In a recent column, I explained to readers who are under 66 and working how they could work with Social Security’s complicated earnings penalty rules to avoid the oftentimes nightmarish bureaucratic hassles involved in dealing with the Social Security Administration on these antiquated laws. (Rather than rehash the whole story, I suggest that readers who missed the column from a week before last go to their newspaper’s online archives to find it — or go to my syndicate’s website: www.creators.com.)
I should have predicted the reaction from two sources. A few current or former Social Security Administration employees criticized me. And many regular readers of the column thanked me and had even more questions. First, an example of a complaint from an SSA employee, and then some questions from readers.
I think you are boneheaded and just plain wrong to advise your readers to lie to the Social Security Administration. Your tactics can only lead to problems. Will you please retract your last column?
A: No, I will not retract it. I stand by my advice. And I really didn’t tell my readers to lie to SSA. OK, maybe I advised them to fib a little. Or to be more precise, I encouraged them to delay reporting their earnings to you as long as possible. All the facts eventually get reported to SSA and the government gets the money they are due — in the form of repaid Social Security benefits. It’s just that under my plan, it all happens at one time, as opposed to the piecemeal approach that regular SSA procedures call for.
I am a 64-year-old retiree who took a job last year and got tangled up in a web of Social Security overpayment letters and appeals and returned checks and other hassles. I wish I would have read your column before I got into this mess. That’s water under the bridge now. But can you please tell me why we are penalized in the first place if we try to work?
A: If Donald Trump calls me up and asks me to be the “King of Social Security,” the very first thing I would do is eliminate the earnings penalty rules that plague working senior citizens under age 66. Here is a little bit of history.
When Social Security was enacted in 1935, the law said benefits could only be paid if someone was completely retired. I guess the thinking was that you must be fully retired in order to get “retirement” benefits.
In the 1950s, they relaxed the rules a bit and said people 75 and older could do some minimal work and keep their Social Security checks. In 1972, the law was amended so that people 72 and older could get all their benefits, no matter how much money was made. In 1981, they dropped that threshold age to 70. And in 1993, they lowered it to “full retirement age” (currently age 66).
But the antiquated earnings penalty rules remain in effect for anyone between age 62 and 66. If those working seniors make more than about $17,000 annually, they start to lose some or all of their benefits. Why? Or to expand that question a bit: Why make senior citizens getting Social Security benefits who want to work and make a little extra money live in fear of losing their government retirement checks?
If you, too, think that is a good idea, send President Trump a tweet and tell him to make me the Social Security King!
I have worked all my life. I am about to turn 62, and I am thinking of applying for my Social Security. But my husband is still working and making a six-figure income. Because we file a joint tax return, will his income reduce my Social Security benefits?
A: No it won’t. Your benefits are potentially reduced only if YOU work and have income that exceeds $16,920 per year. Your husband’s income is not an issue when it comes to Social Security’s earnings penalty rules.
I am 62 years old. I was planning to stop working on March 31 and start my Social Security in April. But my employer is giving me a generous severance package that includes six months of remuneration — and they will pay it in monthly increments until October. So does that mean I might as well wait until November to apply for my Social Security benefits?
A: No. If you want your Social Security checks to start in April, then go ahead and apply for them now to be effective that month.
The only income that counts toward the earnings penalty rules is income that you earn while actively working. So any special payments you get after you retire do not count toward those earnings penalty limits. This could be severance pay, as in your situation. Or it might be compensation such as accumulated sick or vacation pay distributed to you after you retire.
I am 64 and I get Social Security widow’s benefits. I am thinking of taking a job. Do the earnings penalty rules apply to me, or just to retirees?
A: The same rules that apply to retirees also apply to all other Social Security beneficiaries, including widows. So if you find a job that pays more than $16,920, you will lose one dollar in benefits for each two dollars you make over that threshold. And it’s gross earnings that count — not your take home pay.
