How Filing for your Own Benefits Early Affects Spousal Benefits

Social Security spousal benefitsOnce applying for early retirement benefits you will immediately lose the ability to file for full spousal benefits at Full Retirement Age (FRA).

According to the Social Security Administration (SSA) located at, when a worker files for retirement benefits, the worker’s spouse may be eligible for a benefit based on the worker’s earnings. Another condition is that the spouse must be at least age 62 or have a qualifying child in her/his care. By a qualifying child, the SSA means a child who is under age 16 or who receives Social Security disability benefits.

The SSA goes on to state that the spousal benefit can be as much as half of the worker’s “primary insurance amount,” depending on the spouse’s age at retirement. If the spouse begins receiving benefits before “normal (or full) retirement age,” the spouse will receive a reduced benefit. However, if a spouse is caring for a qualifying child, the spousal benefit is not reduced.

If a spouse is eligible for a retirement benefit based on his or her own earnings, and if that benefit is higher than the spousal benefit, then the SSA will pay the retirement benefit of the claimant based on his or her work record. Otherwise the SSA will pay the spousal benefit.

The Impact of Applying for Spousal Benefits Early

A spouse can choose to retire as early as age 62, but doing so may result in a benefit as little as 32.5 percent of the worker’s primary insurance amount (PIA). A spousal benefit is reduced 25/36 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.

For a spouse who is not entitled to benefits on his or her own earnings record, this reduction factor is applied to the base spousal benefit. This amount does not include the spouse’s Delayed Retirement Credits (DRCs). The base spousal benefit is 50 percent of the worker’s PIA. For example, if the worker’s PIA is $1,600 and the worker’s spouse chooses to begin receiving benefits 36 months before his or her normal retirement age, the SSA will first take 50 percent of $1,600 to get the $800 base spousal benefit. Then the SSA computes the reduction factor, which is 36 times 25/36 of one percent, or 25 percent. Applying a 25 percent reduction to the $800 amount gives a spousal benefit of $600. Therefore, in this case, the final spousal benefit is 37.5 percent of the spouse’s PIA (as opposed to 50 percent of the PIA amount).

The Impact of Applying for your Own Benefits, then Applying for Spousal Benefits

Once you have applied for early retirement benefits on your own earnings record you have immediately and for all time lost the ability to file for full spousal benefits at Full Retirement Age (FRA).

When you have applied for early retirement benefits on your own work record and your spouse dies when you are between the ages 62 to 70 you can only collect excess widow(er) benefits. In other words, you cannot suspend your own benefits to collect survivor benefits and Delayed Retirement Credits (DRCs) to bump up your own benefits by 32 percent at age 70.

The Social Security Maximization Solution

If you want to file for early retirement spousal benefits have your spouse file and suspend his / her Social Security application. Next you should file a Restricted Application for spousal benefits only. This way you can collect full survivor benefits.

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Get Your Replacement Medicare Card Online

Social Security Medicare BenefitsThe Social Security Administration (SSA) located at has just announced that if you lost, damaged, or need to replace your Medicare card, you can now get a replacement Medicare card using your online My Social Security account located at This is the newest feature to My Social Security.

According to the SSA your Medicare card is proof that you have Medicare health insurance. Medical professionals and insurance companies need this proof to provide you with accurate care and compensation. If your card is lost or damaged, and you are currently entitled to Medicare, you can easily order a replacement using your online My Social Security account (

Simply access your online My Social Security account and select the “Replacement Documents” tab. Then select “Mail my replacement Medicare card.” After you request a card, it will arrive in the mail in about 30 days.

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Social Security, Government Pensions, WEP and You

WEP Reductions
Why the Reduction in Benefits?

The rules of the Social Security Administration (SSA) for retirement benefits are “progressive”. Those that make minimal wages receive a higher percentage of their pre-retirement income. According to the Social Security Administration (SSA) low paid workers get benefits equal to 55 percent of their pre-retirement earning. In contrast, high paid workers receive about 25 percent of their pre-retirement earnings. The Windfall Elimination Provision (WEP) is a federal law that reduces Social Security retirement benefits that can be received by workers who will collect a government pension, and also receive Social Security retirement benefits. In other words, WEP assists the SSA in keeping retirement income for government workers “progressive”.

Do You Get Benefits from Covered and Non-Covered Work?

In the United States there are two types of work: (1) covered work (where you pay Social Security taxes) and (2) non-covered (you do not pay Social Security taxes). Often state and local government employees (public school teachers, police, firemen, librarians, and so on) do not pay Social Security taxes and their employment is considered uncovered work. Individuals can work for the Federal government and their employment is covered work because they pay Social Security taxes.

For folks that pay Social Security taxes the Windfall Elimination Provision (WEP) and the Government Pension Offset Provision (GPO) does not affect their Social Security benefits. However, many employees have a mix of earnings and retirement benefits from both covered and uncovered work. These folks will often be the subject of the Windfall Elimination Provision (WEP) and Government Pension Offset Provision (GPO). However, some workers can still escape the WEP and GPO provisions. This article focuses on WEP reductions and exceptions.

How WEP Reduces Social Security Retirement Benefits

Using an SSA formula your Social Security retirement benefits are calculated on the highest 35 years of your employment. Next this number is adjusted for inflation and weighted according to SSA rules. Finally the WEP formula is used to determine the actual amount of Social Security retirement benefits you will receive. It is important to point out that the law protects you if you get a low pension. The Social Security Administration (SSA) will not reduce your Social Security benefit more than half (50 percent) of your pension for earnings after 1956 on which you did not pay Social Security taxes.

CalSTRS (, the California State Teachers Retirement System, provides the information in Table 1.0 and Table 2.0 to show how WEP affects workers. Table 1.0 illustrates how Social Security benefits are normally calculated. Using the SSA formula an example worker has Average Indexed Monthly Earnings (AIME) of $2,000. This amount is further refined using SSA formulas to a Primary Insurance Amount (PIA) of $1,328. This is the amount the worker will receive without the WEP provision.

Table 1.0 Work with Average Indexed Monthly Earnings (AIME) of $2,000 and Retiring in 2014
Regular Formula
90 Percent of first $816 $734.40
32 Percent of next $1,184 $378.88
15 Percent of remainder $00,00

Total $1,113.28

Table 2.0 illustrates how the retiree’s Social Security benefits will be reduced using the WEP formula.

Table 2.0 Work with Average Indexed Monthly Earnings (AIME) of $2,000 and Retiring in 2014
WEP Formula
40 Percent of first $816 $326.00
32 Percent of next $1,184 $378.88
15 Percent of remainder $00,00

Total $705.28

Table 1.0 and Table 2.0 show how the Windfall Elimination Provision (WEP) can provide a retiring worker with an unexpected and unpleasant surprise. A comparison of the examples in Table 1.0 and Table 2.0 indicate that Social Security retirement benefits will be reduced by 36.65 percent, a total reduction of $4,896 per year. If the retiree lives for 35 years past his or her retirement date that is a total of $171,360 in expected income that will never materialize.

There are WEP Exceptions
There are several exceptions that can reduce the influence or eliminate the impact of WEP. (In advance of retiring, it is wise to contact your local Social Security Representative to verify that you qualify for any of these exceptions.) Examples of these exceptions are:
• If you receive a pension based on someone else’s work, this pension will not cause WEP to impact your Social Security benefits (nor your spouse’s benefits).
• You are a Federal worker first hired after December 31, 1983.
• If you receive a pension for a non-covered job from a foreign (non-U.S Government) that has an agreement with SSA.
• You have received a lump sum payment of a pension from a non-covered job and have lived past the actuarially-defined timespan that the pension was determined to last.
• Your only pension is for railroad employment

Additionally, if you paid Social Security taxes on 30 years of “substantial” earnings you are not subject to WEP. The Social Security Administration (SSA) provides a chart that shows the maximum monthly amount Social Security retirement benefits can be reduced by WEP if you have fewer than 30-years of substantial earnings at

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Coming Soon: No Social Security Numbers for Medicare Cards

social security, medicare

President Obama Signs a Bill that will Reduce the Risk of Senior Identity Theft

The Social Security Administration (SSA) announced that a new Medicare card is coming, one that will no longer display a cardholder’s Social Security number, or SSN.

This change is designed to protect seniors from identity theft. President Obama recently signed a bill that requires the Department of Health and Human Services (HHS) to issue new Medicare cards that do not display, code, or embed SSNs. This is important because Medicare advises senior citizens to carry their cards at all times, but doing so makes them more vulnerable to identity theft. If a wallet or purse is lost or stolen, identity thieves have access to an SSN. The newly signed bill gives HHS four years to issue modernized cards to new beneficiaries, and four more years to issue the new cards to existing beneficiaries.

U.S. Rep. Sam Johnson, Chairman of the House Ways and Means’ Subcommittee on Social Security, has long advocated removing SSNs from Medicare cards. Johnson recently said to the New York Times, “The Social Security number is the key to identity theft, and thieves are having a field day with seniors’ Medicare cards.”

The SSA also recommends removing the SSN from Medicare cards. SSA has noted that with more than 4,500 seniors enrolling in Medicare every day, seniors are vulnerable to identify theft. With a stolen SSN, identity thieves can commit any number of financial crimes in the victim’s name, or they can steal money from the victim. If the victim is a senior citizen, the thief could even target the victim’s Social Security benefits. Thieves might attempt to change the victim’s Social Security direct deposit information, redirecting benefits to other accounts. If they have also obtained an individual’s personal information, they may also try to establish a fraudulent my Social Security account.

The SSA warns that while removing the SSNs from Medicare cards will reduce one risk, other risks remain. Previously, the SSA has warned about other identity theft schemes via phone calls, emails, and social media that target Social Security beneficiaries. As a reminder, the SSA strongly encourages you to verify the legitimacy of text messages, emails, or phone calls by people who say they are from Social Security. To verify the identity of someone who wants your personal Social Security information. Do not hesitate to contact your local Social Security office, or call Social Security’s nationwide toll-free customer service at 1‑800-772-1213. (Those who are deaf or hard-of-hearing can call Social Security’s TTY number at 1-800-325-0778.)

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Unraveling Multiple Spousal Social Security Benefits

Spousal Benefits

Has someone in your family been married two or three-times?

More and more individuals have multiple marriages. Unraveling how to maximize Social Security benefits for someone who has been married several times can be a headache. There are many occasions when one type of Social Security benefit is better than another. Therefore claimants have to keep an eye on what they are eligible for, when they are eligible for a certain benefit, and how their eligible benefits compare.

Here is an interesting scenario about Social Security spousal benefits and the remarriage to a spouse. Jane was married to Joe, a high-earner, for over 10-years. Jane divorced Joe and married Albert. Jane and Albert were married for over 10-years. When Jane was 64-years old she divorced Albert. When Jane was 65 and at Full-Retirement Age (FRA), she remarried Albert.

How can Jane maximize her Social Security benefits?

At different times Jane is eligible for different benefits. On a regular basis, Jane will have to compare and contrast benefits to determine what works best for her. The following are examples of the the five different types of benefits Jane can receive:

The Ex-Spousal Benefit Strategy
Jane has been married and divorced twice, with both marriages lasting more than 10-years. Jane is single, 64 years-old, and can collect ex-spousal benefits. To maximize benefits Jane should select the ex-spouse with the largest Social Security benefit. However, Jane cannot be married to Joe or Albert and collect ex-spousal benefits.

The Spousal Benefit Strategy with a Non-Working and a Working Spouse
A) Jane and Albert are both Full Retirement Age (FRA). Albert is collecting his Social Security Retirement benefits. If Jane is a non-working spouse she can file for spousal benefits. Jane will receive half (50 percent) of Alberts’ FRA Social Security Retirement benefit.
B) When eligible, Jane files a Restricted Application for Spousal Benefits only. Jane will collect half of Albert’s FRA benefit. If she continues to work from FRA of 65 until 70 she will collect Delayed Retirement Credits (DRCs) equal to 6.4 percent per year (a total of 32 percent). Note: Jane can only collect one Social Security benefit at a time.

The Ex-Spousal Survivor Benefit Strategy
Joe and Jane were married for over ten-years. Jane married Albert after she was 60-years old. If Joe, her first husband, dies Jane can collect Ex-Spousal Survivor benefits on Joe’s work record. However, Jane cannot collect more than one Social Security benefit at a time.

The Spousal Survivor Benefit Strategy
Jane and Albert were married for over ten-years for the first time and married for over nine-months for the second time. If Albert dies, Jane is entitled to Spousal Widow Benefits. If she collects any other Social Security payment, that benefit will cease.

Jane’s Own Retirement Benefit
Let’s say that Jane is a working spouse. She filed a Restricted Application for spousal benefits only (see the Spousal Benefit Strategy above). From the time she was FRA until age 70 Jane collected Delayed Retirement Credits (DRCs). Now 70 years-old Jane may want to see if her own Social Security retirement benefit is larger than the other benefits she is are entitled to. If her own benefit is the largest, Jane can switch to her own Social Security Retirement benefit and maximize the amount she receives each month.

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How Social Security Recognizes Same-Sex Spousal Benefits

Same-Sex Marriage
Find out if you are living in a state that makes you eligible for same-sex spousal or survivor Social Security benefits

The proposed 2016 President Obama budget ( includes a major change to Social Security that would allow same-sex couples to receive spousal benefits if they live in states that do not recognize same-sex marriages. The Obama proposal could cost as much as $14 billion over a ten-year period and has to be passed by a Republican-led Congress.

Public sentiment towards same-sex marriage has rapidly changed. According to the Pew Research Center ( 52 percent of Americans are in favor of gay marriages (in 2004 about 31 percent of Americans were in favor of same-sex marriages).

Today the Social Security Administration (SSA) recognizes Same-Sex Marriages in some states (for details see The following shows how easy or difficult claiming spousal or survivor benefits will be for same-sex couples. Here are a few examples of how spousal benefits vary by state:

1. California recognizes same-sex marriage as valid from June 16, 2008 to present. If a claimant married a Social Security eligible worker in California on October 2008 and the worker dies while living in California on October 30, 2011. The SSA would recognize the marriage has having a duration of three-years when calculating survivor and / or lump sum death benefits.

2. Two individuals enter into a same-sex marriage in Michigan on March 21, 2014. The couple then move to Massachusetts and establish their home. While in Massachusetts one partner applies for spousal retirement benefits based on the other partners’ work record. The SSA will determine that the marriage was valid in Michigan and recognized by Massachusetts at the time of application. The SSA will recognize the marriage for the purposes of spousal benefits. (SSA Sources: GN00210.002 Same-Sex Marriage-Determining Marital Status for Title II and Medicate Benefits and EM-14052 Changes to Policy Involving Same-Sex Marriage in Michigan One-Time-Only instruction)

3. In Indiana, a claim for same-sex marriage survivor benefits for an eligible worker who died between June 28, 2014 and October 5, 2014 must be sent via Email to the SSA with a subject line: “Windsor Claim Hold- Indiana” and the SSN of the deceased worker in the body of the message.

For more information see the following chart from the SSA ( This graph indicates which states have laws permitting same-sex marriage (Column I), the date when the state listed permitted same-sex marriages (Column II) and the dates states recognized same-sex marriages from other states (III). This chart is useful for gaining an understanding of eligibility for same-sex spousal or survivor Social Security benefits. For information about your individual application status check with your local Social Security Representative.

Same-Sex Spousal Benefits

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Need Your Social Security SSA-1099 to File Taxes? Now You can Get it Instantly Online

taxes_2015The Social Security Administration (SSA) recently announced that they are offering a new online service to help people who receive Social Security benefits have the information they need to file their tax returns. If you didn’t receive or misplaced your SSA-1099 or SSA-1042S, you can now use an online my Social Security account to get an instant replacement for tax purposes. Setting up an account is easy, secure, and convenient. You just need to go to Getting your replacement SSA-1099 or SSA-1042S is just a few minutes away with your my Social Security account.

Learn what else you can do with a my Social Security account at www.socialsecurity/myaccount.

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January 31, 2015 Marks the 75th Anniversary of the First Social Security Check

Social Security Anniversary January 31, 2015 is the 75th anniversary of the first Social Security benefit check providing a $22.54 monthly payment made to Ida May Fuller of Ludlow, Vt.

In 2014, over 59 million Americans received $863 billion in Social Security Benefits. For more information about Social Security retirement benefits visit the Social Security Administration Web site located at

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2015 Social Security Updates and Information


The following are a few of the updates you can expect for 2015

1.The Full Retirement Age (FRA) maximum 2015 benefit is more than the 2014 maximum benefit amount. The highest 2015 Social Security retirement amount is $2,663 per month (that’s $31,956 per year). In 2014 the maximum Social Security retirement amount was $2,642 ($31,704 per year).

The FRA is 66 for individuals born between 1943 and 1954. It does not include reductions for early retirement or increases, called Delayed Retirement Credits (DRCs) for individuals who apply for Social Security benefits after FRA. To estimate your own retirement benefit amount use, the Social Security Administration (SSA) calculator located at the Social Security Benefits Quick Calculator

2.This January 2015 Social Security retirement beneficiaries will enjoy a 1.7 percent Cost-of-Living increase, called a COLA increase. According to U.S. News (October 2014) the average Social Security claimant receives $1,306. This increase will result in an average increase of $22 more per month. This will make the new average Social Security payment $1,326 per month. The average increase for a couple will be $38 per month. This will result in a new average for couples of $2,178 per month.

3.As a general rule, the amount you can earn and still get benefits changes each year. If you are younger than full retirement age and make more than the yearly earnings limit, your earnings may reduce your benefit amount. (If you were born between 1/2/1943 and 1/1/1955, your full retirement age is 66 years.)
• If you are under full retirement age for the entire year, SSA will deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2015, that limit is $15,720.
• In the year you reach full retirement age, SSA will deduct $1 in benefits for every $3 you earn above a different limit. In 2015, the limit on your earnings is $41,880 but SSA will only count earnings before the month you reach your FRA.

To get a better hold of the impact of your decision of when you retire and start claiming your Social Security benefits go to Calcualate the Effect of Early or Late Retirement at

4.The SSA in September 2014 announced that it will begin sending via the U.S. Postal Service individual Social Security statements The SSA plans to send benefit statements to workers every five-years. If you turn age 25, 30, 35, 40, 45, 50, 55, or 60 and do not have a Social Security online account, you can expect to receive a paper Social Security statement. After age 60 workers will receive paper Social Security statements on an annual basis. Statements include the amount of Social Security taxes paid and estimates of future retirement benefits.

SSA is quick to point out that you probably plan to receive Social Security benefits someday. Maybe you already do. Either way, you’ll want to create an individual online SSA account to:
• Keep track of your earnings and verify them every year;
• Get an estimate of your future benefits if you are still working;
• Get a letter with proof of your benefits if you currently receive them; and
• Manage your benefits:
• Change your address; and
• Start or change your direct deposit.

At this time there are over 14 million individuals who have personalized accounts with Social Security. Set-up your personalized online account go to My Account.

5.In 2015 the ceiling on earnings subject to Social Security payroll tax is $118,500. In 2014 the maximum was $117,000. According to the SSA of the estimated 168 million workers who will pay Social Security payroll taxes in 2015, about 10 million will pay higher taxes because of this increase. If you are earning above the annual maximum level you will stop paying Social Security taxes.
The Social Security payroll tax for employer and employee is 7.65 percent. The self-employed Social Security payroll tax is 15.30 percent. Medicare payroll taxes continues on all earnings. The Medicare tax rate is 1.45 percent on all earnings.

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Are Your Social Security Benefits Taxable?


Taxable Social Security Benefits

Will you Pay Taxes on Your Social Security Benefits?

According to AARP ( in 2012 Social Security claimants paid a total of $45.9 billion in income taxes on their benefits. The Social Security Trust Funds, from which benefits are paid, received $27. 3 billion and the Medicare Hospital Insurance Fund (HI) received $18.6 billion. This blog provides an easy way to determine if your Social Security benefits are taxable.

About 15 million Social Security recipients pay Federal taxes on their benefits. Most states do not tax Social Security benefits. Specifically, 27 states and DC do not tax Social Security benefits. To see if your state taxes your Social Security payout go to the Tax Foundation at

Generally, if your only source of income is your Social Security benefits  you won’t have to pay taxes. A quick way to determine if you have to pay taxes on your benefits is to determine your Modified Adjusted Gross Income.

What’s Included in Your Modified Adjusted Gross Income (MAGI)

According to Turbo Tax ( to calculate your Modified Adjusted Gross Income (MAGI), take your adjusted gross income (AGI) and add back certain deductions. Many of these deductions are rare, so it’s possible your AGI and MAGI will be the same. To sum it up, your MAGI is your AGI with the addition of the following deductions, if applicable:

  • Student loan interest
  • One-half of self-employment tax
  • Qualified tuition expenses
  • Tuition and fees deduction
  • Passive loss or passive income
  • IRA contributions, taxable social security payments
  • The exclusion for income from U.S. savings bonds
  • The exclusion under 137 for adoption expenses
  • Rental losses
  • Any overall loss from a publicly traded partnership

Determining How Much You Will Be Taxed

A simplified overview of the MAGI calculation is: AGI + tax-free interest (such as, municipal bonds, U.S. savings bonds, etc.) + 50 percent of your Social Security benefits + any tax free benefits and exclusions (such as, foreign income).  If this amount exceeds certain break points you will have to pay taxes.

Taxable MAGI for Singles

For singles with MAGIs of less than $25,000 your benefits are not taxable, (2) for singles between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits, and (3) singles with MAGI’s of $34,000 and greater, up to 85 percent of your benefits may be taxable.

Taxable MAGI for You and Your Spouse Filing a Joint Return

For couples filing a joint return with a combined MAGI  below $32,000, your benefits are not taxable, (2) if you and your spouse file a joint return with a combined MAGI between $32,000 and $44,000 up to 50 percent of your benefits may be taxable, and (3) if you and your spouse file a joint return with a combined MAGI that is greater than $44,000 up to 85 percent of your benefits may be taxable

Note: If you receive a $255 lump-sum death benefit it is not taxable and you should not include it on your tax return.

Example a Social Security Tax Calculation

Kiplinger ( provides this example of how the taxation of Social Security benefits works: Let’s say that your Adjusted Gross Income (AGI) is $30,000 and you have $4,000 in tax-free interest from municipal bonds and $5,000 in Social Security benefits. Adding your AGI ($30,000), you tax-exempt interest ($4,000) and half of your Social Security benefits ($2,500). Your total MAGI is $36,500. You are now $4,500 over the $32,000 limit for joint returns. Since half of that amount ($2,250) is less than half of your benefits ($2,500), the smaller amount becomes taxable income. If you are in the 15 percent tax bracket, the $2,250 will cost $337.50 in extra Federal income tax ($2,250 X .15 = $337.50).

How Will You Know the  Exact Amount of Your Social Security Benefits?

Each January you will receive a Social Security Benefit Statement(Form SSA-1099) showing the amount of benefits you received in the previous year. You can use this SSA-1099 when you complete your Federal income tax return to find out if your benefits are subject to tax.

Your Options if Your Social Security Benefits are Taxable

If you do have to pay taxes on your Social Security benefits, you can make quarterly estimated tax payments to the IRS or choose to have Federal taxes withheld from your benefits. For more information about taxation of benefits, read page 14 of the Social Security Administration’s Retirement Benefits booklet or refer to the Internal Revenue Services’ IRS Publication 915.


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