What you don’t know about Social Security could cost you
For so many, Social Security is the safety net that they just can’t live without.
But knowing when to collect your benefits and understanding the system’s complex rules can be very vexing.
In a poll earlier this year conducted for MassMutual, nearly half of respondents 50 and over failed a short true/false quiz on Social Security retirement benefits.
During a recent online discussion, I invited Andy Landis, author of the book “Social Security: The Inside Story,” to join me in answering reader questions. Landis, who spent 12 years working for the agency, put his insider knowledge to work after he left by helping individuals and professionals understand the convoluted program. Here are some of his answers to readers:
Q: Is the surviving spouse entitled to all or a portion of the deceased spouse’s Social Security? Both spouses worked to their full retirement age.
Landis: A widow or widower can get up to 100 percent of the deceased spouse’s benefit if claiming the benefit at full retirement age. A survivor who is dually eligible for his or her own Social Security plus a survivor payment can choose the higher of the two, or even take one early and the other later, with no carryover of the reduction for early filing.
Q: Could you explain the process of how Congress borrows from the Social Security trust fund?
Landis: Nothing mysterious about it, but a lot of hype is generated. The Social Security Administration (SSA) has always been required to invest its excess funds in only one type of investment — U.S. Treasury Bonds. The invested amount re-
ally is similar to any purchase of U.S. Savings Bonds. Treasury pays back the loan with interest, credited every quarter.
Q: Isn’t there an argument for taking Social Security early because it’s less likely that legislators would cut benefits to people actually receiving them versus people who aren’t yet collecting?
Landis: We can’t predict what Congress might do, so there’s no definite answer. However, I’ve observed that changes to Social Security, actual and proposed, tend to fall on younger workers, not nearretirees, typically based on birthdate rather than whether you’re already collecting. In addition, political talk is easy, but passing bills isn’t, especially to cut Social Security. So there are many factors in deciding when to take Social Security, but I think fear of political action is a smaller factor.
Q: I was an independent contractor for a few years more than 20 years ago and (stupidly) did not pay my estimated quarterly taxes or any Social Security. I have since repaid the tax debt and am clear with the IRS (thank goodness) but never paid anything into Social Security for those years. You can easily see the missed years on my work history on the “my Social Security” website. Do I need to do anything now?
Landis: You have what SSA calls an “earnings discrepancy.” If you settled up with the IRS, you might have paid your Social Security taxes as part of that, and it’s just a matter of updating SSA’s records. If not, you’ll have to pay your Social Security taxes also. Either way, you can call 800-SSA-1213 to start the correction process.
Q: I just started getting spousal benefits. I am 66 and will work for one more year. Does getting spousal benefits reduce my own benefit when I apply at 70?
Landis: As long as you were born before Jan. 2, 1954 (check!), and your spouse is getting Social Security (check!), and you first file at 66 (check!), you can draw spousal payments now and delay your own payment, which will continue to grow until 70.
Q: I’m 67 and still working full time. I plan to work to 70. I am married, but I have an ex-husband, now deceased. We were married over 10 years. Am I able to draw on his Social Security once I retire?
Landis: You can draw Social Security on a deceased ex-spouse if you are unmarried or you remarried at age 60 or later.
Q: I admit I haven’t established my account on the Social Security website. Does it show your personal benefit with the option of delaying until age 62, 65, full retirement age and at 70?
Landis: Yes, you can see all of that. Sign up at www.ssa.gov/myaccount.
By the way, in the MassMutual survey, 86 percent of participants hadn’t created an account.
How well do you understand Social Security rules? Take the full 10-question MassMutual quiz at www.massmutual. com/planning/social-security-quiz. If you get a poor score, it’s time to do some homework, because being uninformed could cost you.
Readers can write to Michelle Singletary c/o The Washington Post, 1301 K St., N.W., Washington, DC 20071. Her email address is michelle.singletary@washpost.com. Follow her on Twitter (@SingletaryM) or Facebook (www.facebook. com/MichelleSingletary). Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer’s name, unless a specific request to do otherwise is indicated.