Social Security is a government program established by the Social Security Act, which makes monthly income-maintenance payments to retirees, spouses, dependent children, and survivors. The Act also establishes two programs, Social Security Disability and Supplemental Security Income, which pay monthly cash benefits to disabled persons, who can't work because of an injury, illness, or worsening medical condition. Social Security law is a large and complex body of law that governs edibility for benefits under the Social Security Act, administrative proceedings, and judicial review.
CLAIMING SOCIAL SECURITY BENEFITS
There are three basic requirements for Social Security benefits. First, a person must file a written application with their district office or local representative. Second, the applicant must be fully insured, which simply means that the person has worked for the required number of quarters. If you were born after January 2, 1929, your requirement for full insurance is 40 quarters, or 10 years. The third requirement is to be of a certain age, 62 years of age or older. The Social Security Administration has regulations stating what is preferred proof of age.
Entitlement
Entitlement refers to a person's ongoing eligibility for claiming benefits. A retiree is required to show initial eligibility in order to claim benefits, and also to show continuing eligibility in order to receive ongoing benefits. The motivation behind the Social Security Act is to replace a person's income once they retire. In order to retain the entitlement to benefits, a person must remain retired, at least to some extent. The measure of a person's retirement status is his or her overall earnings. While Social Security allows a person to work to some extent, in order to show continuing entitlement to benefits, the person must have an income low enough to be able to claim benefits.
Retroactive Benefits
While it is a good idea to apply early, a person may apply for benefits for up to the previous six months from the time of application.
Determining Your Benefit
Every wage earner who meets the eligibility requirements for benefits is entitled to monthly benefits at age 65 based on their primary insurance amount. The best way to find out what your primary insurance amount would be is to ask at the Social Security Administration local District Office.
Early Retirement Reduction
The Social Security Act provides an option for retirement prior to age 65, the age at which full retirement benefits are generally payable. A retiree may elect to retire as early as age 62. However, the amount of his benefits would be reduced as a penalty early retirement. It's important to remember that this penalty is permanent and is not removed once the retiree turns 65. This is also true for the auxiliary husband's and wife's benefit's (except those with a child in care). The retirement benefit is reduced by 5/9 of 1% (or 1/180 ) for each month of entitlement before age 65.
Pension Income other Than Social Security
While a retiree's financial condition is not a factor in claiming benefits, the retiree's eligibility for pension plans other than Social Security is considered. Lower-income workers receive a higher percentage of benefits based on their eligible income, and in order to prevent people with pension income based on earnings not subject to Social Security withholdings, from also receiving a larger percentage of their income when claiming benefits, a lower percentage is used to calculate benefits for retirees with income based on earnings not subject to Social Security withholdings.
How a Lawyer Can Help
Social Security law is a complex maze, with subtle twists and turns that may require a lawyer's skill. At this time in your life there is a lot at stake. One thing to remember is that until 1996, the Social Security Administration was within the Department of Health and Human Services. Some phone books may still list the Social Security Administration under that department, and some may list it under its own heading.
SOCIAL SECURITY BENEFITS AND WORKING
There are three basic requirements for Social Security benefits.
- First, a person must file a written application with their district office or local representative.
- Second, the applicant must be fully insured, which simply means that the person has worked for the required number of quarters. If you ere born after January 2, 1929, your requirement for full insurance is 40 quarters, or 10 years.
- The third requirement is to be of a certain age, 62 years of age or older. The Social Security Administration has regulations stating what is preferred proof of age.
Working While Receiving Social Security Benefits
We all know that living off of Social Security benefits may not yield a decent standard of living. For this reason, a person is allowed to work and earn a certain amount of money while receiving benefits without a reduction of benefits. The amount allowable is based on the age the person attained prior to receiving benefits. In addition, once the person reaches 70 years of age, there is no decrease in benefits regardless of how much the person earns.
Defining Earnings
Earnings are defined for the purpose of calculating any decrease in benefits as wages, for services rendered in a tax year, net earnings from self-employment and net losses from self-employment. In addition, payments made under a set plan of the employer providing medical or hospitalization expenses, or death or retirement for disability are not counted as wages, and reduced benefits should not result. Further, stock dividends are not included in wages, and earnings that resulted from work in prior years is not included in wages. As an example, if a retired insurance agent receives policy renewal income from policies that he or she sold years ago, those payments are not considered wages.
Income Shifting
Sometimes, a retiree may rearrange his work habits in order to reduce his amount of income to avoid a reduction in benefits. This is not allowed. As an example, a husband and wife own and operate a small business. If the husband is older and eligible for Social Security benefits, the couple will be motivated to shift business income from the husband to the wife to avoid a decrease in benefits. The Social Security Administration and the Social Security Commissioner could challenge this scheme and a court will be allowed to review the transactions and decide whether the couple has really changed their business operation or whether they are trying to avoid a reduction of benefits.
The Grace Year
The grace year refers to the first year of eligibility. If a person becomes eligible for Social Security benefits during a year, the person only needs to have one eligible month in order to claim that year as their grace year. What this means is that if you earn more than the amount allowable for your age and your retirement date prior to your retirement and application for Social Security benefits your wages are exempt from penalty for that year if you have one month of benefit eligibility during that year.
Links for government publications to learn more about social security benefits:
http://www.socialsecurity.gov/pubs/index.html