Question on level income option early retirement

[JOHN CARRIGAN]

OK, I am brand new to this site. I have a question of all. LEVEL INCOME OPTION EARLY RETIREMENT!! I took it when I was able to and everything worked as stated to me. My wife did the same and accepted a position with another employer. As time went by her RA and fibro became unbearable to be able to work anymore. Her RA Doctor told her to apply for SS disability. Did so, approved, and now we are at that point of her turning 62!

October,2011!! Her level income was reduced from $1000 dollars a month to $184 dollars a month, with NO increase in her social security! SS says that when she was approved for disability benefits that would be all she was entitled to. All the time we were expecting level income option to work as explained to us. Any answers or further action?

[MichaelB]

John, I moved your post over to the FIRE and money forum where it has a better chance of being answered.

[rescueme]

I assume that DW is receiving a pension, with a reduction in income from that pension by the amount of age 62 SS.

You might want to check with her former employer to find out their method of calculation on the pension income reduction, and to have them explain the calcuation and assumptions to you/DW.

While I worked in a company that had union retirement benefits (I was not union, and did not receive a pension), I was well aware of the age 62 "offset" to leave total monthly benefits at the same amount, but since your DW has applied/approved for SSD benefits, they may look at that in a different manner, including (maybe) that she has been collecting SSD prior to early SS.

IMHO, you can't get an answer to your question on this board. Every situation is different, and if it's related to union pensions, it also gets into contract language - which you may know is different for every company.

On the SSD side (if that is your question), payments are calculated against current benefits (not an age 62 statement of possible benefits) and keep at that level (adjusted to future SS contributions if working, along with COLA adjustments, if any) when the SSD benefit is awarded. At FRA age, it is just refered to as normal SS - not SSD. Any changes in benefits are strictly due to earnings and by the rules of current SS qualification.

BTW, future SSD adjustments based upon earnings after SSD is awarded must be "posted" (with a W2) at your local SS office on an annual basis. There is no connection between normal SS and SSD earnings/benefits updates. I found this out when my (disabled) son's SSD was never increased over many years, even though he workes in a sheltered workshop (for minimual pay), but still contributes to SS. Just be aware of that "glitch" in the system.

[JOHN CARRIGAN]

Thanks for the advise. Her pension is paid through her union, although 100% is paid by her employer! We will check on those calculations by them first thing Monday IF we can! Wife tried to make that call Friday and found to her surprise she had no telephone contact number on any of her correspondence from them, not even a listed number to call. We will be getting in touch with her employer's home office Monday in hopes that they can provide us that number.

[rothlev]

when I looked up level income pensions this type of pension is designed to be lowered when social security kicks in. It gives you more income for the years you don't have social security. In your wifes situation she collected social security before age 62, which did not affect her pension. Now that she is 62, she is subject to her pension being lowered by the original social security estimate amount. bummer if you didn't understand how it worked ahead of time. Her social security amount lowers the pension not vise versa. If you did the same when you turn 62 I think the same will happen to you.

[East Texas]

I didn't like, nor take, the level income option because I think it's not the best pension option. I feel if you choose the level income option because you need that much extra money before you turn 62, then you need re-think retirement.

Rothlev is correct - the pension goes down by the "estimated" amount of social security she (and you) would receive upon turning 62.

This is an observation only, not a criticism: I'm sure level income worked as it was explained to you - the difference is you might not have understood the entire process. All you might have heard is higher bring home pay in the short-term.

Unfortunately, you're locked in now. The time to go over the numbers was before retirement.