Military service and Social Security Figuring out benefits can be complicated
In most cases, your military service increases Social Security benefits. However, depending on when you served, figuring out how service affects your benefits can be complicated.
All people who work in jobs where FICA taxes are withheld receive credits toward Social Security benefits. In any year, the maximum number of credits is four, as long as certain income thresholds are met (in 2019, if you make at least $5,440). To qualify for benefits, no one needs more than 10 years of work, or 40 credits.
The size of your benefit at retirement depends on your earnings, averaged over your working lifetime. Under certain circumstances, special earnings can be credited to your military pay record for Social Security purposes.
If you served in the period from 1940 through 1956, for example, you did not pay any Social Security tax. Accordingly, military service during this period is not counted on your Social Security earnings records.
However, the Social Security Administration, in order to recognize your service, manually posts a special $160 wage credit to your earnings record for each month you were on active duty, or active duty for training, between Sept. 16, 1940 and Dec. 31, 1956. This extra credit could increase your Social Security payment.
Starting Jan. 1, 1957, military pay became subject to FICA taxes. Accordingly, if you served between 1957 and 1977, your military service automatically appears on your Social Security earnings record and will be used to compute your payment. You are also credited with $300 in additional earnings for each calendar quarter in which you received active duty basic pay.
These additional earnings may help you qualify for Social Security or increase the amount of your benefit.
This $300 credit does not automatically appear on your earnings record before 1968. In order to receive this credit for service prior to 1968, you will need to submit proof of your service dates with your DD-214 discharge form.
If you served in the period from 1978 through 2001, your military pay was subject to FICA taxes, and appears on your Social Security earnings record. You are also automatically credited with $100 in additional earnings for every $300 in active duty pay you received, up to a maximum of $1,200 a year in additional earnings.
If you enlisted after Sept. 7, 1980, you had to complete at least 24 months of active duty or your full tour in order to get the additional earnings.
After 2001, there are no special Social Security credits for your service.
You can receive both military retirement and Social Security. Normally, your Social Security benefits are not reduced because of your military retirement.
Department of Veterans Affairs payments called pension are considered aid payments; other income you receive will reduce the amount of your VA pension payment. Other VA payments such as compensation are not affected by Social Security payments.
If you receive a military disability pension and apply for Social Security disability payments, your total compensation plus workers compensation is limited to 80 percent of your average current earnings before you became disabled.
If you become disabled while on active military service on or after Oct. 1, 2001, you can apply for a Social Security disability claim, which is different from VA benefits and requires a separate application. As a wounded warrior, your application gets expedited processing. The same is true if you have a VA compensation rating of 100 percent permanent and total.
The expedited process means you get a decision on your claim much faster. Elliot Raphaelson welcomes your questions and comments at raphelliot@gmail .com.