Social Security Award Letter Question...

[Burkmere]

I will turn 62 in Sept. and am taking early SS. I applied online about three weeks ago and today received an "Award Letter" specifying my monthly amount.

I actually retired fro my job last Oct. 1 and have had no FICA wage income since then. A couple of months after I retired I went online and did an estimate. I believe the printout said it assumed I'd keep working until I retired and received SS.

The monthly benefit the Award Letter I received today indicated i'd receive the same amount as the estimate indicated I'd receive when I ran the estimate 6 months ago.

Can I assume the Award Letter is correct or are they often revised? I'm thinking that the Award Letter also used the assumption that I'd be working at my former salary until I actually started to receive benefits at 62 which, as I mentioned, was not the case.

If the amount is different, hopefully, it will only be a small amount..maybe $50 a month or so...

Thanks for any info.

[UpAnchor]

If the amount is different at all, I would expect it to be a tiny fraction of that $50. Perhaps on the order of a rounding error. 😀

[Independent]

I expect the impact of these fractional year's wages is a lot smaller than $50/month.

I'm assuming that you application specified that you'd start receiving benefits at age 62.

The impact of your 2016 wages on your annual benefit would be:

.75 x F x (A - B) / 35

Where:
A = the wages you (would have) earned in the first 8 months of 2016
B = the lowest indexed earning year in your top 35 prior years
F = .32 or .15, depending on whether your averaged indexed annual earnings are below or above $61,884.

So, for example, suppose
A = $60,000
B = $25,000
F = .15

Then your annual benefit, starting at 62, would be increased by $112.50

[Burkmere]

Quote:

Originally Posted by Independent I expect the impact of these fractional year's wages is a lot smaller than $50/month. I'm assuming that you application specified that you'd start receiving benefits at age 62. The impact of your 2016 wages on your annual benefit would be: .75 x F x (A - B) / 35 Where: A = the wages you (would have) earned in the first 8 months of 2016 B = the lowest indexed earning year in your top 35 prior years F = .32 or .15, depending on whether your averaged indexed annual earnings are below or above $61,884. So, for example, suppose A = $60,000 B = $25,000 F = .15 Then your annual benefit, starting at 62, would be increased by $112.50

I'm not understanding what you are saying.

Facts:

I quit my job Oct 1, 2015. No other jobs.
I applied for SS and my 62nd bday is Sept 2016.

An estimate I had done six months ago was $1850.
When I received the estimate the estimate indicated that it was based on me working until my 62nd birthday in September 2016.

I applied for Social Security benefits a few weeks ago and on Friday received an award letter saying I would receive same amount that the estimate indicated. (1850 per month).

However, the estimate apparently was based on me working until 62 and I actually quit working a year before I reached 62.

So is the award letter accurate and will I receive the amount indicated which was the same as my estimate which also assumed I worked the year between 61 and 62 ( but I didn't ) or will I likely receive less ?

I'm assuming there might be a reduction from the original estimate and Award letter (1850per month). If so, about how much would that be? Thx for any help.

[Another Reader]

The SSA does not have your current year (2016) income information and they may not have the 2015 information. Call or make an appointment to get a revised award letter. It will likely be a little less, depending on how your income "pool" based on your highest 35 years is affected. They may pay you now based on the $1,850 amount and then deduct the over payment later, but you need to discuss this with them.

[Burkmere]

Quote:

Originally Posted by Another Reader The SSA does not have your current year (2016) income information and they may not have the 2015 information. Call or make an appointment to get a revised award letter. It will likely be a little less, depending on how your income "pool" based on your highest 35 years is affected. They may pay you now based on the $1,850 amount and then deduct the over payment later, but you need to discuss this with them.

They do have my 2015 income info. And I haven't worked since Sept 30, 2015. Probably not "that" much less than the Award Letter says, but I still want to know.

[Another Reader]

SSA will project your 2016 income and use that. Call them to see if that can be fixed before you start receiving payments or if they will deduct the over payment and adjust the annuity. You might try using the detailed SSA calculator, using zero for 2016. You will need your income subject to SS taxes from the current SS statement for all the other years, including 2015.

[Independent]

Quote:

Originally Posted by Burkmere I'm not understanding what you are saying. Facts: I quit my job Oct 1, 2015. No other jobs. I applied for SS and my 62nd bday is Sept 2016. An estimate I had done six months ago was $1850. When I received the estimate the estimate indicated that it was based on me working until my 62nd birthday in September 2016. I applied for Social Security benefits a few weeks ago and on Friday received an award letter saying I would receive same amount that the estimate indicated. (1850 per month). However, the estimate apparently was based on me working until 62 and I actually quit working a year before I reached 62. So is the award letter accurate and will I receive the amount indicated which was the same as my estimate which also assumed I worked the year between 61 and 62 ( but I didn't ) or will I likely receive less ? I'm assuming there might be a reduction from the original estimate and Award letter (1850per month). If so, about how much would that be? Thx for any help.

You think they assumed you would work for 8 months in 2016. Take the amount of money you think they assumed for those 8 months, plug it into "A" in the formula I gave you. The formula result will be the annual reduction from the $1,850 in the award letter for not working in 2016. (If you want a monthly number, you'll have to divide the formula result by 12.)
You'll have to make an educated guess at "B" unless you have your wage record handy.

Now, take the wages you didn't earn in 2015 because you quit on Oct 1. Repeat the steps in the paragraph above to get the reduction for not working the last 4 months of 2015.

Note that SS only counts your annual earnings up to $118,500. If that's relevant to you, you only count the wages you would have earned after Oct 1 that were under the annual $118,500.

I'm not claiming this will give you the adjustment to the dollar. However, I think it will show you that the impact of these 12 months of missing earnings is very small relative to any decision you're trying to make today.

[Marc]

If 2016 was not going to be one of your highest 35 adjusted years, then not working will have no effect on your amount due. Given you were working only part of the year (assuming income would be less than $118,500) that is a real possibility.

Marc

[lucky penny]

Buckmere,
Did the letter indicate that your first payment will be in September or October?

I'm turning 70 in October and will apply online shortly. SS website seems to indicate that my first payment will be in November, but a friend who turns 70 this month said they told her when she applied (in person) that the first payment will be in July, a few days after her birthday.

[braumeister]

Quote:

Originally Posted by lucky penny I'm turning 70 in October and will apply online shortly. SS website seems to indicate that my first payment will be in November, but a friend who turns 70 this month said they told her when she applied (in person) that the first payment will be in July, a few days after her birthday.

There can be a bit of slop in the system.
When I turned 70 this year, my first check was a one-time payment for the month of my birthday. It was one-time because I had been paying my Medicare Part B, and that check didn't need that deducted. Future payments have Medicare deducted automatically.

Anyway, that first check was due the second Wednesday of the following month (based on my birthday), but SS actually did the direct deposit to my bank on the 27th of my birthday month, or two weeks earlier than they were supposed to.

For all practical purposes, expect the first check the month after your birthday month. The SS website will tell you which Wednesday to expect it.

[Burkmere]

Quote:

Originally Posted by lucky penny Buckmere, Did the letter indicate that your first payment will be in September or October? I'm turning 70 in October and will apply online shortly. SS website seems to indicate that my first payment will be in November, but a friend who turns 70 this month said they told her when she applied (in person) that the first payment will be in July, a few days after her birthday.

According to the letter, my first check is in November for October. Since my birthday is in Sept., I don't believe you actually get paid for that month.

[Independent]

Oops, I typed too fast and goofed up 2015. And, the system won't let me edit my post. This is the corrected version:

You think they assumed you would work for 8 months in 2016. Take the amount of money you think they assumed for those 8 months, plug it into "A" in the formula I gave you. The formula result will be the annual reduction from the $1,850 in the award letter for not working in 2016. (If you want a monthly number, you'll have to divide the formula result by 12.)
You'll have to make an educated guess at "B" unless you have your wage record handy.

For 2015, you'll look at the value that your 2015 wages really added, and compare that to the value that SS thinks they added. So you'll do the formula once with A = your actual 8 months wages, and once with A = what you think SS used (probably your 2014 wages). The difference is your lost benefit.

Note that SS only counts your annual earnings up to $118,500. If that's relevant to you, be sure that you cap all the A's above at $118,500.

I'm not claiming this will give you the adjustment to the dollar. However, I think it will show you that the impact of these 12 months of missing earnings is very small relative to any decision you're trying to make today.

[Burkmere]

Quote:

Originally Posted by Independent Oops, I typed too fast and goofed up 2015. And, the system won't let me edit my post. This is the corrected version: You think they assumed you would work for 8 months in 2016. Take the amount of money you think they assumed for those 8 months, plug it into "A" in the formula I gave you. The formula result will be the annual reduction from the $1,850 in the award letter for not working in 2016. (If you want a monthly number, you'll have to divide the formula result by 12.) You'll have to make an educated guess at "B" unless you have your wage record handy. For 2015, you'll look at the value that your 2015 wages really added, and compare that to the value that SS thinks they added. So you'll do the formula once with A = your actual 8 months wages, and once with A = what you think SS used (probably your 2014 wages). The difference is your lost benefit. Note that SS only counts your annual earnings up to $118,500. If that's relevant to you, be sure that you cap all the A's above at $118,500. I'm not claiming this will give you the adjustment to the dollar. However, I think it will show you that the impact of these 12 months of missing earnings is very small relative to any decision you're trying to make today.

Thanks!