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... Back to your lady friend, the school teacher. I don't see her as "walking away" from her investment in Social Security. If she has already paid into it for decades, she will receive retirement benefits at the appropriate age upon applying for them. It's just that they will be smaller than they would be if she had continued to pay in for the full 35 years that are used to average earnings and compute the benefit. But that smaller amount will be offset by the municipal pension - I don't mean offset to the penny, but more or less. So she will not have lost anything, basically.
It would make sense to me. Say you pay into your S.S. policy for forty-quarters and then stop paying into it. Your account is 'full'. When you reach the appropriate age, then you may apply to begin receiving benefit from your account.
So who cares, what else you do after that point.
The S.S. handbook I have is from 1995 and in it the formula is the last ten years that you paid into your policy, is used to determine how much you will get as benefit. That was later changed, so now they look at a 35-year span determined to be your highest earning 35-years, and that is what gets used to determine your benefit. It used to hurt you if your last 10 years was only working part-time, or at a reduced wage. Now instead it looks at your highest earnings 35-year span.
Now I do not understand this next part, I do not have any links, and I have not done any research on my own to verify it. But the story goes that when you start working for any of the municipalities or companies that do not participate in S.S. then any future benefit from your S.S. is reduced by 1/3 automatically. The thought being that now you will have this other package kicking in.
We know two teachers who have moved to this state. Both have said this to us. The first one came here around 3 years ago. I had never heard of the 1/3 reduction from S.S. so I asked a retired Maine teacher and she said it was so. Now with this second teacher moving here saying it, I must assume that this is what her new school district is telling her as well.
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... The specific language you have used ("she would be expected to stop paying into her S.S. policy and shift to the municipal policy") leaves me very puzzled. It's not as if she had made a decision to pay into S.S. - the employers did that for her automatically. And now, with the change, it's not as if she is "expected" to shift, she will be shifted automatically because she has no other choice, other than not to work as a teacher in that locality. To put it another way, you are speaking of S.S. as if it were the same as a 401K, for which an employee chooses the amount to contibute (within cerain limits) or not to contribute at all. The S.S. contribution is fixed by law and doesn't vary up or down, and the basic nature of it is quite different from a voluntary retirement account in that there is no "personal" amount, or account, set aside individually in S.S. Rather, records are kept of one's earnings, and later rights to benefits are based on the earnings records.
I see the confusion.
I deal with a few folks who if they want S.S. then they must go to S.S. file forms and pay an amount each quarter.
Back when S.S. determined your benefit from the last 10-years of your contribution, we had planned on running a self-employed business for my wife simply to allow her to 'beef-up' her S.S. policy during the last 10-years before she became eligible for benefit. Now that they look at a 35-year span, such would no longer work.
Now I do not understand this next part, I do not have any links, and I have not done any research on my own to verify it. But the story goes that when you start working for any of the municipalities or companies that do not participate in S.S. then any future benefit from your S.S. is reduced by 1/3 automatically. The thought being that now you will have this other package kicking in.
We know two teachers who have moved to this state. Both have said this to us. The first one came here around 3 years ago. I had never heard of the 1/3 reduction from S.S. so I asked a retired Maine teacher and she said it was so. Now with this second teacher moving here saying it, I must assume that this is what her new school district is telling her as well.
What you are describing is the Windfall Elimination Provision (WEP). Before describing it, let me lay out the formulas for determining Social Security retirement benefits: The highest 35 years of earnings are indexed for inflation and averaged (zeros are added if there are fewer than 35 years of earnings). Then this formula is applied:
1. From $1 to $749: multiply by 90%
2. The next $3,768: multiply by 32%
3. The remainder if any: multiply by 15%
You can see that life-long low wage earners receive a considerably higher percentage of their earnings as benefits than do higher wage earners. Now my own case makes a perfect example: I have very minimal life-time Social Security wages with lots of zeros in the average, so it would appear from the S.S. wages alone that I am a low wage earner very much in need of the extra help provided by the formulas. However, I am not actually a low-wage earner because I worked a 34-year career in a job with its own pension - a job not covered by S.S. (very similar to your teacher friends). So I do not deserve that help for the poor and the WEP is applied to my case, reducing the 90% multiplier to 40%. In order for the WEP to apply, my other pension has to be substantial (as defined by S.S.). I am perfectly content to be subjected to the WEP because I can see the reasons for it and the fairness of it. A lot of people think they are getting screwed by S.S., but that is just not true. For one thing, if they have 35-year averaged S.S. earnings which exceed $749 per month, the exceeding portion continues to earn the 32%. Whether this comes out to a 33% reduction would depend on exactly what the lifetime S.S. earnings were. Have I been clear?
It would make sense to me. Say you pay into your S.S. policy for forty-quarters and then stop paying into it. Your account is 'full'. When you reach the appropriate age, then you may apply to begin receiving benefit from your account.
So who cares, what else you do after that point....
I know you are talking about Social Security Retirement Insurance (SSRI). However, Social Security is not only about SSRI it is also about Social Security Disability Insurance (SSDI).
There is one strange rule that I was stunned to find out about. There are two major requirements for eligibility for disability. You must past the "recent work test" which means that you must have earned 5 years or 20 quarters of creditable work within 10 years of your disability onset date. Even though you have past the "duration of work test" where you have 40 quarters of creditable work.
What makes this a bad rule is that many woman accrue the forty quarters, 10 years of work. These woman stop working to raise a family and are not continuing to work or work sparingly. They do not have accrued 20 quarters of work within the next 10 years. That is very common for woman raising a family. Some tragedy happens and they are not eligible for SSDI, disabilty. They may be young and many years before age 65. They find they cannot work and worse of all they cannot get any insurance. For many people apply for SSDI to get medicare.
I think this is very important information for all you to know.
I know you are talking about Social Security Retirement Insurance (SSRI). However, Social Security is not only about SSRI it is also about Social Security Disability Insurance (SSDI).
There is one strange rule that I was stunned to find out about. There are two major requirements for eligibility for disability. You must past the "recent work test" which means that you must have earned 5 years or 20 quarters of creditable work within 10 years of your disability onset date. Even though you have past the "duration of work test" where you have 40 quarters of creditable work.
What makes this a bad rule is that many woman accrue the forty quarters, 10 years of work. These woman stop working to raise a family and are not continuing to work or work sparingly. They do not have accrued 20 quarters of work within the next 10 years. That is very common for woman raising a family. Some tragedy happens and they are not eligible for SSDI, disabilty. They may be young and many years before age 65. They find they cannot work and worse of all they cannot get any insurance. For many people apply for SSDI to get medicare.
I think this is very important information for all you to know.
Livecontent
I'm really fuzzy on this because we talked about it decades ago ... I had a friend who became disabled at age 18. So she wasn't ever on SSDI because she hadn't worked when she started qualifying for disability. There is a different disability support system for those who don't qualify for SSDI, and she was on that one. Unfortunately I don't remember what it was called.
I'm really fuzzy on this because we talked about it decades ago ... I had a friend who became disabled at age 18. So she wasn't ever on SSDI because she hadn't worked when she started qualifying for disability. There is a different disability support system for those who don't qualify for SSDI, and she was on that one. Unfortunately I don't remember what it was called.
There is nothing to be fuzzy about as I was just discussing Disability under Social Security for working Adults. In addition, I was just giving some information on one part of the COMPLEX issue considering disability under Social Security for those who have the time to work for the 10 years or 40 quarters and specifically addressing the "recent work test".
For workers who are much younger and get disabled before they even have the time in life to accrue the "duration of work", there are benefit available. If you are working under Social Security and for example get disabled at 23, you still can get benefit. In the world of the internet it is easy to research at the Social Security website. Here is the Social Security Publication that discusses these issues https://www.socialsecurity.gov/pubs/10029.pdf
There are whole different rules for disability of children under Social Security and those under 18. Our country is not going to abandon disabled children left without support or children born with severe disabilities. There are many disability support systems, as you have said. For reference here is the web page from Social Security on their benefits for Disabled Children:
SS has brought back statements. You can now go online and get your statement..the very same they used to mail out annually. You can view it, download it and print it out.
I missed getting my annual statements and now I can do it myself.
Here's the website to sign up..this is not a calculator but your actual statement with work history.
I just got my statement in the mail. I didn't sign up or anything, it just came as usual. I'm all for cutting costs and going to online-only for myself. But, strange as it may seem, there may be humans out there who don't have access or aren't computer savvy. I wonder why some do, some don't get statements.
I just got my statement in the mail. I didn't sign up or anything, it just came as usual. I'm all for cutting costs and going to online-only for myself. But, strange as it may seem, there may be humans out there who don't have access or aren't computer savvy. I wonder why some do, some don't get statements.
I read somewhere that Social Security reversed course about mailing statements, but only to people above a certain age, and I seem to remember that the age was 60. Therefore (even if I am wrong about the specific age) some people are getting statements in the U.S. Mail and some are not, which is confusing. But it has to do with an age cut-off.
I read somewhere that Social Security reversed course about mailing statements, but only to people above a certain age, and I seem to remember that the age was 60.
That's encouraging. Talk about feeling invisible....
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