I retired at 62 (65 now) and I receive $976.10/mo in Social security before deductions ($812 after deductions) and me and my partner receive $280/mo for food stamps. Can I apply for SSI?

Hi. You can definitely apply for Supplemental Security Income (SSI), but I'm not sure that you'll qualify. Your Social Security benefit exceeds the maximum federal SSI payment rate, so it sounds unlikely that you'd be eligible for any federal SSI benefit. However, some states add state supplement payments to a person's SSI, so it probably couldn't hurt to file an application in order to get a formal determination of your eligibility.

Best, Jerry

I overpaid my first three months of Medicare before it started coming out of my Social Security Benefits, and so was due a refund. It took several months to get reimbursed, but when I did, I did not get the full amount. The 10% I have taken out for taxes in my Social Security benefits was taken out. I don't understand why this is not a simple reimbursement. It was not income. It would be like if I was overcharged at a hospital or store and the refund was taxed when returned, which we know, is not how it works. Thank you.

Hi. I don't have enough information to know if your math is correct, but if you believe that you're due more of a refund then you'll need to follow up with Social Security. If you're not satisfied with their response, you may want to try contacting the offices of your U.S. congressional representative or one of your U.S. senators.

One fact I'll mention for clarity is that even though Social Security benefits are paid a month behind, Part B Medicare premiums deductions are for the current month. In other words, Social Security benefits paid in December are for November, but Part B premiums deducted from those payments cover the person's Medicare premium for December. That often causes confusion over how much, if any, of a premium overpayment actually occurred.

Best, Jerry

My spouse and I are divorcing. We have been married 25 years. He is 54 and I am 61. My spouse‘a SS benefits will be much higher than mine when he reaches the full retirement age for the purpose of collecting SS. Obviously he won't reach that age until several years after I have reached the age. Do I have to wait until he begins collecting SS to make a claim for ex-spouse benefits? If I can make it without filing for my own until that time, is it better to wait so I'm not locked in to my lesser amount? Is the ex-spouse benefit an amount that's added to my own benefit so that my benefit would then be equal to what he receives?

Hi. The earliest that you could qualify for divorced spousal benefits is when your ex-husband reaches age 62, unless he becomes entitled to Social Security disability (SSDI) benefits before then. And, you'll only be able to qualify for divorced spousal benefits if your ex-husband's primary insurance amount (PIA) is more than twice as much as your own PIA. A person's PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA).

If a person is eligible for both Social Security retirement benefits based on their own record and for divorced spousal benefits, Social Security pays the person's retirement benefit plus a partial divorced spousal benefit. The unreduced divorced spousal amount is calculated by subtracting the person's own PIA from 50% of their ex-spouse's PIA. Any reduction for age that applies to either benefit is calculated separately depending on the person's age at the time they become entitled to the benefit.

For example, say Joy files for her Social Security retirement benefits at age 62. Joy's PIA is $600, but her benefit rate is reduced for age to $422 because she's claiming her benefits at age 62. Several years later Joy's ex-spouse reaches age 62 and Joy applies for divorced spousal benefits. Joy's ex's PIA is $2000, so Joy's unreduced excess divorced spousal benefit would then be calculated by subtracting her PIA from 50% of her ex-husband's PIA, which in Joy's case amounts to $400 (i.e. $2000/2 - $600). If Joy is at least FRA when she becomes eligible for her excess divorced spousal benefit, she would then be paid the full unreduced amount of $400 in addition to her own reduced rate of $422 to give her a combined rate of $822. But, if Joy isn't yet FRA when she becomes eligible for divorced spousal benefits then her divorced spousal amount would also be reduced for age.

Your best strategy for claiming benefits depends on a number of different factors, so you should strongly consider using our software (https://maximizemysocialsecurity.com/purchase) to fully compare and analyze all of your options so that you can determine your best strategy for maximizing your benefits.

Best, Jerry

After I notified Social Security of my husbands death and had an appointment to apply for his health benefit they sent $255 to my bank account on his social security number and $34 on mine SS# to my bank. The $34 is not the amount I draw every month. I got a letter stating the one time $255 but, said nothing about the $34. I believe they are completely cutting my SS off foe some strange reason. During my appointment with them they said nothing about cutting me off if I claimed the one time payment but, I believe they have.

Hi. I'm sorry for your loss. There isn't enough information in your question for me to be able to give you any kind of an analysis, but one thing I can tell you for sure is that claiming the one-time $255 lump sum death benefit would have no effect on any other type of Social Security benefit for which you are eligible. I can't explain the $34 payment you received, but if I had to make a guess my first thought would be that it's some type of adjustment payment. I would suggest that you contact Social Security for an explanation of the $34 payment, since they are they're the only people who have access to your records.

By the way, if you're at least age 60, or at least age 50 and disabled, you may be eligible for widow's benefits. However, if you're already collecting benefits based on your own Social Security record then you could only qualify for additional widow's benefits if your widow's rate is higher than your own benefit amount. Depending on your age and circumstances, you may want to consider using our software (https://maximizemysocialsecurity.com/purchase) to fully compare and analyze all of your options so that you can determine your best strategy for maximizing your benefits.

Best, Jerry

I was married for 17 years.. and now divorced for more years than that. My ex passed 5 years ago at age of 60.. I am 66 years and 1 month old. I am planning to retire from my full time job at the end of June 2023. I was planning to draw my retirement benefits beginning in April at 66 and 4 months. Right now now his benefit is $1300/mo and mine is $2100/mo. If I can swing it with a part time job, my 401k and other savings, am I able to draw his benefits beginning in April and allow mine to accrue until I am 70? If I am contributing much less working part time, will mine still grow at a rate of approximately 8% year over year? So .. what to do and when to do it? Please and thank you!

Hi. Yes, you could. But, you'd probably be able to start drawing your survivor benefits sooner than April, which would almost certainly be more advantageous. For one thing, if you were born in 1956 your full retirement age (FRA) for surviving divorced spousal benefits is age 66, even though your FRA for retirement benefits is 66 and 4 months (https://www.ssa.gov/OP_Home/cfr20/404/404-0409.htm). Therefore, your survivor rate won't be reduced for age if you can start collecting benefits prior to April.

However, the Social Security earnings test still applies until you reach your FRA for retirement benefits even if you're FRA for survivor benefits is earlier. But, if you reach your FRA for retirement benefits in 2023, then you could be paid benefits starting with January 2023 as long as you won't earn more than $56,520 in the months prior to the month you reach FRA (https://www.ssa.gov/benefits/retirement/planner/whileworking.html).

And yes, you'd accrue the 8% annual increase in your own benefit rate from delayed retirement credits (DRC) up to age 70 even if you're collecting survivor benefits and regardless of whether or not you continue working.

Assuming your benefit estimates are accurate it sounds like you should start drawing survivor benefits as soon as possible and then switch to your own benefits at age 70. However, you may want to consider using our software (https://maximizemysocialsecurity.com/purchase) to fully compare and analyze all of your options so that you can be sure to choose the optimal filing strategy for maximizing your benefits.

Best, Jerry