Question: Can soc. sec. be adjusted upwards based on income?

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Question: Can soc. sec. be adjusted upwards based on income?

Postby Breezy » Sun Nov 10, 2013 3:55 pm

My mother started collecting social security in her early or mid 60s. She is now 73 and still working, although she will likely retire within the next year or so.

My question is - is the amount she started to collect back then set forever, or is it recalculated based on her current earnings? Her income in the ten+ years since she started collecting is on average higher than it was back then, so I am wondering if this is somehow automatically calculated and her amount gets increased based on this, or is she SOL for whatever income is earned beyond when she starts collecting?

Related, I guess: Does she still have social security taken out of her current paychecks if all she gets is what's based on her earnings of ten years ago?
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby jsl11 » Sun Nov 10, 2013 4:02 pm

SS benefits are calculated based on the highest 35 years of earnings, as adjusted. So, even if someone is receiving benefits, the amount is recalculated if they have an earnings year higher than one of the original 35. If you want all the details, they are explained at www.ssa.gov.
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby sscritic » Sun Nov 10, 2013 4:05 pm

You work you pay (answer to last question).

I don't like "is it or isn't it" questions, and you have two of them. I think the answers are no, yes, yes, no.

It's not set in stone. If her earnings are enough to make it into her top 35 adjusted, then there will be an upward adjustment. It is recalculated every year, but there may be no adjustment in a year if that most recent recorded year* doesn't crack the top 35.

There is an easy way to check. Look at her benefits each year. Did her benefit go up more than the official COLA? For example, did it go up in either of the two years that the COLA was zero? Of course, as stated above, if her recent earning are not in her top 35, then there will be no adjustment.

http://www.ssa.gov/cola/automatic-cola.htm

* In November 2013, the last reported earnings are for 2012. This is what determines if the payment she receives in January 2014 is increased by more than the official COLA.
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby Breezy » Sun Nov 10, 2013 4:11 pm

Thank you for your replies. I don't have access to her accounts, including SS info - she might provide it if asked, but my real point in asking you all is so I can provide her with questions she should ask/research. I'm positive she hasn't thought of anything having to do with SS in years - she just sees the deposit each month and never thinks twice. I simply want to prompt her to explore things further if she's leaving money on the table.
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby sscritic » Sun Nov 10, 2013 4:22 pm

There can amounts taken out of the check (direct deposit these days), so the issue is the benefit, not the amount deposited. She should get a letter in mid November (possibly later than that this year) telling her what her benefit will be starting with the January deposit. I keep mine; you will have to ask her if she has kept any of hers.

The adjustment is automatic, so she isn't leaving anything on the table. She wouldn't even know unless she has her own spreadsheet to calculate her benefit, and I doubt she does.
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby frugaltype » Sun Nov 10, 2013 4:30 pm

One thing to be careful of, and my mom got caught in this trap, if you are taking benefits based on a spouse's SS and you are still working, if your benefit amount based on your own earnings eventually surpasses the spouse one, SS doesn't tell you and will not fix this retroactively.

I may have hazed out a bit about the details, but something like that.
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby sscritic » Sun Nov 10, 2013 4:38 pm

frugaltype wrote:One thing to be careful of, and my mom got caught in this trap, if you are taking benefits based on a spouse's SS and you are still working, if your benefit amount based on your own earnings eventually surpasses the spouse one, SS doesn't tell you and will not fix this retroactively.

I may have hazed out a bit about the details, but something like that.

I am not sure that would happen. As a spouse, your benefit is your own (if you have one) plus an add-on. If your PIA goes up based on additional work, then your benefit goes up, but the add-on goes down as it based on the difference between 1/2 the other worker's PIA and your own. Once your PIA is greater than 1/2 the other worker's, you can't be a "spouse" any more. Note that the key is PIAmount, not benefit amount.

Now if you fail to apply for a benefit to which you are eligible, that's another story, and then they only go back so far.
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby dm200 » Sun Nov 10, 2013 6:54 pm

As stated, the actual SS retirement amount is based on the highest 35 years of wages, so if continuing to work past the eligibility SS age has any higher years, those will increase the benefit. What is "higher" is not just a simple dollar calculation - and adjusts for multiple factors (all explained on the SS site).
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby frugaltype » Mon Nov 11, 2013 6:58 am

sscritic wrote:
frugaltype wrote:One thing to be careful of, and my mom got caught in this trap, if you are taking benefits based on a spouse's SS and you are still working, if your benefit amount based on your own earnings eventually surpasses the spouse one, SS doesn't tell you and will not fix this retroactively.

I may have hazed out a bit about the details, but something like that.

I am not sure that would happen. As a spouse, your benefit is your own (if you have one) plus an add-on. If your PIA goes up based on additional work, then your benefit goes up, but the add-on goes down as it based on the difference between 1/2 the other worker's PIA and your own. Once your PIA is greater than 1/2 the other worker's, you can't be a "spouse" any more. Note that the key is PIAmount, not benefit amount.

Now if you fail to apply for a benefit to which you are eligible, that's another story, and then they only go back so far.


I'm having trouble parsing your reply. It happened to my Mom.
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby sscritic » Mon Nov 11, 2013 8:09 am

frugaltype wrote:I'm having trouble parsing your reply. It happened to my Mom.

The problem is that we aren't sure what "it" is. You wrote:
I may have hazed out a bit about the details, but something like that.

If you clear away your haze and let us know what really happened, we might be able to understand how the rules were applied to produce the result you observed. Details matter in social security, as they do in taxes, investing, and lots of the topics we talk about here. Without the details, it is hard to know which rules were applied and how.
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby frugaltype » Mon Nov 11, 2013 3:59 pm

Mom was receiving SS as a spouse based on my Dad's earnings. Mom kept working. Eventually Mom had enough credit so that if she had SS based on her own earnings, it would be higher than what she was collecting as a spouse. She did not know that. SS did not tell her. By the time she somehow realized this, there was a significant loss of money and there was no way to get any reimbursement retroactively. I wrote SS, I wrote the Senator's office, et., zilch.
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby sscritic » Mon Nov 11, 2013 4:16 pm

There are still a lot of details missing. But first, did they then fix it going forward? Did SS admit there had been a mistake?

If not, here is a possible scenario:

If she started before her FRA, she was in fact receiving her own benefit. The so called spouse benefit is made up of two parts, your own plus a bonus. Since she started before FRA, her benefit based on her own work record was reduced. I am not sure what "if she had SS based on her own earnings, it would be higher" means. Are you looking at her own benefit as if she had started fresh at that point (e.g., she started at 62; when she got to 66 you looked at her own benefit as if she hadn't started at 62)? The problem is that you can't start over again fresh. Her benefit at 66 is still reduced because she actually started her own benefit at age 62, in spite of the fact it was called a spousal benefit.

I am just stabbing in the dark here without knowing the facts, other than "if she had SS based on her own earnings, it would be higher" (but what that means, I don't know).
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby sscritic » Mon Nov 11, 2013 4:25 pm

Here is another unlikely scenario:

At her FRA, she made a restricted filing for wife's benefits only so she could earn delayed retirement credits. Most people who do that then file as themselves at age 70. Instead, she forgot all about it until she was 75, when she finally applied as herself. In that case, she would lose the five years of her own benefits because she hadn't filed.

Note that in this case, her own benefit was probably larger than her wife's benefit at her FRA. The reason for the restricted filing is so that you don't take your larger (or almost as large) own benefit so you can get the delayed credits.
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby sscritic » Mon Nov 11, 2013 4:36 pm

They have a procedure for correcting mistakes that they make. I know they do that if they give you incorrect information. A friend of a friend lost her husband. A social security office told her she couldn't be a widow, she had to take her own benefit. This was flat out wrong. When my friend asked me about it, I emailed her the citations from the regs. She showed her friend, who went back to social security. The recanted and gave her all her back benefits.

P.S. Now I am the hazy one. These may not be the exact details about the situation (I have them in my old emails, but I am not going to look them up), but I did send the regs to my friend, and her friend did get her back benefits.
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Re: Question: Can soc. sec. be adjusted upwards based on inc

Postby sscritic » Mon Nov 11, 2013 6:40 pm

Let me make another wild conjecture. There are two ways to get an increase in benefits:

1) you are in a position where something is supposed to happen automatically.

2) you have to take an action.

From something you wrote, I am guessing this is a 2).
SS doesn't tell you


This is correct. If you go in at 62 and apply, they don't tell you that you would get more by waiting until 66. If you go in at 66 and apply, they don't tell you that you can do a restricted filing and wait to take your own benefit at 70. SS is responsible for 1), but you are responsible for 2). Perhaps your mother was a 2).

P.S. I lie just a little bit. There are some situations where if you ask to do something, they have to tell you some of the consequences. For example, if you withdraw your application, they have to tell anyone whose benefits depend on your having a benefit (in that case, they need the approval of the other party).
1. Explain Effects

Explain fully the effects of consent to the beneficiary whose entitlement will be affected (or the proper applicant on that person's behalf). Inform the person that without his/her consent, the request for a WD will be denied.
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