Observant reader notices fluke in COLA payments
Q: The recent cost-of-living adjustment to our Social Security checks got me wondering about something. As you’ve always pointed out in your column, the checks come one month behind.
So, for example, the check we got in January is actually the payment for December. But the 2018 COLA increase showed up in that January check. So did we get the 2018 increase for one month of 2017? In other words, did we get the first 2018 increase one month early in our December 2017 benefit payment? And if so, why?
A: Bingo! You got it right. And surprise, surprise: Politics is the reason for what happens with the COLA payment.
The annual cost-of-living adjustment used to be paid properly. In other words, Social Security beneficiaries got their first increase for the year in the February check – which was the payment for January.
But about 30 or so years ago, seniors got up in arms because they (incorrectly) assumed Congress was delaying their COLA increase by a month. Someone should have splashed some cold water in their faces and explained to them that they were properly getting their first annual cost-of-living increase in the January check – paid to them in February.
Well, that’s not how politics works. Members of Congress, then and now, sure hate to upset senior citizens (i.e., the most reliable cohort of voters). And they couldn’t act quickly enough to appease them. So they changed the law to say that Social Security beneficiaries would get their annual cost-of-living adjustment one month early. Ever since then, senior citizens have gotten a once a year gift from Congress. And that is why the 2018 COLA is actually figured into the December 2017 benefit – payable in January.
Q: I am 64 and started getting my own Social Security about three months ago. I just learned my ex-wife, who owned her own realty company and made big bucks, has recently signed up for her Social Security. I have never remarried. Can I now suspend my Social Security and then apply for husband’s benefits on her record and save mine until 70?
A: No, you can’t do that. If you had waited until age 66 before applying for any Social Security benefits, then you could have applied for spousal benefits and, at the time, saved your own retirement benefits until age 70. This is the “file and restrict” maximizing strategy that is all the rage among baby boomers. (For other readers, you can only use that strategy if you turn 66 before January 2020.)
But you may not have totally missed the boat. Anyone who files for Social Security retirement benefits has up to 12 months to change his or her mind. So you still have a chance to jump on that maximizing ship if you want. What you would have to do is withdraw your current claim, repay all benefits received, and then reapply for spousal benefits at age 66.
Beginning at that point, you would get 50 percent of your ex-wife’s Social Security rate. Then at age 70, you would reapply for your own retirement benefits and get a 32 percent delayed retirement credit added to your monthly benefits.
But before doing all of that, I suggest you sit down with a calculator and run the numbers and decide if it is worth it.
Q: I turned 66 in January. When I filed for benefits online, I said I wanted my benefits to begin in February, knowing the January check comes in February. After reading one of your recent columns, I now realize I made a huge mistake. I should have said I want my benefits to begin in January (the month I turned 66), with my first check to come in February. So now I will be missing out on one Social Security check. I am losing sleep over this. What can I do?
A: I think you are worrying way too much about this. There is really nothing special about starting your benefits exactly at age 66. If they start the following month, it is no big deal. In fact, there is a small advantage to starting your benefits one month later. You will get a two-thirds of 1 percent “delayed retirement credit” added to your ongoing monthly benefits. So if I were you, I wouldn’t try to change anything. But if this is really bothering you, your only recourse would be to withdraw the claim you already filed and then file a whole new claim stating you want your benefits to begin in January.
Q: If I delay my widow’s benefits until age 70, do I get the same 32 percent bonus added to my check as a retiree does who waits that long to file?
A: No. That delayed retirement credit only applies to retirees. So there would be no advantage to delaying starting your widow’s benefits beyond age 66.
Q: I am thinking of taking my Social Security benefits when I turn 65 this July. I understand I will get reduced benefits. I am married to a younger man. He is only 58 and makes substantially more money that I do. But sadly, he has cancer and has been told he has 12 to 24 months to live. If he were to die, would I be messing up my potential widow’s benefits by taking my own benefits early?
A: Not really. Essentially, your widow’s benefit will be based on one thing only: your age when you start getting those benefits. If you are 66 or older when he dies, you will get your own benefit supplemented up to 100 percent of his full retirement rate. If he dies before you reach age 66, you will have a choice.
You can either switch to a reduced widow’s benefit right away. (The reduction would be about one half of 1 percent for each month you are under age 66.) Or you could continue to collect your reduced retirement check until age 66, when you could switch to a 100 percent widow’s benefit.
If you have a Social Security question, Tom Margenau has the answer. He retired in 2005 following 32 years with the Social Security Administration. Contact him at email@example.com.
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