I've been either working for the Social Security Administration or writing a column about Social Security issues for about 40 years now. And I would have bet money that in all that time, I've been asked every question in the book. In fact, I don't recall getting a question in the past 15 years or so that I haven't been asked a dozen, if not hundreds, of times before. And now this week, I've had two questions emailed to me that I've never been asked in my entire career! Will wonders never cease? The first deals with the relationship between disability and retirement benefits.
Before I answer the question, let me give some background information. If you are getting Social Security disability benefits, and if you are still getting those benefits as you start to push normal retirement age, then at age 66 you are automatically switched to the retirement program. The changeover is generally transparent to you because the benefit amount remains the same. Or, to put that another way, a Social Security disability benefit pays the same rate as your full age 66 retirement benefit. So when you reach age 66, nothing really changes — moneywise. But on Social Security's books, you are switched from the disability ledgers to the retirement ledgers. That means from age 66 on, your benefits are paid from the retirement trust fund and not the disability trust fund.
So now, here is the first question I was asked that I've never been asked before.
Q. I am 65 years old and have been getting Social Security disability benefits for about five years now. I've been told that I will be switched to the Social Security retirement program at age 66. But can I delay that switchover until age 70 and then get the 32 percent "delayed retirement bonus" you have written about in past columns?
A. If you are asking — "Can I continue receiving disability benefits until age 70 and then switch to retirement benefits with a 32 percent bonus?" — the answer is: no.
But if you are asking — "Can I stop my disability benefits at age 66 and delay the switchover to retirement benefits until age 70?" — the answer is: I guess you can. I can't think of any rule that would prevent you from doing this. However, I am going to suggest that you think things through first.
I've written columns lately about folks who are "gaming the system," playing around with their Social Security benefits trying to get the maximum return on their "investment." Most of these retirees are delaying taking benefits as long as possible. They will generally win that Social Security game if they live until their mid to late 80s. Personally, I would never do it. I'd rather spend a little bit smaller Social Security check while I'm still young enough to enjoy it — as opposed to spending a bigger check once I'm in the old folks home!
And you are playing against even bigger odds. After all, you are getting Social Security disability benefits presumably because you have some pretty bad health problems. So do you really think you are going to live long enough beyond age 70 to come out ahead by giving up all those Social Security checks you essentially want to throw away between age 66 and 70?
It's your money, and you can do what you want with it. But I think you are trying to squeeze too much blood out of Social Security's turnip!
The second question deals with the retirement program. It comes from a person who forgot that he signed up for Social Security!
Q. I applied for Social Security when I was 62 years old. But almost immediately afterwards, I decided to return to work. I went back to my Social Security office, and they suspended my benefits. At the time, we figured it would be temporary, because I thought I might stop working shortly thereafter. Long story short: I just kept working and frankly forgot that I had signed up for Social Security. Now, I'm about to turn 66. I want to start up my Social Security benefits again. How do I do that? And am I stuck with the early retirement reduction I took at age 62?
A. Forgot you filed for Social Security, huh! That sure is one I've never heard before. But I've got good news for you. And then I have even better news for you.
The good news is that starting up your benefits again will be a piece of cake. You simply need to contact Social Security and some representative there will push a few buttons and your monthly checks will soon be on the way.
The better news is that you will NOT be stuck with the reduction you took by initially filing for Social Security at age 62. Even though your age 62 benefit rate came with a 25 percent early retirement reduction, there is a rule that says when you reach age 66, your benefit is refigured to give you credit for any months between age 62 and 66 where you didn't get a Social Security check.
In your case, all 48 Social Security checks you normally would have received between age 62 and 66 were held back. So you get credit for 48 months' worth of reduction — meaning your benefit will be reset at your age 66 full retirement rate.
I'd suggest you sit down with a representative at your local Social Security office to go over all of this and make sure you get the full readjustment of your monthly benefits.