Q. I am single and will be eligible to receive Social Security as of next January. Will I have to pay income tax on this?
A. All Social Security benefits are subject to Federal income taxation. Whether any tax is due depends on all of your other income. For specific information on taxation of Social Security benefits, call the Internal Revenue Service at 1-800-829-3676 or go online to the IRS website and read or download publication No. 915.
Q. Do the earnings of your final ten years of employment have any special bearing on your Social Security benefits once you retire?
A. Final years of earnings have no special significance. Earnings prior to age 60 are indexed to bring them up-to-date. Actual earnings from age 60 on are included in the benefit calculation. Benefits are determined on the basis of the highest 35 years of indexed or actual earnings. It does not matter when those years of earnings occur.
Q. About a year ago I purchased a new car. The Credit Union (after a credit check) asked, “Did you know someone else is using your Social Security number?” I called the local Social Security office and was told, “You will have to pursue this on your own. There are no laws on taking on someone else’s ID?” Can you possibly give me some advice on where to pursue this?
A. Depending on the extent to which your identity has been compromised, you may need the help of the Social Security Administration and the Federal Trade Commission. The Social Security Administration has an online publication on Identity Theft and Your Social Security Number. Go to http://www.ssa.gov/pubs/10064.html#contacting for information and advice.
Q. I am eligible for benefits; my husband does not have enough credits. I know he will receive survivor benefits if I die, but does he receive any income if both are alive?
A. When you apply for your Social Security benefit to begin, your husband could become eligible for a Social Security spouse benefit if he is at least 62. At 65, he will be eligible for Medicare based on your Social Security earnings record. Upon your death, your husband will be eligible for a surviving spouse benefit (i.e. widower benefit). Whether a spouse or widower benefit is payable depends on your husband’s earned retirement benefits. If, for example, he receives a pension based on non-Social Security government employment, any spousal benefit he is otherwise entitled to receive will be reduced by two-thirds of his government pension. An issue brief discussing this provision of law can be found here: http://www.socialsecurity.gov/pubs/10007.html.
Q. Someone told me if you don’t sign up for Social Security as soon as you are eligible, but do sign up a few years later, you get back pay to when you were first eligible. Is this true?
A. In general, Social Security benefits cannot be paid retroactively to the month the application for benefits is filed. The exception is if the applicant is past full retirement age. In that case, up to six months of retroactive benefits can be paid as long as backdating the application does not result in benefits being paid for any month prior to full retirement age.
Q. I have been of the belief that Social Security benefits are determined by taking the average income of all the years of employment. I recently heard that it is the average of the highest 35 years of employment. Which is correct?
A. Monthly Social Security benefits are determined on average monthly earnings over 35 years. When a benefit application is filed, the Social Security Administration indexes lifetime earnings to bring them up to date. The highest 35 years of earnings are selected and averaged to determine the monthly benefit. If a worker has more than 35 years of earnings, excess lower-earning years are disregarded. If the worker has fewer than 35 years of earnings, some zero income years are included in the calculation.
Q. If I were to retire at age 60 and begin receiving Social Security benefits at age 62, would the two years of zero earnings between my retirement and beginning to collect benefits be factored into my Social Security benefit calculation? If so, would this greatly reduce my benefits?
A. How leaving the work force before retirement age or changing to new, lower wage employment will affect your monthly Social Security benefit depends on your prior earnings history. If you have spent your full work life in the paid work force, a minimal number of low or no-earning years could make very little difference in the amount of your benefit. If you have a short earnings history, the difference could be substantial.
The best way to learn how leaving the work force early or accepting a lower paying job would change your latest benefit estimate is to use the online estimator. Go to http://www.socialsecurity.gov/estimator/. More detailed calculators can be found at http://www.socialsecurity.gov/planners/benefitcalculators.htm.