Social Security Disability Benefits and Retirement

Posted Date: October 8th, 2014 |

Putting off filing for retirement benefits until age 70 can be a wise strategy for many retirees because the delayed credits you earn can beef up the monthly check amount substantially. But does it do any good to wait longer?

No. Never. The credit-accumulation clock stops when you celebrate your 70th birthday, and there’s no extra bump afterward.

If you were born in 1943 or later, consider yourself lucky that credits are worth 8% each year after you reach full retirement age, boosting your monthly check by 32% after four years. Those turning 89 this year got only a 3.5% annual bump, which grew 5% per birth year until last year, when those born in 1943 or later were awarded the full 8%.

Of course, as the full-retirement age inches up from 66 for those born in 1943 to 1954 to 67 for people born in 1960 or after, the total added benefit will shrink because there are fewer months to accrue it. By the time this year’s 54-year-old Americans blow out 70 candles on their birthday cakes, the accumulated credits will kick their checks up only 24%. For now, that still represents a pretty healthy annual return.


Q: My daughter has fallen in love with a man on disability through Supplemental Security Income because of a car accident. He has told her they cannot get married because he will lose his income. Can people on disability lose their income if they marry?

Ruth G.

Southwick, Mass.

A: He’s right. His disability income is based on financial need. Supplemental Security Income is not Social Security Disability Insurance, which pays benefits to people who have worked in jobs covered by Social Security. Though both programs are administered by the Social Security Administration, their rules differ.

“SSI is federal welfare and is need-based,” says Patrick Toomey, a disability lawyer in Minneapolis. “If he got married and he has assets or she has monthly wages, it could affect his entitlement to SSI.”

SSI considers the entire household income and resources for financial eligibility. If his total resources are worth no more than $2,000 per month, or $3,000 for a couple, he may still be eligible.

Q: I am 65 years old with a 38-year work history and have been collecting Social Security Disability Insurance benefits for eight years. At age 66, the SSDI benefits change but I am not certain how. Are benefits taxable after 66 years of age?

Jeff H.

Bakersfield, Calif.

A: First things first: at your full retirement age, the SSDI benefits switch into Social Security retirement benefits but you won’t notice it. The amount shouldn’t change by more than a few pennies, and the checks will be directly deposited into your bank account.

As for taxes on Social Security benefits, it depends. Benefits are generally considered tax-free and you don’t even have to file a return if they are your only source of income or if the benefits and other income don’t exceed $25,000 for singles and $32,000 a year for couples filing jointly, according to the IRS.

You will have to pay taxes on as much as 50% of your benefits if your combined income reaches $25,000 to $34,000 annually and you’re a single filer. The income threshold for couples filing jointly is $32,000 to $44,000.

Expect to pay taxes on as much as 85% of your benefits if combined income tops $34,000 for singles and $44,000 for couples filing jointly.

Q: I’m 65 and plan to file and suspend Social Security benefits at 66 to receive a larger benefit at 70.

My husband is 80 and took his Social Security at age 63. I know I can receive half of his benefit when I reach my full-retirement age and then take my full benefit at age 70.

If he should pass away after I turn 66 and before I’m 70, will I be eligible to receive his full benefit until I reach age 70 and then my deferred benefit?

Lynn T.

San Diego, Calif.

A: Yes, that’s among the perks of the survivor’s benefit. If he dies when you are, say, 68, you can collect a survivor’s benefit equal to what he’s receiving. When you turn 70, you can switch to your own benefit.

The Wall Street Journal

*If you have any questions about Social Security Disability benefits please contact the Jones Law Group at (614) 545-9998.

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