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Reduction of Benefit Rate

Excerpted from "Social Security Handbook". See the up-to-date, official Social Security Handbook at ssa.gov.

0723

723. Reduction of Benefit Rate

723.1 When are benefit rates reduced?

Your benefit rate is reduced if you become entitled to the following benefits at the ages shown:

  1. Retirement insurance benefits at age 62 through the month before you reach Full Retirement Age (FRA);

  2. Husband's or wife's insurance benefits at age 62 through the month before you reach FRA, provided that you do not have in care a child of the worker either under age 18 or disabled and entitled to benefits;

  3. Widow(er)'s insurance benefits beginning at any time from age 50 through the month before you reach FRA;

  4. Widow(er)'s insurance benefits after the deceased worker has received a retirement insurance benefit reduced for age;

  5. Disability insurance benefits received after a reduced retirement insurance benefit; or

  6. Retirement or disability insurance benefits received after a reduced widow(er)'s insurance benefit. This applies only to workers born before 1928.

723.2 How is a reduction in benefits made?

The reduction is made by first determining your full benefit. This benefit rate is then reduced by a specified percentage for each month you are entitled before your FRA. The reduced rate is payable as of the first month of your entitlement to benefits. For retirement and spouse's benefits, you must be at least age 62 throughout the month before entitlement to reduced benefits begins.

These reduced benefits continue at a reduced rate even after FRA. The reduced disability insurance benefit is converted at FRA to a reduced retirement insurance benefit.

723.3 When is the reduced benefit rate recomputed?

The reduced benefit rate may be recomputed to include additional earnings. An increase in your benefits, either resulting from additional earnings or from a cost-of-living increase, is reduced in proportion to the reduction in effect in the first month your benefits were elected. A benefit rate may also be increased to give you credit for certain months before FRA in which the reduced benefit was not paid. (See §728.)

723.4 How will an increase in the retirement age affect reduced benefits?

Beginning with the year 2000 (workers and spouses born 1938 or later, widow(er)s born 1940 or later), the retirement age increases gradually from age 65 until it reaches age 67 in the year 2022. This increase affects the amount of the reduction for persons who begin receiving reduced benefits.

An additional reduction applies to primary insurance benefits and spouse's benefits based on the additional reduction period. The modification for widow(er)'s benefits is slightly different. The reduction amount at age 60 remains at 28 1/2 percent of the full benefit even as retirement age increases.

723.5 What is the full retirement age for workers and spouses born after 1937?

The following chart contains the full retirement age for workers and spouses born after 1937:


Full Retirement Age

If your birth date is...

Then your full retirement age is...

1/2/38-1/1/39

65 years and 2 months

1/2/39-1/1/40

65 years and 4 months

1/2/40-1/1/41

65 years and 6 months

1/2/41-1/1/42

65 years and 8 months

1/2/42-1/1/43

65 years and 10 months

1/2/43-1/1/55

66 years

1/2/55-1/1/56

66 years and 2 months

1/2/56-1/1/57

66 years and 4 months

1/2/57-1/1/58

66 years and 6 months

1/2/58-1/1/59

66 years and 8 months

1/2/59-1/1/60

66 years and 10 months

1/2/60 and later

67 years

723.6 What is the full retirement age for widow(er)s born after 1939?

The following chart contains the full retirement age for widow(er)s born after 1939:


Full Retirement Age

If your birth date is...

Then your full retirement age is...

1/2/40-1/1/41

65 years and 2 months

1/2/41-1/1/42

65 years and 4 months

1/2/42-1/1/43

65 years and 6 months

1/2/43-1/1/44

65 years and 8 months

1/2/44-1/1/45

65 years and 10 months

1/2/45-1/1/57

66 years

1/2/57-1/1/58

66 years and 2 months

1/2/58-1/1/59

66 years and 4 months

1/2/59-1/1/60

66 years and 6 months

1/2/60-1/1/61

66 years and 8 months

1/2/61-1/1/62

66 years and 10 months

1/2/62 and later

67 years

Last Revised: Sep. 22, 2003


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There are 12 Comments

how can you find out what your ex spouse would earn for social security and whos is greater

If you are eligible for benefits on more than one work record, such as your own and your ex-spouse's, you generally receive the higher benefit amount. When you apply for benefits, the Social Security representative can determine which record will give you the higher benefit.

See here for details : http://www.ssa.gov/pubs/10127.html

I have a disabled child and I was receiving a SSI check for him. When I was laid off and on unemployment the amount went up. After a month I started receiving a benefit check from my the employer that laid me off. The check was called an unemployment supplement check it was a benefit check not a wage check. Taxes, social security, medicare etc. were not taken out. The amount of the SSI was reduced when I received these Unemployment Supplement checks from my old employer. The Social Security office now says I owe them money because of these Unemployment supplement checks. Does it matter if it is wages or if it is a benefit check? They were really nasty and rude on the phone. SSI is saying they didn't know about the supplement checks. I asked why the amount was reduced in half when I started receiving the supplement checks and they weren't sure. They say I owe and I can appeal if I want to.

Yes, if you receive SSI payments and you have income other than your SSI, you must tell the SSA about it. And you should tell them if the amount of your other income increases, decreases, or if the income stops. Usually, changes in your income in a month will affect your SSI payment two months later.

http://www.ssa.gov/pubs/11011.html#8b

Here is information about the SSI appeals process :

http://www.ssa.gov/ssi/text-appeals-ussi.htm

I am 66yrs old receive ssi just started to receive annuity in april do I have to report this

If you're receiving SSI (not retirement benefits), then you must report if there is a change in your income or the income of family members.

Annuities, pensions from any government or private source, workers' compensation, unemployment insurance benefits, black lung benefits and Social Security benefits are counted as income.

http://www.ssa.gov/pubs/11011.html#part3

If I begin receiving benefits at 62, will the amount increase when I reach 66?

The question is a little vague, but I'll try to answer. I assume you're talking about Social Security retirement benefits.

In general, Social Security retirement benefits increase each year under a Cost of Living Adjustment (COLA). The COLA is in-line with annual inflation (CPI-W). However, note there were now COLA increases in 2010 nor 2011 due to low inflation. COLAs have ranged from zero to 5.8 percent since 2000.

http://www.ssa.gov/oact/COLA/colaseries.html

However, if you delay initiation of your retirement benefit, your monthly benefit will increase by about 6 percent for each year of delay. For example, if you were born between 1943 and 1954, and you begin benefits at age 62, your benefit will only be 75 percent of what it would be if you waited until age 66 (full retirement age).

http://www.socialsecurity.gov/retirement/1943.html

if a person is working during the year that the person will reach the full retirement age, does the ceiling on earned income during that whole year fall under the full retirement age ceiling? Example, can a person earn $33,600 ($2800/mo) for the whole calendar year and still receive full social security benefits for the entire calendar year, even though the birthday (which will make the person full retirement age) of the indivdual falls in August of that calendar year?

I started receiving my SS retirement benefits at age 62. And I also started working again,, the same year I started receiving my SS retirement. What is the maximun I can earn, and it will not reduce my monthly check amount. I have been told by outside people, amonts for 13K to 15K. What is the actual amount>

If you are younger than full retirement age during all of 2013, the SSA will deduct $1 from your benefits for each $2 you earned above $15,120. These rules apply until you reach your full retirement age of 66.

There is a special rule that applies to earnings for one year, usually the first year of retirement. Under this rule, you can get a full Social Security check for any whole month you are retired, regardless of your yearly earnings.

Note that these deductions in benefits aren't lost. If some of your retirement benefits are withheld because of your earnings, your benefits will be increased starting at your full retirement age to take into account those months in which benefits were withheld.

http://www.ssa.gov/pubs/10069.html


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