The rules around Social Security are complex and continually changing. In Part III of our series on Social Security, we would like to address some of the questions that we are frequently asked that were not covered in Parts I and II.
- Are your Social Security payments taxable at the state level?
The answer is maybe. There are 13 states where you could be taxed on your Social Security benefits. They are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia and it may depend on your income.
- What is my full retirement age (FRA):
Note: Full retirement age for Survivor’s benefits may be different. Your FRA is the day before your actual birthday, so if your birthday is the 1st day of the month, you will actually receive a benefit for the month prior to your birthday!
- What does the future look like for Social Security?
We believe Social Security benefits will be around for anyone paying into the system today, however, the benefit amount, age of full retirement and cost of living adjustment will most likely be different.
- How do I change or correct my name on my Social Security card or record?
There are required documents that you will need to change your name. You can find the list of required documents here: https://www.ssa.gov/ssnumber/ss5doc.htm. There is also an application you must fill out. You can find the application here: https://www.ssa.gov/forms/ss-5.pdf. Once you have the documents and completed application, deliver them to a Social Security office. You have the option to mail the documents, but we would suggest going into the office due to the sensitivity of the information you are providing. Here is how to locate your nearest Social Security Office: https://secure.ssa.gov/ICON/main.jsp.
- What is the Social Security wage base for 2020?
You will pay Social Security tax on $137,700 of earnings for 2020. This is an increase from 2019 ($132,900). This number will, most likely, continue to go higher. There is no limit to the wages for Medicare tax though.
- What is the maximum retirement benefit I could receive for 2020?
The maximum benefit in 2020 at Full Retirement Age (FRA) is $3,011 per month. At age 70 is $39070 per month and age 62 is $2,265 per month.
- What if I apply for benefits and then change my mind?
If you change your mind within one year of receiving your first payment, you have the option to “withdraw” your benefits. You will pay back all the money you (or anyone on your record) received up to that point (without interest) and it will be as though you never received your benefit in the first place. Special rules apply to ex-spouses that have received benefits on your record.
You can also “suspend” your benefits at Full Retirement Age and you had elected benefits early and more than one year ago. There is a special re-calculation of benefits for this scenario.
- Can I collect benefits under my ex-spouse’s record?
If you are divorced, you may be entitled to benefits on your ex-spouse’s record. In order to claim a benefit on your ex-spouse’s record, you must have been married at least 10 years and not be remarried. For this strategy to make sense, your own benefit would need to be 50% or less of your ex-spouse’s benefit. If your ex-spouse is deceased, there are special rules that apply to claiming Survivor’s benefits on an ex-spouse’s record.
- What happens to my benefit if my spouse dies?
You will receive the greater of the two benefits, but not both benefits combined.
- What has the Cost of Living Adjustment been in the past for Social Security Retirement benefits?
The historical cost of living adjustments are below for your reference and as you can tell, there is a wide range of adjustments ranging from 0% to 14.3%!. At Seaside, we project a modest inflation adjustment on benefits to be conservative with our future projections in our financial plans.
As always, please let us know if you have any additional questions about Social Security that have not been addressed in our series.