Social Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.
Todays column examines the effect of continuing income on benefit amounts, railroad pensions’ effects of Social Security benefits, filing retroactively, the earnings test in the first year and benefits for adopted grandchildren. Larry Kotlikoff is the founder and president of Economic Security Planning, a company that markets Maximize My Social Security, a Social Security benefits calculator referred to in this post.
See more Ask Larry answers here.
Ask Larry about Social Security:
Will My Benefit Go Up If I File And Keep Working?
Hi Larry, I am 68 with $48,000 annual income. My retirement benefit estimate is $1,806 at 70. If I collect now and work till 70 does my benefit go up? Thanks, Josh
Hi Josh, Your benefit rate may or may not increase, depending on your earnings history. Your retirement benefit rate is based on your highest 35 years of wage-adjusted earnings. So if your future earnings are higher than one of the years currently being used in your benefit calculation, it could increase your future benefit rate. Whether or not your future earnings increase your rate, delayed retirement credits (DRC) will only be added for months that you don’t draw benefits prior to age 70. And, if you start drawing benefits at age 68, your rate will be 16% lower than if you had waited until age 70. If you haven’t already done so, you can run expert software, such as my company’s Maximize My Social Security or another very careful program that allows you to enter projected future earnings, which will tell you how much, if any, that future earnings would increase your benefit rate. Best, Larry
Will I Be Able To Collect Both Social Security And Railroad Retirement Benefits?
Hi Larry, I’m 58 and have worked a combined 2.5 years for three different rail roads in my life time. Otherwise I have worked and paid into social security. I am thinking of taking a job with the UP for approximately 8 years to get a RR pension and retire at 66. Since I have so many years paying into Social Security for 38.5 years, will I be able to collect Social Security along with the RR pension which would be a total of 10.5 years? Or will all my Social Security benefits be transferred to the RR pension for a larger pension? Thanks, Leo
Hi Leo, If you meet the requirements for both Social Security and Railroad Retirement benefits, you could apply for and receive both. However, you’ll essentially receive either your RR Tier 1 benefit or your Social Security benefit, whichever is higher, plus your RR Tier 2 benefit. The RR Tier 1 benefit is more or less Railroad’s substitute for Social Security, and your credits under Social Security are factored into the benefit calculation. Tier 2 RR benefits are similar to a company pension. In most cases, it’s only advantageous to apply for Social Security if the benefit rate payable is higher than the RR Tier 1 benefit rate. And, if the Social Security rate is higher, it may be best to wait until age 70 to apply for the Social Security benefits. Social Security delayed retirement credits can accrue from full retirement age until age 70, even if a person was drawing RR benefits during that time. Best, Larry
Can I Collect Benefits Retroactive To My 70th Birthday?
Hi Larry, I will retire next April. I turned 70 in January 2017. I did not take my retirement benefit at that time as I am still working. I will start taking it the month I retire. Can I collect back to my 70th birthday or at least collect for the past 6 months? I thought I needed to be retired before I started asking them to send my monthly check. I have set up a meeting with my local SSA office. Should I also seek an attorney to help me collect back payments? Thanks, Charlie
Hi Charlie, You can’t collect benefits retroactively for more than 6 months from the month in which you apply. So, if you apply this month, you should be able to receive benefits back to 3/2017, but not all the way back to 1/2017. However, if you contacted Social Security in a previous month to set up your upcoming appointment, it may have established a protective filing date that could permit an earlier month of entitlement to be established.
As you apparently know now, your work and earnings would not have precluded you from receiving your Social Security benefits starting with age 70, or even starting with age 66 for that matter. And since delayed retirement credits only accrue up until age 70, it would almost certainly have been more advantageous for you to have started drawing benefits no later than when you turned age 70. I doubt if an attorney would be of much assistance to you with regard to your Social Security situation, but I don’t have access to all of the facts of your case. You may want to first see how Social Security handles your claim before deciding if you want to pay an attorney. Best, Larry