Demo version (2004) - Social Security Law > Topic 6 > E. Problems
To begin => [Audio]

Duration of audio: 8 minutes   

Working through some illustrative and problem situations


1. About to be eligible

A and B, husband and wife, are 61 and 58, respectively. A, who will be 62 in May, just received his "Social Security Statement." It detailed his earnings record up to but not including the year 2003, reported that his retirement benefit would be "about $1,213 a month" "if you stop working at age 62" but "about $1,600 a month" "if you continue working until your full retirement age (65 and 10 months)." It also gave figures for disablity and survivors benefits and said that "total family benefits cannot be more than $2,758." About spouse benefits for B it said only "If you get retirement or disablity benefits, your spouse and children may also qualify for benefits."

B's statement was similar with much lower numbers and a different "full retirement age." Hers stated that she could expect about $750 a month at her full retirement age of 66.

The couple have some questions about how their benefits fit together.

They have heard that a wife is entitled to 1/2 her husband's benefit if that is larger than her own retirement benefit. They ask: Does that mean that B can collect a wife benefit of approximately $800 a month if they both begin benefits at A's "full retirement age"?
Yes
No
Would it be possible, they wonder, for B to commence her wife benefits at age 62 and hold off applying for retirement benefits on her own account until she reaches her "full retirement age"?
Yes
No
Finally, the couple want to know whether B's continuing to work at her full salary (currently $35,000 / year) will have any effect on A's being able to draw his full Social Security benefit. Will it?
Yes
No

2. Phased retirement

A's employer has a program of "phased retirement" that is designed to encourage employees to stop working during their sixties. This program would allow A to work half-time at slightly better than half salary as soon as he turns 62, with full health benefits and full pension contribution for up to five years. In return A would have to commit up front to retiring at the end of the five year period.

A's current salary is approximately $72,000. Under the phased retirement scheme he would receive $40,000. A wants to know: "Can I take 'phased retirement' at the earliest possible date and start collecting Social Security right away, perhaps at some reduced amount?"
Yes
No
Alternatively, A wonders, is there some later point at which he might begin phased retirement and be able to collect full Social Security?
Yes
No
A is concerned that the years at reduced salary may drag down his average earnings and therefore his Social Security benefit since he understands that his benefit amount is somehow calculated from an average. Might they have that effect?
Yes
No

3. Looking ahead from mid-fifties

C is 55. In three years, she will qualify to retire with full pension from her current job. She has heard that the Social Security retirement age is no longer sixty-five but that it will be sixty-six for her.

C asks: "Does that I mean I cannot begin benefits at age 62 like my older co-workers now can?"
Yes
No
C's follow-up question is: "If I start Social Security at the earliest possible point am I right that the monthly amount will be 80% of what I would receive if I waited until age sixty-six?"
Yes
No

4. Public employment pensions

The Social Security statements received by A and B (the couple described in problem 1 above) contained one qualification that caught their attention. The language in question noted that actual benefits might be different from the estimates in the statement for several reasons, one being that "a pension for work not covered by Social Security ... may affect your benefit amount." B is a retired public school teacher, now working in the private sector. The twenty-five year period she was working as a teacher has very small earnings figures in her statement. She worked at a variety of summer jobs to augment her teacher's salary and it seems clear to the two of them that the statement contains the income from these jobs and not from her teaching. B is entitled to a teacher's pension, which she has not yet begun to draw.

A and B inquire:

Is B's teacher's pension likely to:
Increase her own Social Security retirement benefit
Reduce her Social Security benefit below the estimate set out in her statement
Have no effect on her retirement benefit
They also want to know: Will B's teacher's pension have any effect on the Social Security benefits she may receive on A's account, including a potential survivor's benefit?
Yes
No