As you near retirement, it's
likely you'll have many questions about Social Security. Here are a few of the
most common questions and answers about Social Security benefits.
Will Social Security be around when you need it?
You've probably heard media
reports about the worrisome financial condition of Social Security, but how
heavily should you weigh this information when deciding when to begin receiving
benefits? While it's very likely that some changes will be made to Social
Security (e.g., payroll taxes may increase or benefits may be reduced by a
certain percentage), there's no need to base your decision about when to apply
for benefits on this information alone. Although no one knows for certain what
will happen, if you're within a few years of retirement, it's probable that
you'll receive the benefits you've been expecting all along. If you're still a
long way from retirement, it may be wise to consider various scenarios when
planning for Social Security income, but keep in mind that there's been no
proposal to eliminate Social Security.
If you're divorced, can you receive Social Security retirement
benefits based on your former spouse's earnings record?
You may be able to receive
benefits based on an ex-spouse's earnings record if you were married at least
10 years, you're currently unmarried, and you're not entitled to a higher
benefit based on your own earnings record. You can apply for a reduced spousal
benefit as early as age 62 or wait until your full retirement age to receive an
unreduced spousal benefit. If you've been divorced for more than two years, you
can apply as soon as your ex-spouse becomes eligible for benefits, even if he
or she hasn't started receiving them (assuming you're at least 62). However, if
you've been divorced for less than two years, you must wait to apply for
benefits based on your ex-spouse's earnings record until he or she starts
receiving benefits.
If you delay receiving Social Security benefits, should you still
sign up for Medicare at age 65?
Even if you plan on waiting
until full retirement age or later to take your Social Security retirement
benefits, make sure to sign up for Medicare. If you're 65 or older and aren't
yet receiving Social Security benefits, you won't be automatically enrolled in
Medicare Parts A and B. You can sign up for Medicare when you first become
eligible during your seven-month Initial Enrollment Period. This period begins
three months before the month you turn 65, includes the month you turn 65, and
ends three months after the month you turn 65.
The Social Security
Administration recommends contacting them to sign up three months before you
reach age 65, because signing up early helps you avoid a delay in coverage. For
your Medicare coverage to begin during the month you turn 65, you must sign up
during the first three months before the month you turn 65 (the day your
coverage will start depends on your birthday). If you enroll later, the start
date of your coverage will be delayed. If you don't enroll during your Initial
Enrollment Period, you may pay a higher premium for Part B coverage later.
Visit the Medicare website, www.medicare.gov to learn more, or call the Social Security Administration
at 800-772-1213.
Will a retirement pension affect your Social Security benefit?
If your pension is from a job
where you paid Social Security taxes, then it won't affect your Social Security
benefit. However, if your pension is from a job where you did not pay Social
Security taxes (such as certain government jobs) two special provisions may
apply.
The first provision, called the
government pension offset (GPO), may apply if you're entitled to receive a
government pension as well as Social Security spousal retirement or survivor's
benefits based on your spouse's (or former spouse's) earnings. Under this
provision, your spousal or survivor's benefit may be reduced by two-thirds of
your government pension (some exceptions apply).
The windfall elimination
provision (WEP) affects how your Social Security retirement or disability
benefit is figured if you receive a pension from work not covered by Social
Security. The formula used to figure your benefit is modified, resulting in a
lower Social Security benefit.
