I got a notice from the Social Security that says, if I earn above a certain $amount a year while collecting Social Security, they will reduce my SS benefit. Would the retirement pension I’m receiving from my previous workplace be included in that earning, or are they just referring to income made from working now? Can’t seem to find this information on their site.
(And, anyway, considering I PAID INTO Social Security all those years, it shouldn’t matter how much I earn otherwise after retirement… in my opinion… it’s my money; not a perk!)
Sounds like you took SS early. If you take it at full retirement age there should be no penalty.
I waited for full retirement age for that reason. That penalty is steep.
BTW, when you reach full, the penalty should end.
I can vouch for the fact that my wife is receiving both SS benefits and retirement income before reaching 66 with no penalty. The penalty is only for income earned from working.
As a factual matter, it is not your money. Social Security is not an individual retirement account. It is essentially an insurance policy: you pay certain premiums, and if a particular event happens, you are entitled to a payout of a certain amount. If the event is changed, the lying may be changed. And like your homeowners insurance, just because you paid in doesn’t mean you get that money out. You may get as much as you put in, you may get more, you may get less. But there is no account with your name on it that says you are entitled to a certain amount of money, and it has always been that way.
And, more to the point, the benefit can be changed, or even terminated, any time the federal government wishes to, without the payee having any rights at all.
Which is why the bill introduced the other day in the House is a bit scary. First time, to my knowledge, someone’s actually begun an attempt to solve the eventual benefit reduction issue by proposing to chop benefits significantly… :eek:
I receive a pension from the city I retired from. I also receive SS benefits. I did not pay into SS while I worked for the city but I did pay into SS while working a part time job (for over 20 yrs).
I started my SS benefits at age 62. My SS benefits were reduced by about 35% because of my city pension.
The answer depends on whether you are receiving (1) Social Security retirement benefits either (a) having reached full retirement age or (b) elected early retirement, or (2) you are receiving Social Security disability benefits.
There is no income limit for full retirees. SSDI and early SSR recipients are subject to having their benefits offset against wages/salary.
Your pension benefit will only be offset if it came from a job in which you did not pay into Social Security - typically that means only federal, state or local civil service jobs.
Perhaps a law should be passed to prevent the government from borrowing from the account, instead of targeting citizens who are unable to defend themselves.
If SS is the same as our State Pension here, our government is solving the same problem by pushing ever upwards the age at which it can be claimed. I got mine at 65, but my wife will have to be 66 (and bear in mind that women used to get theirs at 60). My daughter, under the present rules, will be 70 when she gets hers, and that’s if it doesn’t change yet again.
Claiming it early, even at a reduced rate is not possible, but it can be deferred and 10.4% is added for ever year of deferral. I did this as it is a very good investment.
The term “borrowing” is misleading. Surpluses in the trust fund are used to buy Treasury-issued securities, which are constitutionally guaranteed under the 14th Amendment to be paid back with interest. If one takes the term “borrow” at face value, it implies that there is a chance for default. This is not the case, as the Constitution prohibits default for these sorts of transactions involving U.S.-guaranteed debt.
The issue that others raised, as to the self-sufficiency of the Social Security system (i.e., will the payroll taxes raised be sufficient to guarantee the full level of promised benefits over the long term) is a different and more pressing issue.
My dad told me when I started working full time, to start saving both personally and through retirement vehicles, as I should definitely not count on social security being around when I retired. Well, I’m about 12 years away from pulling that the retirement trigger. Thankfully I followed his advice and should not have to rely on SS, so if it’s still around, that’s a few extra vacations a year.
The US system is pretty similar. We have started down the road to increased claim age. A law was passed IIRC 20-plus years ago changed it from a fixed age 65 to begin slowly climbing starting around now. So it was safely far in the future when passed.
I’m 58 now and instead of the traditional 65 I’ve got to wait to 66 years 8 months to claim mine. An extra 20 months. Under present legislation the standard claim age eventually goes up to IIRC age 68. AFAIK there never was an age difference between men & women.
We have the same kind of deferral right you do up to age 70. Albeit the rate of return is about 8% per year, not 10.4%. We also have a right of early claiming, back down to an age of 62 vice the standard 65 (and climbing slowly as above). Early claimers receive a reduced benefit at the same ~8% / year rate.
The vast majority of low-wage workers claim the benefit at 62, the earliest possible age. Which causes a big hit on their benefit amount as a result. And thereby screws them pretty thoroughly if they live to be significantly old.
What do you propose that they do with the money they collect, put it in a giant mattress? As it is now, the surplus is invested in long-term T-bills I believe.
The overall problem is that the money Jinx paid in for all these years was not saved for her, it was paid out back then for people who were receiving SS benefits at that time. Sorry, Jinx, your money is gone, and the benefits you get will come from those who will be paying in at that time.
Way back in the late 40s when my father was filling out his father’s tax return, your benefits were reduced if you were working and under 75. Then that age was reduced to 72, which my grandfather was and the reductions stopped. I guess the age finally bottomed out at 65.
There was a reason for this. When SS started, one purpose was to get people to retire and let younger people get jobs in their place. There was this archaic idea that your employer had some obligation to keep employing you after many years of faithful service.
Federal employees hired after Jan. 1, 1987 (and those who had less than 5 years of nonmilitary service at that time) also pay into Social Security. The only federal employees still not paying are those originally hired in or before 1981 who elected to remain on the Civil Service Retirement System when it replaced by FERS (Fed’l Employee Retirement System) in the 1980s.
Most state civil service employees also pay SocSec, and I think there are only a handful of local employers who do not. (Famously, Galveston, Brazoria, and Matagorda counties in Texas exempted themselves, but that is no longer an option.)