I’ve been advising fellow Baby Boomers to think twice before signing up for Social Security retirement benefits.
I chose early retirement at age 62 only because I needed some income to supplement my half-time-job earnings. If you can, it’s probably best to wait until you are at or near full retirement age as your checks will be much bigger. If you change your mind midstream on that score, you’ll have to pay back in lump sum all the money you received.
What I most want to warn about is the “earnings limit” if you retire before full retirement age. The earnings limit for 2013, on which this year’s Social Security payments are based, was $15,120. If you made more than that, Social Security will adjust your benefits accordingly this year, keeping back half of what you earned above that limit. At full retirement age (66 for my age group), those earnings limits don’t apply. But, don’t forget that in the year of your full retirement age, the Social Security checks you receive in that year will be based on the income you made the year before (when you were 65). That was the nasty surprise for me this year.
So let’s say your work income in 2013 was $16,120, which was $1,000 above the limit. Social Security will keep back $500 from one of your monthly $1,000 checks for this year. If it’s more, depending on how much, they’ll keep two or even more checks. In the year AFTER your full retirement year, you won’t have to worry about limits on what you made at age 66.
The good news is when you reach full retirement, your monthly benefits will be increased a bit to take into account the previous months in which you received no benefits or reduced benefits (because of earnings limits).
The bad news is when Social Security sends you letters explaining (trying to explain) how they will adjust the amounts of your checks, you will likely tear out your hair (or what’s left of it) trying to make heads or tails out of those letters.
They read as if they were written by the Mad Hatter. I’ve been getting such letters for the past three years, and they are virtually indecipherable. I’ve shared them with people I know who are wizards at math, accounting, finances, logic, and more, and they were all not only stumped but stunned anyone could write letters so needlessly confusing and even contradictory.
In recent months, I received three letters telling me I made too much money last year so they’ll have to adjust my checks. I’ve gone through baffling hoops and hurdles trying to figure out exactly what those letters mean.
I was on the phone for an hour one day, obeying the commands of a robo-voice at the national Social Security headquarters. After all the rigamarole, Mr. Robo asked me for my Social Security confirmation number. My what?!, I wondered. Then Robo explained it’s the number I was given when I signed up, a number I was never told to save or remember. Because I didn’t know that number, I could proceed no further and had to hang up on robot.
Then I learned the Social Security office in St. Cloud has no local number. You’ve got to call the national number to speak to a “real” person, (such as to make an office appointment), but to do that you first have to deal with Robo’s commands, and if you don’t know your confirmation number don’t even bother dialing.
People kept telling me, “Just go to the local office; they’ll explain what the letters mean.” No thanks. A few years ago, I brought reasonable questions to that office, and the man who was supposed to help, a man who could barely speak English, harangued me verbally, telling me repeatedly “You no unnerstan’ the concekt.” (Translation: You don’t understand the concept.). I was so disgusted by his arrogant, unhelpful attitude, I left that office, vowing never to return.
I’m not disputing Social Security rules. What I do take issue with are those crazily confusing letters. What I needed to know was so simple: Will I get a check in July and how much? Will I get a check in August and how much? Knowing that, I would be able to tighten my budget to tide me over until full benefits are restored. I was actually relieved when I checked my bank July 23 and discovered a Social Security check had not been auto-deposited – relieved because now, at last, after months of wondering, I now know the answer: No July check. IF I’m reading the latest letter correctly (a big IF), I will get $69 on my August check. And then, September will be the full amount again, I presume. I still have no idea how they did their math, but one might as well try to fathom the ways of God.
I repeat: If you do retire early, try to stay under the earnings limit to avoid those maddening confusions. Other than that, Social Security is a wonderful program, and I am grateful it exists. The checks arrive like clockwork – unless, of course, you “made too much.”