Kate Lang: Hello, everyone, and welcome to today’s webinar presentation entitled Social Security Benefits for Older Adults Basics. I’m Kate Lang, Director of Federal Income Security on the Economic Security and Housing Team at Justice in Aging. And today I’m delighted to be joined by John S. Whitelaw, advocacy director at the Community Legal Aid Society in Delaware. Before we begin, I’m going to go over a few webinar logistics. Again, welcome to all participants. Everyone is on mute, but we welcome your participation in today’s presentation through the Q&A function in the Zoom control panel. Also available in the Zoom control panel is the CC button, which enables closed captioning. I’ll be watching the participant questions as they come in throughout the webinar, and we will respond to some high-level themes from the questions in the Q&A segment at the end of today’s presentation as time permits. Any questions unanswered during today’s webinar will be addressed via email following the presentation. You can also use the Q&A function to request technical assistance from our staff and they’ll do their best to assist you.
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So as I mentioned, I’m joined by John Whitelaw of the Community Legal Aid Society. The Community Legal Aid Society in Delaware is a statewide nonprofit law firm whose mission is to achieve equal justice through creative and persistent civil legal advocacy that protects Delawareans’ most fundamental rights and secures access to basic needs. CLASI is also Delaware’s designated protection and advocacy agency for individuals with disabilities. And as I mentioned, I’m with Justice in Aging, and we are a national organization that uses the power of law to fight senior poverty by securing access to affordable healthcare, economic security in the courts for older adults with limited resources. Since 1972, we’ve focused our efforts primarily on fighting for people who have been marginalized and excluded from justice such as women, people of color, LGBTQ+ individuals, and people with limited English proficiency.
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So thanks for sticking through all of that background information, and now I’m going to turn to our key lessons for today’s webinar to get started. So we’re going to go over calculations for social security retirement benefits, including reductions for claiming early and credits for delayed claiming. We’re going to talk about eligibility for spousal and widow or widower’s benefits, including for divorced spouses. We’ll cover the impact of the earnings test for those who continue to work after claiming retirement spousal or survivor benefits early before their full retirement age. We’re going to go over the interactions between early retirement and Social Security Disability benefits, and we’ll close out by going over some considerations around Medicare benefits.
So I’m going to start by doing a quick overview of Social Security benefits. So these benefits are covered by Title II of the Social Security Act. There’s also benefits administered by the Social Security Administration called Supplemental Security Income Benefits or SSI that’s covered by Title XVI of the Social Security Act. We did a webinar about those SSI benefits in May. So if you have questions about SSI, you should check out that SSI Basics webinar for May. But today we’re focusing on Title II benefits. These are compulsory social insurance benefits for workers, and they cover more than retirement. So sometimes you’ll see these Title II benefits abbreviated as RSDI benefits, and that stands for Retirement, Survivor and Disability Insurance. So you can see there’s more than retirement involved.
About 90% of workers pay into the Social Security system through their FICA payroll taxes, and FICA stands for Federal Insurance Contribution Act. So these are taxes that are taken out of people’s wages and 6.2% is paid by the employee and 6.2% is paid by the employer into the Social Security trust funds. There is a cap on how much earnings are taxed for Social Security benefits. So that maximum taxable earnings for 2026 is $184,500 per year. Above that amount are not subject to FICA taxes for Social Security benefits. That amount is adjusted for inflation annually. So this is the amount for 2026, but it’ll be more next year. There is no cap or no earnings limit on Medicare withholding the full amount of somebody’s wages are taxed for Medicare purposes. This is the rules for people who are working for somebody else as their employer. There are different rules for self-employed individuals. They are still expected to pay in FICA taxes into the social security system for their self-employment earnings, but those rules are a little bit different, so we’re not going to get into them today.
And here is a little information about people who are currently receiving Social Security benefits. So as of May 2026, this is the most recent month where data is available from the Social Security Administration. We know that there are currently 71 million people receiving Social Security benefits from the Social Security Administration each month. And here we have a pie chart that breaks out those beneficiaries. And you can see the largest piece of the pie at 76.5% are retired workers. So this is about 54 and a half million people receiving retirement benefits on their own work history. And this is why people usually think of retirement benefits when they hear social security benefits because that’s the vast majority of people receiving benefits from SSA are retired workers. But as I mentioned earlier, there are other types of Social Security benefits and these include disabled workers, people receiving Social Security Disability Insurance or SSDI benefits.
Those are about 10%, about seven million people receiving SSDI. That’s the orange slice of the pie. And then spouses and children of retired and disabled workers make up about 5.4% of beneficiaries. And then survivors of deceased workers receive social security benefits and those make up about 8.2% of beneficiaries. So now that I’ve done that overview, I’m going to hand it off to John to get us started talking about calculating retirement benefits.
John Whitelaw: Thank you, Kate. And even though I did go to law school to avoid doing math and numbers like that, we still have to do some, so bear with me as we do this. Social security is a lot about numbers and we’re going to talk a little bit about how getting benefits from social security is determined and how much you get. The first and most important thing to remember is social security is an insurance program. What does that mean? It means you pay premiums and those premiums are paid for your FICA taxes. But unlike car insurance where you make your first payment and you are insured, that is not true for social security status. You have to pay in for a certain amount of time before you become either fully insured, which is what you need for retirement, or, and we’ll get to that in a minute, a little bit less for potentially for disability.
What is fully insured status? 40 quarters of coverage. That term is a technical term that it’s hard to intuit what it means from just looking at it. And I will come back to the 20 out of 40 in a minute. What is a quarter of coverage? A quarter of coverage is determined by earnings. It’s not really determined by time at all. And it is a little under 1900 in a quarter for the year 2026. This number also goes up a small amount each year. So last year was a little lower. Next year will be a little bit higher. The time element is this: You can only earn four quarters in a calendar year. So in order to get 40 quarters, you have to work for at least 10 years. During the quarter or during the year, it is not by time. So once you’ve earned your first $7,600 less a couple of dollars, you have earned already your four quarters of coverage for the year. So within the year it’s dollars, but you can only earn four quarters per year.
There’s 20 out of the last 40 for disability. What that is, it’s a recency requirement in order to get disability. So that basically for someone who is older, you have to have worked five out of the last 10 years in order to be insured. So that if your work was a long time ago and you didn’t become disabled until your insurance lapses, then you’re not insured for disability anymore. That is called the date last insured, and if you’re working with people who are wondering if they’re insured for disability, this is a date that the local social security can give you if your client doesn’t already have it, and there’s a term for it, DLI, date last insured, and that’s the date you have to prove you were disabled before in order to get benefits.
And then on other little note at the bottom, and how I learned about this was I had a child client. So he had worked as an actor when he was a minor. He then acquired a disability, but you can be insured for disability purposes in as few as six quarters depending on how young you are when you become disabled. So particularly for younger people, people in their 20s and 30s, they do not have to have worked the full 40 quarters in order to be insured for disability. And that’s just something to keep in mind. Social security almost never gets this part wrong unless there’s an ID theft problem or a mistaken identity problem. They are very good about crediting you with the earnings you’ve got and telling you if you’re insured. So if you have clients who don’t know if they are insured for social security, that information can readily be obtained possibly from the national toll-free number, though I’m skeptical about their ability to do anything, and then definitely from the local offices. Okay, next slide please.
So that was the first part, are you insured? The second part is how much money can you get? And just like life insurance or other forms of insurance, the more you pay in premiums, the more you get, and in terms of premiums for social security, what is premiums? It’s your FICA taxes, which is on the first, this year, 186,000 or so of earnings. How much you get is an aggregate of your 35… Sometimes I stumble all over this, your 35 highest years of earnings, and it is the amount you get if you retire at full retirement age. Although Social Security is now trying to call this normal retirement age, but we’re not going to let what they call it determine in some ways what we want to call it. It’s always been called full retirement age, FRA, and that’s what we refer to it as.
FRA is essentially approaching 67. There are a few people, like one of my colleagues today is retiring and her full retirement age is 66 years and I think it’s 10 months. But as we get a little bit closer for everybody going forward, it’s going to be 67. And I think here’s a point to make. People keep asking about, “Oh, should I take my retirement at 65?” And we’re going to talk about 65 for Medicare. 65 has no special meaning for collecting Social Security retirement benefits. It is nothing more than a wait station between 62 to take early retirement and 70 if you want to take the delayed retirement credits and wait till the maximum that you would get the maximum benefits. 65 is just a little spot on the way. And so it does not have any particular meaning for the cash anymore. It’s still very important for Medicare, which we’ll talk about later, and that disconnect does sometimes trip people up because they don’t take their early retirement at 65, but they forget to deal with the Medicare aspect of it.
Okay. How much do you get? The maximum, which I don’t think we put… Oh, we did. The maximum you can get is 4,100 at FRA. You get a little bit more if you wait till you’re 70, you get less if you take it early. The maximum is 4,152, and that’s for everybody. The average, a little bit over $2,000. So we are not talking a huge amount. Although the data is very clear the majority of people who are taking retirement, that is either their entire retirement plan or the bulk of it. And so you can see that you’re not wealthy if this is what you depend upon. $2,000, 2,083 is basically 25,000 a year. That is not a huge amount to live on. And as I said, the maximum is 4,100. Next slide please.
Okay. When can you claim early retirement? 62. Very simple. 62. To claim early retirement on your own record, you have to be at least 62. So what happens if you claim it at 62? One is there is a permanent reduction if you claim before you hit full retirement age. So you know how we talked a little bit about your primary insured amount? And so if your primary insured amount would’ve been say 2,500, 2,800, 3,000 or whatever. If you take it early, there is a reduction and it is, and I’m going to say it, I’m going to stumble through it, but I’ll say it, five twelfths of 1% reduction per month before FRA. And it’s a straight line. So there aren’t little bumps on it. It’s a straight line between 62 and 67 for how much it is reduced.
It’s about 30%. So that’s a significant hit. There’s one little exception to that. If you take retirement early once and then a few months later you decide, “Oh, that was a mistake. I don’t want to do that.” You get a do-over if you have to pay the money back and there’s some other little hoops you have to jump through, but you only get one do-over. And my clients aren’t people who do do-overs with rare exceptions, but there is one opportunity to do a do-over. But the short version is you need to think really hard before you take early retirement. I will say there’s one group of people at least who has no choice, and I know this is not a presentation about SSI, but if you are getting SSI, which is the needs-based program for people who do not have enough of a work history to get Social Security Disability or only a very small amount, if you get SSI, particularly if you get SSI only, when you turn 62, you must apply for your early retirement even though there’s going to be a reduction.
And what happens if you don’t? They take your SSI away. Why? SSI is a payment of last resort, and if you’re eligible for anything else, they’re going to make you apply. So I have clients who say, “You mean I have to give up a chunk of my retirement to keep getting my SSI?” The answer is yes. You don’t really have a choice on that. Okay. There is a publication… Social Security does have some fairly client-friendly pieces. One of course is retirement age and benefit reduction. It talks through how much the reduction is depending on what age you take it. On the flip side, so we have full retirement at 67 and you get reduced if you take it early. If you delay, you get a bonus and it’s called delayed retirement credits. And that is just what it sounds like is you get paid extra money if you wait to claim after full retirement up to age 70. How much do you get? It’s about 8% a year up to 24%, assuming FRA is 67.
There is never, ever, ever, ever a reason to wait until after 70. Once you hit 70, there’s no bonus. There’s no bonus for waiting any longer. There’s no work restrictions. There is not an economic reason not to take your benefits at age 70. Although we have heard of clients, people who don’t take it because they don’t understand, but that is just leaving money on the table. So again, in terms of the big picture, you can retire as early as 62, but if you do, you get punished by having a smaller amount than your primary insured amount.
You can retire at retirement age and you get your full retirement amount, or you can delay it up till 70 and you get an extra 8% per year. And we will talk a little bit about what sort of thinking that people might engage in deciding what is the best option for them, whether they should take it now, whether they should take it later. And remember, it’s a slide. It’s not big jumps and little jumps. It’s very much of a straight line or an angle line between 62 and 67, and then between 67 and 70.
See, trust me, I am not the graph creator, but I do love having them. This gives you an example of what happens if you wait, and the short answer is the longer you wait, the more you get. And this is a slightly older one because it was when, for those folks who are a little bit older than people who are retiring now, this assumed full retirement age at 66. And as you can see, it’s pretty much almost a straight lineup. The longer you wait, the more you get per month. Next slide please.
Very important question here. It’s not really a legal question. We can crunch the numbers. We can tell you how much… I can’t, but it can be told to let you know how much you’re going to get. It is a very much of a personal decision based upon you, your family’s financial situation, your current health, and a topic no one wants to talk about, longevity expectations. To be blunt, what does that mean? How long you think you’re going to live. And then you need to ask some questions. Do you think you can meet your needs without social security benefits? Many of my clients cannot. So economically, if they’re not working, they really don’t have a choice. They have to take it. Do you have other sources of income in retirement? Do you have a 401K? Do you have savings? Do you have a nonprofit, a 403 payment? Is there another way for you to get by and not be working? Do you still want to work, is a valid consideration, particularly if you take early retirement when they punish you if you work too much.
And what do I say you anticipate living beyond average life expectancy? The reason to wait is in case your other money might run out, and then if you’ve waited, you’re going to have more social security. So it’s to hedge that for your other savings running out and then having a larger social security check. Again, if you’re married, it’s more complicated because it’s you and your spouse’s benefits that you need to look at. If there’s no longevity in your family… And again, it’s not just longevity because if you end up in a nursing home, all the money is going to have to go to the nursing home anyway. So it really is about some anticipation of living well if you have the choice. And if you’re living well, you may well want to delay it as long as you reasonably can.
That’s the advice for people who have other funds. But if you’re in a low-income family, this discussion doesn’t matter because if you don’t take early retirement, you got nothing to live on. So for many people, it is not an actual practical discussion to be able to have. When is the breakeven point you might ask for taking it early and waiting? Sometime late 70s, early 80s. Although that is obviously only one question that you need to talk about. Next slide please.
How do you run the numbers? There are some benefit calculators. They’re all put out by private companies. The AARP one last we checked is free. A couple of the other ones are not. They all have little glitches in them and they’re not the best about dealing with complicated situations where you have dependents also collecting, but people can play with these numbers. And I will tell you, the people who are good at doing the numbers are financial advisors. If your client is less impoverished and actually has to think about whether they want to do this, financial advisors can help them run the numbers. Although you want to be careful about what their interest is and what are they doing and what are they trying to sell you and what are they trying to get you to put your money in. But financial advisors historically have been pretty good about being able to help people run the numbers.
And I do think if it’s something that… If people really want to look crunch numbers, it’s just straight math and it is not particularly complicated, but it is detailed. And these are just some of the programs that help you run those numbers if you want, if you’re interested or if the people you are working with are interested in running those numbers. But as I said, for people that Kate and I work with for the most part and people serving those folks, the vast majority of people I work with take it when they’re eligible because that’s the only way they can live. Okay, next slide please.
So the first set of slides that we talked about was the wage earners’ money and their own benefits. And as Kate and I, we both think of it, you can’t really understand dependence or auxiliary benefits until you at least understand what it starts from, and everything starts from what the worker gets. So now we have that brief introduction about what the worker gets, how the worker becomes eligible, how much the worker gets and when they can claim their retirement. We are now going to talk about dependents, or if I could say it, auxiliaries, which are other people in your family who can collect on the worker’s account.
First one is spouses. That’s a fairly obvious one to talk about. There are some rules. It is not merely enough to be married. Generally speaking… And that should be nine months, I think I got that wrong. The marriage has to have lasted a certain amount. It might be 12. I can’t remember, but I have a bad feeling it’s nine. So you can’t just marry… To be blunt. You cannot marry someone on their deathbed generally just so that you can collect benefits as their spouse. You do generally have to be 62 or older, or caring for a child who is under 16 or disabled, including a disabled adult child.
What are the POMS? We’ve attached the POMS or cite to the POMS. The POMS, P-O-M-S, are Social Security’s internal rules. They are published. If you want to find them, the best way to do is Google SSA POMS, and then if you Google this number, they will pop right up. And we put in as many POMS sites as we go along you can see and that’s where you can actually read their very specific rules about the things we are talking about. The POMS are probably not user-friendly for clients, but advocates and people working with clients can usually make sense of most of them.
Okay. So we’ve got spouses… Oh, I know that. That is 12. I was thinking of widows, excuse me. So it is 12 months or more for spouses. You got too many things in your head at once. The next one is one that does get missed, and I’m going to give you an example of how it gets missed and why it gets missed. Divorced spouses. So long as the marriage lasted 10 years and that you are currently unmarried with a couple of exceptions. This is particularly relevant for people who have been divorced or just separated for many decades, and perhaps it was an abusive former spouse. And then that’s you can collect on a former spouse assuming you meet these rules. And the other key difference is the worker does not have to have applied and get benefits.
And so this is one that it’s always worth… If you are working with older folks who may not have much of their own work history, it’s worth asking, is there a current spouse from whom they might be estranged or separated or is there a former spouse who might be eligible, in which case you can collect on their account? And note, it does not affect the worker’s benefit. There’s no reduction in the worker’s benefit because of the amount a spouse is claiming. And so this is very much of a lesser known eligibility basis and people forget about the fact that they can take social security benefits on their former spouse, even though we’re now 30 years down the road. You haven’t seen the person for 15 or 20 years, but you were in fact married for 10 years. So it’s just something to keep an eye out to be. When clients are thinking about what they might be eligible, you want to ask about former marriages and when they lasted, how long they lasted.
And for those of you who are working with divorce attorneys, divorce attorneys need to know that unless there’s some emergency, there’s no good reason to get divorced at nine years and 11 months of marriage. We’ll get it to the 10 so that you might be eligible down the road for these benefits. It’s a 10-year minimum, and nine years, 11 months and two weeks does not cut it. It has to be 10. Okay. Next slide please.
How much does a spouse get? Basically half. You get half the worker’s PIA if you wait to FRA. If you’re married to the person, the worker must begin receiving their own benefits. So it’s not enough that you are eligible. The worker has to apply. So my wife and I, we are both about 65. We’re both eligible. Neither one of us has applied, so that means neither one of us can get spousal benefits because the other one hasn’t applied. In order to collect on a spouse, the spouse has to begin receiving their own benefits. That does not apply to divorced spouses, but you have to have been divorced for two years. And then again, this is always true and sometimes you don’t get to double dip. You don’t get yours plus your spouse’s, yours plus your ex-spouse’s. You get the bigger. Now, that doesn’t necessarily mean you don’t get two checks. The precise vagaries of who gets one check and who gets two checks have always been beyond me. The key though is the two checks together should add up to the greater amount that you’re entitled to.
So you might get two checks, but you don’t get a full amount on your account and the full amount on a spouse’s account. You get the greater of the two, even though it might come in two portions. And I think in part it depends on what you collect first and who collects what and when. I have never really paid much attention to whether they get one check or two checks because what count is how much they’re getting. I will say getting two checks unfortunately means there are more opportunities for SSA to make mistakes. So it is definitely true that it is more error-prone when they get two checks. And so that’s just something to keep an eye out for, but it is absolutely possible for people to get two checks, a little bit of one check on their own account and a little bit of the other check on a spouse’s account. Okay, next slide.
Widows and widowers. I assume at some point we will come up with a word that is gender-neutral, but for right now we do this widow and widowers. I’m probably just going to say widows because it’s easier. But when I say it, it’s without regard to the gender of the person. Again, spousal divorced spouse over age 60. Here’s another one that I think most fairly well-known, but I do see it occasionally is if you are a disabled spouse or ex-spouse over age 50 and a disability started within a certain amount of recent time of when the person died or when you were getting these other benefits, you can get what is called disabled widow’s benefits, and this is the one where you have to have nine months of marriage with a couple of exceptions for accidental death or death in the line of duty, or this is another one that gets missed, parents of a mutual child.
So I had a case that a private lawyer did, this was years ago. They went to an ALJ hearing. They lost because they haven’t been married for nine months. I acquired the case later on, was having a conversation with my client, and it turns out she and the deceased person had been together for 30 years and they had a 20-some-year-old kid, but they had only got married very close to his passing, and that had been completely missed in the entire process that they had a mutual child together. And so once we discussed this with SSA, they said, “Oh, yeah.” And so the appeals council took it, they reversed it and said, “Yeah, the nine-month rule doesn’t apply.” So that’s just something you want to make… When you’re looking at widows, if they haven’t been married for the nine months, you want to have a look and see if any of the exceptions apply.
And then again, we’ve got the 10-year marriage for the divorced surviving spouses where the spouse dies, which is another one that sometimes gets missed is your long ago divorced spouse, but to whom you were married for 10 years dies, you may be entitled to widow’s benefits on that person’s record, particularly if it’s more than the amount you’ve been earning. So divorced former spouses, that’s a good one to look for benefits for. Next slide. And then I think this is the last one I’m doing before I hand it back to Kate.
Again, so we’ve talked about who is a widow or a widower, and then the question is how much do they get? If you are a surviving spouse of FRA, if everyone didn’t start [inaudible 00:37:18] FRA, you basically get 100% of the deceased worker’s benefit amount. So husband and wife are living together, we’ll say the husband dies, the wife was getting spousal benefits. So I’ll just make up numbers. He was getting 1,500 and she was getting 750 on his account as a spouse. He dies. She can then get $1,000 a month in widow’s benefits. The problem there is two of them used to live on the 1,500 and now she’s living on a thousand. So there is going to be an income reduction because you don’t get to keep spouse’s and widow’s, you don’t get to keep your own and widow’s. Again, you only get the higher benefit. So it doesn’t completely replace the money.
There are reductions. Remember how we said you can collect widow’s at age 60 instead of age 65? There’s a reduction if you claim it at 60. Also, you don’t get Medicare until you’re 62 anyway, unless you’re disabled… I mean 65, excuse me, unless you’re a disabled widow. And again, if the deceased worker had taken early retirement, there’s a smaller amount. So there’s all… Again, you get punished if someone takes the benefits early. Oh, and on the widow side, you don’t get rewarded, you don’t get delayed retirement credits on the upside on the other side. You get punished if people took a benefit early, but you don’t get the extra delayed retirement credits.
Anyway. That’s a lot of numbers. I will say much as I complain about Social Security, and I do all the time, I complain about SSA and what they do, they don’t make a huge number of mistakes about the numbers because it’s all just putting money and numbers into a computer. I mean, yes, there may be occasionally data entry errors, but miscalculation while it does happen on occasion, is really quite rare. There’s not a daily problem that we see. It’s very unusual that the issue is they’re giving me the wrong amount. They’ve calculated the wrong amount of benefits. Now, they may have cut you off for all sorts of reasons that aren’t appropriate, they may have suspended you and done other bad things to you, but the problem usually isn’t they’re not giving me the right amount of underlying benefits. All right, with that, I’m going to pass this back to Kate.
Kate Lang: Thanks, John. So now I’m going to start by talking about the earnings test. We just have one slide on this and keep it brief, but this isn’t something that’s important to know about because people want to know, can I claim early and still work? And the answer is yes, but there is this earnings test. So for 2026, if you earn up to $24,480, there would be no impact on your benefits, but if you earn over that amount, your benefits are going to be reduced by $1 for every $2 you earn over that limit, and then there’s a different limit for the year where you’re turning your full retirement age, 67, and that’s up to $65,160 in that year.
And these amounts are, again, adjusted for inflation annually. So these amounts go up, these limits will be increased annually, but that’s what the amounts are for this year in 2026, and this is only imposed up to your full retirement age. So if you continue working after you reach your full retirement age, there’s no impact on your benefits. And sometimes people are upset because they think that these benefits that are withheld, this reduction of a dollar for every $2 earned over the limit are benefits that they’ve lost, but actually once you reach your full retirement age, your monthly benefit amount is increased or adjusted upward permanently to account for the months your benefits were withheld. But it can be hard to see that reduction before your full retirement age and how it’s made up for later. People just see the reduction before their full retirement age, and thought that they would be able to meet their needs and be able to afford all their expenses by continuing to work after receiving their benefits early, starting and claiming their benefits early and they are hit by this earnings test and see the benefits reduced.
And this applies to all types of benefits that we’ve covered so far. So retirement, spousal, survivor benefits, all of those different kinds of benefits. If the person claims them before their full retirement age and continues working, they’re going to be encountering this earnings test. Again, as I mentioned earlier, there are different rules for people who are self-employed in how these are calculated, but it still comes into play. There’s still an earnings test for people who have claimed their benefits before their full retirement age and are working as self-employment. And we’ve provided here a couple of links to information on the Social Security Administration’s website on receiving benefits while working, and then a calculator that shows how much you’re getting in benefits, how much you’re earning, and how much of those earnings might reduce your benefits that you’ve claimed early before your full retirement age.
And now I’m going to start talking about the interaction between SSDI, so that’s Social Security Disability Insurance, and early retirement benefits. We have this overlapping period for people in their 60s where they’re still eligible for SSDI, but they’re also eligible to receive retirement benefits early. So things to keep in mind in these situations for people in their 60s for Social Security Disability Insurance benefits, or SSDI, people are eligible for SSDI up to their full retirement age. So for most people going forward, that’s going to be 67. So you can see there’s several years where they would be eligible for early retirement, but also eligible for SSDI up until their full retirement age.
When you get SSDI, it’s based on your PIA, your primary insurance amount at an unreduced benefit amount. You do have to go through the disability determination process, which can be quite lengthy, can take months, sometimes even years if you need to go through the ALJ hearing process. So that can be an extended period where people are waiting to hear about their eligibility for SSDI from the Social Security Administration.
People who receive SSDI benefits are eligible for Medicare after a 24-month waiting period. There are exceptions for people receiving SSDI for early stage renal disease and ALS, but generally by and large, people have a 24-month waiting period for Medicare coverage. And if people on SSDI decide they want to try and return to work, they have to worry about substantial gainful activity or SGA limits, just as anybody on SSDI has to be concerned about working over those limits and losing their eligibility for benefits because of work. And also with SSDI, there are workers’ compensation offsets for SSDI benefits and there aren’t for retirement benefits.
So here are things to think about when thinking about trying to take early retirement. There’s no disability determination process. It’s based on your age. You go into SSA when you turn 62, you say, “I’m here. I want my early retirement. I’m 62.” They verify your age. The next month you’re getting your early retirement benefits. So it can be a very quick way to start getting benefits without having to go through the lengthy disability determination process. But as we’ve discussed earlier, there is a permanent benefit reduction that can be quite substantial for the rest of the time you’re receiving those retirement benefits. There’s no Medicare coverage until age 65. So even if you start claiming early at age 62, you’re going to have to wait until you turn 65 before you can start receiving Medicare coverage, and those early retirement benefits are subject to the earnings test I just described if you continue to work after claiming early.
So putting these two together, putting early retirement and SSDI together, you can apply for both at the same time, or you can apply for one and then the other later. You could apply for SSDI first and then early retirement later, or you would apply for early retirement first and then apply for SSDI later. There’s no constraint on the order or the timing, and for many people, early retirement can provide income while they’re waiting for the decision on their SSDI application going through that disability determination process, which can be lengthy. Usually the SSDI benefit amount is going to be higher than the early retirement amount, but it’s not going to be as high as if the person did not receive early retirement before receiving SSDI. So the disability benefits will be reduced by five-ninths of 1% for every month they received early retirement prior to when they were eligible for disability benefits. And we have a link to the section of the POMS that covers that reduction.
And I mentioned you can apply for both at the same time, but there is no application for both. There is a retirement application and a disability application. If you file form SSA-1, the retirement application, there is a question on that form, I think it’s question nine that says during the last 18 months, have you been unable to work because of illness, injuries, or conditions that have lasted or are expected to last at least 12 months or can be expected to result in death? If you want to apply for SSDI benefits, you need to check off yes on this retirement application question. And then it will ask you what date did you become unable to work? And that is when they will consider your alleged date of onset of your disability and we’ll go through the disability determination process for there that will trigger a disability application, but if you answer no to this question or if you read this question and you don’t understand what it means and you check off no, then they will not move forward with an application for disability benefits.
However, when you apply for SSDI when you’re over age 62, every time SSA will contact you to ask, “Do you want to file for early retirement?” So you need to have a conversation with a claimant who’s over age 62 who’s filing for SSDI about whether they want to also apply for early retirement because SSA is going to be contacting them, and if they’re not prepared for the question, they might say yes without understanding the implications. So you want to talk that through with them before filing the application for SSDI. And then I’m going to hand it back to John to talk about Medicare.
John Whitelaw: Before we do, there is a lot of confusion over this topic out in the community, even amongst lawyers who do disability work. There is a big perception that you cannot apply for both. There’s a big perception that you’re going to lose money even if there’s a full overlap between your disability and your early retirement, and just generally, there is a lack of understanding that you don’t have to choose one or the other at the front end. And that’s particularly important for people who… Well, it’s particularly important now generally for anyone who’s claiming disability to seriously think about taking early retirement while they’re waiting because of the large delays, and then to be perfectly blunt because SSA gets many disability decisions wrong. It’s one thing for someone to say, “Well, I have enough money that I can wait for six months to get my initial decision because I know they’re going to give me… Or eight months or nine months, but I know that I’m fairly obviously disabled and meet their rules, so they’re going to pay me and I’m going to get the money anyway.”
You cannot count on the disability decision to be correct. I mean, eventually you file appeals, you go to a hearing, two years later you win, but you waiting two, three years is very different from waiting six months. So I do think that there are many folks who are applying for disability over 62. And the one thing that I think… The one example that Kate didn’t mention, which I think is even harder to spot is you might apply before age 62, but because the case is taking so long, you now cross age 62, and my experience in the field is social security is not actually calling you then to say, “Oh, by the way, John, you’ve now turned 62. Do you want to now file for your early retirement?” And so I think for people who reach the retirement age in the middle of their case, there’s even less ways for them to understand that they can start collecting retirement.
So I just think, again, this is an area where there’s a lot of confusion, a lot of bad information, and it is an area where getting early retirement while you wait for a decision on your disability is a way to lessen the financial hardship for folks who have marginal amounts of income and savings. Okay, now we can talk a bit about Medicare. This is important… Next slide.
This is important because of what happens when it goes wrong. It used to be back 15 years ago whenever, when 65 was full retirement age, what happened was the vast majority of people took Medicare and Social Security at 65. Now that the cash and Medicare have been divorced, it has led to some unintended consequences which are difficult, and I’ll get to what those are. To get Medicare, you’re either eligible at 65, which we’ll come back to in a minute, or after a 24-month waiting period for disability, and you might also be eligible through a spouse’s work history. We’re not going to spend a lot of time talking about spousal Medicare, but it is also a possibility for spouses who themselves do not have a work record, but that they can get Medicare in the same way that they can get Social Security benefits through their spouse.
And I particularly know about this next little thing because as I said a little while ago, both my wife and I are turning 65, so we are in the middle of our initial enrollment period for Medicare, and it’s three calendar months before you turn 65, which for me is June, July and August. September, which is the month I turn 65, and then the three months following when I turn 65. That is your initial enrollment period for people who are turning 65. And that’s when if you decide to take Medicare at 65 because that’s when you’re eligible, you should enroll. And in the meantime, you will get just volume mail about trying to enroll in a Medicare Advantage plan, which is not the topic of today, but you can tell your 10X 65 because we get letters every day saying, “Please enroll in our lovely Medicare Advantage plan.” Okay, next slide.
There we go. What happens if you don’t apply? To understand what happens if you don’t apply, you need to understand what the different parts are. Part A is free for everyone who’s insured, which is everyone that we care about for purposes of this discussion. Part B is doctor visits and some doable medical equipment, and part D is prescription coverage. Part C is Medicare Advantage. It’s not really a separate part of Medicare. It’s a different way of getting it and we’re not going to talk about it today. The problem is if you do not take Medicare when you are eligible and you don’t meet one of the narrow exceptions, which we’ll come back to, you get punished. And the two punishments are quite severe, penalties and delayed enrollment. And both of those, particularly the delayed enrollment, it can be catastrophic if you declined Medicare and you don’t meet an exception.
So who might decline Medicare? Someone who’s turning 65 who doesn’t have health problems. What do I need to pay the $200 a month for in my Part B insurance? I’m 65. I see my doctor once a year for a checkup and I’m not sick. I don’t need Medicare. The problem is if you decline it… And I can’t remember if I put these on the next slide. Can we go to the next slide? I don’t remember if I put the penalties on it. No, so let’s go back. The penalty is 10% per year for each year that you are out. So instead of 200 bucks a month, if you’re out one year, it’s 210; if you’re out two years, it’s 220; and so on and so forth, and that adds up pretty quickly. And then the other penalty is if you don’t take it when you’re first eligible, you can only enroll during the general enrollment period, which is January to March.
Why do they do this? Because they don’t want people not to pay the premium even if they’re not spending the doctor bills, because that’s how insurance works. You want as many people in the pool, especially people who are not particularly needy of the services because that money helps keep the system afloat. What is the big narrow exception, which is why both my wife and I do not need to take it is if you have creditable insurance through either your employment or your spouse’s employment. So basically if you’ve got large group healthcare coverage through your employer or you’re on a spouse’s plan through their employer, so long as the person is working, then you meet this narrow exception that you don’t have to take it. Unless you really know what you are talking about, you shouldn’t be skipping Medicare when you’re eligible without making sure that you’re skipping it because you have creditable coverage.
I have seen too many really bad ugly cases with people who did not take it when they were eligible or declined it because they didn’t think they could pay the Part B premiums, and then when it turns out they needed it, they couldn’t get it. And remember also you can’t get straight Medicaid if you’re eligible for Medicare. You can’t get marketplace coverage. There’s not a good option if you don’t take Medicare and don’t have other creditable coverage. So it’s one of these things that you really need to encourage people not to decline their Medicare when they are first eligible because the consequences of getting thereon are just too high if you don’t know what you’re doing and it’s just not worth it.
The other thing that I will just mention since we have a little bit of time here about Medicare Part B, which is a fun thing. So the Medicare Part B premium is about $200 a month. If you are low income and there are specific income requirements, the state will pay that premium through your Medicaid program and it’s called the buy-in or cost sharing, and it is a Medicaid program that pays for your Medicare costs so that for most of my clients, the state is paying their $200 a month because they meet the income requirements to get the state to pay for it.
If you are in the vast majority of people, you pay $200 a month. And then if you have much higher incomes, you have to pay an extra premium. So that people with higher incomes pay more than the $200 per month. But again… And the same as Part B, there are Part D penalties if you don’t take it, which really affect you if you didn’t have credible coverage. I cannot stress enough because of the catastrophic consequences of getting it wrong, you just need to be really careful about declining Medicare.
I think we’ve basically come to the end of, I think… Ah, okay, this one. This is where the rules are. I will tell you the SSA publications are great and there’s lots of things. If you Google some of these topics, read the SSA publications that are meant for the public. I mean, they’re not especially public-friendly, but they’re not bad and they do cover a wealth of materials. The POMS, we’ve put in a few citations there.
Unless you’re a lawyer or a non-lawyer doing this work day in and day out, you do not need to read the code of federal regulations. It’s too weedy, not helpful. Don’t waste your time. The POMS, yes, because the social security field offices, that’s what they use every day. And then the other thing you absolutely, and Kate won’t have to say this, I am going to say this: The wealth of materials that is on the Justice in Aging website is simply unsurpassed for this topic and a bunch of other topics involving SSI and social security and other matters, but especially in the SSI and social security space.
If you are doing this work, you need to be looking at their materials because they are incredibly helpful and they’re great reference materials to print up and have. There’s a PowerPoint usually, there’s a book. There’s all sorts of just really useful detailed information so that you can have it for your little library and can go back and consult it. And that’s all I have and I’m going to give it back to Kate and I think we probably will do some… I’m assuming we might do a few questions.
Kate Lang: Yes, we have time for some questions here. We have, I think, almost 150 questions in the Q&A.
John Whitelaw: Which we will not do 150 questions.
Kate Lang: We’re not going to be answering those live, but there are a few that have come in that I think it would be helpful for us to go over now at the end since we have some time, and the first one I’m going to throw to you, John, is a question, can a surviving spouse delay collecting their own retirement benefits until 70 but collect their widow’s benefits until they reach 70?
John Whitelaw: The answer is no. Oh, no, widow’s benefits? Sorry, sorry. Widows, yes. Yes. It is the one area where you can still play the game, and I want to contrast it with you cannot do that with spouse’s benefits. Kate and I are married. I’m sorry, Kate, just for purposes of right now, Kate and I are married. We’re both eligible. I cannot claim as Kate’s spouse and let mine sit. If you’re married and alive, an application for one is deemed to be an application for the other and you get the higher one, too bad. On the other hand on widow’s, you absolutely can play the game. Yu can claim your widow’s benefits and then delay your own. You’re still going to be subject to the earnings test. So you want to be careful you’re not making too much money if you’re claiming your widow’s benefits. But yes, you can in fact do that planning game, claim your widow’s benefits and then let your own accumulate.
Or if it’s the other way, you can do it the other way too, right? You can crunch the numbers and see which makes more sense. And yes, you can plan. And when I say play the game, I do not mean in the play sense. I mean, it’s sort of the numbers game and it is one of the rare planning choices that is left, except for the fact that I fumbled it right out of the gate. But other than that, the answer is absolutely yes, you can do that.
Kate Lang: And how would you advise folks who want to see how much they would get as spouse or in spousal or ex-spouse benefits? If you create a My Social Security account, you can go in there and see what your own benefit amounts would be, but you can’t see how much your benefits would be as a spouse or an ex-spouse. So how do you suggest people find out those amounts?
John Whitelaw: So you have to know the spouse’s earnings. It’s all tethered off the spouse’s earnings. So I think one way you can do… I certainly think you can ask social security, they’ll tell you. So if you have a cooperative spouse, you can do it that way. So that’s the easy way. And again, Kate and I are married. We love each other dearly. Kate can tell me what her primary insured amount is and then I can calculate the spousal off that. If they are deceased and you don’t have it or they’re separated or they just don’t talk to each other, unless you know… It’s based upon your spousal income.
I do think you can ask Social Security and they will tell you. I think they will tell you what your spouse’s benefit would be if you’re eligible. But again, you probably even have to go in. I’m not sure they would tell you over the phone. Probably worth trying, but I wouldn’t count my breath on that one. But I think you have to ask SSA for what your spousal amount would be because they’re not going to tell you all sorts of information about your spouse, but I do think they will tell you… I’m pretty sure they’ll tell you your spousal amount. But yeah, I think there’s no substitute for asking them for that. Again, unless of course you’re on speaking terms with your spouse and then you can share the information with them.
Kate Lang: And then we did have some questions about the calculating the PIA, the primary insurance amount, and about those 35 years of earnings, and people were asking, are they consecutive or can they be in different time periods? How does SSA go about using those 35 years to calculate the PIA?
John Whitelaw: You’re going to tell me when I mess this up, Kate, but my understanding is they look at your annual earnings ever since you started earning and they just tot up the 35 highest. So if you have a gap, you have a gap. The reason a gap hurts you is it may be hard to get the 35. So if you’re 55 and you have missed 10 years in the middle somewhere, you may have a hard time getting the 35, but it’s not consecutive. There’s no, oh, they’ve got to be two together or three together. They literally look at the 35 highest years. A couple of economic problems, the more recent your missing years are, the worse that’s going to be because usually throughout people’s careers, they often earn more as they go up in the scale. But yeah, there’s no particular test. We look at your work history.
I mean, I started having a part-time job when I was 15. I’m now 65, so I’ve got what, 50 years’ of earnings. But obviously some of them I was in college, so I had zero or nothing though, but they literally look at your top 35. I will say one or two bad years not really going to mess it up. But again, they just look at the top 35 and then they crunch them. But there’s not much you can do about it. Other than if you can keep working and making more money so that the lower ones drop off. I mean, I do think where you can do something about it is if your 35th year is zero and you can make 180,000 the next year, that’s going to have an impact as opposed to 180,000 versus 160,000 is not going to have an impact.
But yes, it’s 35 calendar years over your entire working history. It’s also a reason that working under the table can be bad because what are you not getting? Credit, credit, credit. It’s also a reason why if you are self-employed, it’s not always necessarily the best long-term strategy to minimize your taxable income through deductions because your taxable income when… Again, this is fairly sophisticated, but if you are reducing your taxable income, you are also reducing the amount of income you get credit for with social security. So there is a downside to having a low taxable income. It’s that it then is also lowering what the accountable earnings are for retirement. Again, most people, that may not matter, but for working under the table, it certainly matters.
Kate Lang: Or even gig workers, gig workers who aren’t paying FICA taxes on their earnings, that’s going to show up as a zero on their-
John Whitelaw: Well, so they need to be paying the double self-employment tax and reporting it all. So yeah, there are downsides to having low taxable earnings, and that is that when it comes to calculate your social security at the back end, you’re not going to get credit for it if you don’t pay taxes on it. Yeah.
Kate Lang: And also, this is why I think women who take time out of the workforce to care for their children are going to have a harder time having those 35 years of earnings. So there might be years of zero earnings when SSA goes to calculate their PIA out of their 35 years, they’re going to be years of zero because they were out of the workforce.
John Whitelaw: 100%. One of my colleagues just recently retired. She’d been basically a career legal aid attorney, but she took 15 years off in the middle to raise her family, and so her social security retirement is relatively low because she’s got this big gap that would’ve been in prime earning years where she earned nothing because she don’t get compensated for staying home and running the family and looking after the kids and all of that. So yeah, that’s exactly what Kate said is true. So being a stay-at-home parent and not working does have significant economic consequences, not just in those years, but at the backend when you’re looking at your social security, that’s for sure.
Kate Lang: Okay. I’m just looking through the questions here to see if there’s any ones we can-
John Whitelaw: I’ll do one while you’re asking. Is the maximum taxable income for social security higher for couples? No. Social security is not done… It is not done by couples. It’s each individual worker. So again, Kate and I get married a lot at these trainings, so it’s not going to be our combined income that we file for tax purposes that calculates the FICA that we pay. It’s our own earnings that are looked at to determine whether we’ve each met the threshold. So if Kate earns 300,000, I earn 100,000, Kate stops paying at 186 and she’s done the max and I’m still way under the max because I only do 100. They don’t put our earnings together. Social security taxes and payments are all individual.
Kate Lang: Well, and I just found a correction that somebody helpfully provided that I made a mistake for ESRD. It’s end-stage renal disease, not early stage renal disease. So thank you for catching that error. We will fix the slides there. So for the exception for the 24-month waiting period for Medicare, it’s end-stage renal disease.
John Whitelaw: And I’ll just add, I will tell you who the experts are on ESRD Medicare, it is the social workers at the dialysis centers. There is nobody who knows more about ESRD Medicare than social workers at dialysis centers, and why are they so good at it? Because it’s how the dialysis centers get paid and they live, eat, and breathe ESRD Medicare, which is different from regular Medicare, and I will say it’s not an area that legal aid lawyers really know much about, although I’ve dabbled around in it. It is dialysis social workers and transplant social workers that you want to talk to about that.
Kate Lang: And here’s one last Medicare question that we’ll end with, this person asks, “You say no Medicare coverage until age 65, so no Medicare, but you can get Medicare Advantage. Is that correct?”
John Whitelaw: No, Medicare Advantage is just the form. You can only get Medicare Advantage if you’re eligible for Medicare. Again, remember, there’s Medicare for people with disabilities after 24 months. So it’s not just 65. So it’s really two. 65 or been on disability, and most of those folks have to be on disability for 24 months except for the two exceptions that we talked about. Medicare Advantage is just the way you get your Medicare. It is a delivery service. Traditionally, Medicare is fee-for-service without red, white and blue card, Medicare Advantage is just a way of getting your Medicare through either an HMO or an MCO, which it’s managed care. It is a mechanism that people can choose to get Medicare if they want. Although I will say a lot of us are deeply skeptical of Medicare Advantage and whether it for most people makes sense. And we could do a whole session on that. We’re not doing that today.
Kate Lang: That’s a separate webinar.
John Whitelaw: That’s a whole separate webinar and you’ll see us jumping up and down about that one. But no, Medicare Advantage doesn’t get your Medicare any earlier. It is just a way of getting your Medicare that you are otherwise eligible for.
Kate Lang: So that’s it for today. We’re out of time. So thank you again to everyone for joining us today and thank you to John for presenting with me. As a reminder, any questions that were submitted that went unanswered today will be followed up on via email and feel free to reach out to John and me with any additional questions if any come up for you later. And don’t forget to complete the post-webinar survey. Your feedback on these programs very important to us. So thanks very much everybody and have a great rest of your day.