Roy and I have found with talking to people each day, even the most basic knowledge about Social Security is not understood. With all the articles on the internet, some good and some bad, people are just confused and basically give up educating themselves. They drive to the Social Security office and just take what they are given. This does not have to be the case. Remember, the Social Security office will give you information on your benefit only…..not advice on how to file collectively and improve your income position.
In this article, we are going to define some of the more elementary terms related to Social Security:
- Cumulative Benefits – lifetime payout of Social Security benefits.
- Delayed Retirement Credits – 8% increase in your benefit amount per year, for every year you wait to file after your Full Retirement Age. This is actually calculated monthly, so you do not have to wait an entire year.
- Delayed Strategy – claiming benefits after Full Retirement Age (FRA) in order to receive increased benefits.
- Divorced Benefits – benefits paid to the divorced spouse of an eligible worker to whom you were married at least 10 years – must comply with the new law changes effective November 2, 2015.
- Earnings Record – the history of your earnings for the years you have worked during your lifetime.
- Earnings Test – the reduction in benefit taken if you continue to work while receiving benefits before you reach Full Retirement Age (FRA). Once you reach FRA, the earnings test no longer applies, and there is no limit on your income. The year your turn FRA, the Earnings Limitations amount is substantially higher.
- Primary Insurance Amount – (PIA) is the benefit you will receive at your FRA.
- Windfall Elimination Provision (WEP) – a provision that may reduce Social Security benefits based on your earnings history if you are eligible to receive a pension from work not covered by Social Security taxes.
- Survivor Benefits – benefits paid to the surviving spouse of a deceased eligible worker.
- File and Suspend – a Social Security policy allowing a worker to file an application for retirement benefits but immediately suspend payments. This makes the worker’s spouse eligible to file for and receive spousal benefits. This also allows the worker’s benefit to accrue delayed retirement credits. However, the Bi-Partisan Budget Act of 2015 has altered this policy. Effective April 30, 2016, File and Suspend will no longer exist.
This is truly only a fraction of the many rules and regulations (2,827) that encompass the Social Security law. And, all of these laws carry exceptions to the rules. Most people that take their taxes to be done by an accountant or CPA have a better end result…..because these professionals are versed in the law and know the exceptions to the rules. This is also true of your Social Security Benefit. This is a benefit that will be with you the rest of your life, so have it professionally reviewed for the best end result.
Please visit our website at www.pillarsllc.com or email us with any questions at dthompson@pillarsllc.com. You may also call Pillars (Roy and Diane Thompson) at 601-954-0699 with any questions you may have. We enjoy what we do and love to help people better their Social Security benefit.
