Maybe the Social Security Administration fixed the problem? I guess we'll just have to wait and see.
So, what's the problem? I'm talking about an issue that, on the surface, sounds very simple. Yet over the years, hundreds, if not thousands, of readers have found it confusing and have written to me for clarification.
It's the answer to this simple-sounding question on the online Social Security retirement application form: "When do you want your benefits to start?"
The reason this confuses people is primarily because way too many folks overthink the question. And it is especially vexing for those who absolutely insist that their benefits start at their full retirement age — not a month before and not a month later. (Near the end of this column, I will point out why people shouldn't get so hung up about this full retirement age start date business.)
But for now, here is an example. Frank wants to wait until he is 66 to start his Social Security. He turns 66 in March. So, when the application asks, "When do you want your benefits to start?" Frank should answer, "March." It really is that simple.
But then, as I said, Frank starts thinking too much. Here is what I mean by that. He knows that Social Security checks always come one month behind. In other words, the Social Security check for March is actually sent out in April. So now Frank worries that if he indicates he wants his benefits to start in March, the SSA will interpret that to mean he wants his first check to come in March, meaning it would be the payment for February. And if his benefits started in February, that would give him a one-month reduction in his full retirement age benefit rate.
And then Frank thinks even harder and figures that he better answer the question by saying he wants his benefits to start in April, knowing that would be the March Social Security payment.
As I have explained a thousand times in this column, don't worry about Social Security check payment dates. The application question is not asking when you want your first Social Security check to physically show up in your bank account. Instead, it is asking which month you want to be your first month of eligibility for Social Security benefits.
The folks at the Social Security Administration know this has been a problem because they have been getting lots of calls from panicked retirement applicants who misinterpreted the question and answered it incorrectly, or at least what they perceive to be incorrectly (more about that in a minute). So, they are calling to see if they can change their answer — thus creating lots of extra work for the SSA representatives and computer systems.
But according to quite a few readers who have reported this to me, the SSA has changed the question asked on the online retirement form, at least for folks approaching their full retirement age. It now says this: "Do you want your benefits to start at the earliest date without a permanent reduction?"
This is a bit of a mouthful. And more than a few readers told me it took them a reading or two of that line to decipher it. But if you are approaching your full retirement age and that is when you want your benefits to start, by simply answering yes, you will be assured that your benefits will start effective with the month you reach full retirement age — not a month before and not a month after.
So now let me get back to this issue of working yourself into a tizzy about starting your benefits at exactly the right month. And to explain where I am coming from, let's go back to Frank's case. And for use in the following examples, we will assume his full retirement age benefit amount is $2,500 per month. I said he turns 66 in March, and he wants his benefits to start then. So, he should indicate March as his starting month. Or if he is filling out the online application with the new question — "Do you want your benefits to start at the earliest date without a permanent reduction?" — he would answer yes.
Now, let's say he didn't do that. Suppose he said he wanted his benefits to begin in February because he figured that's the check that comes in March. That essentially means his benefit start date would be age 65 and 11 months, one month before his full retirement age.
Retirement benefits are reduced about one-half of 1% for each month they are taken before full retirement age. So, instead of getting $2,500 per month, Frank's benefit rate would be about $2,488 — meaning he loses $12 per month, forever. That's the bad news. But on the upside, by choosing February as his start date, Frank did get one extra check for $2,488. It's going to take Frank about 207 months before he comes out on the short end of the Social Security stick. In other words, Frank will be 83 years old before his supposed "mistake" catches up to him.
A panicky Frank might be inclined to call the SSA to change his starting date, which would entail withdrawing that first claim, repaying the one month's reduced retirement benefit he received and refiling a new claim. But I'd tell Frank not to worry about it. Take the extra $2,488 check and have a party!
Q: I want my Social Security checks to start at age 66. I will be 66 on May 1, 2020. I talked to a Social Security rep, and she told me that I should use April as my starting date. This makes no sense to me. Can you explain?
A: Yes, I can explain. But before I do, I want to warn all my readers that only folks born on the first day of the month should pay attention to this answer. For all the rest of you, it's not an issue and will just confuse you further.
There is a common law that Social Security follows that says you actually attain your age on the day before your actual birthday. For example, I will reach my 71st birthday on June 22. But I will legally turn age 71 on June 21. That's really no big deal.
But it is a huge deal for Social Security purposes if you were born on the first day of the month — as you were. In other words, although your birthday is May 1, you legally reach age 66 on April 30. So, you turn your full retirement age in April, and that's why April will be the starting month.
If you have a Social Security question, Tom Margenau has the answer. Contact him at [email protected] To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
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