About two months ago, I got a question from a reader that I had never received before. (And believe me, that is unusual. I thought there wasn’t a single Social Security-related question I haven’t been asked a hundred times before.)
The unique question had to do with how to answer a specific question on the online application form for Social Security retirement benefits. I’m paraphrasing, but it essentially asks this: “What month do you want your Social Security payments to start?”
At first glance, the question seems pretty straightforward. For example, the person who sent me that question wanted to wait until age 66 to start her Social Security benefits. And she was turning 66 in November 2017. She asked me if she should answer the “when to start” question by indicating November. Or, she wondered, since she knew that checks were paid one month behind, should the answer be December?
I told her the correct answer was November and that she shouldn’t worry about when the physical payment was actually sent . She should only worry about her first month of entitlement to full retirement age benefits, and again, that would be November.
Because no one had ever asked me about that before, I really thought she was overanalyzing the question. Since that first time a few months ago, I have been asked versions of the same question about 20 times!
So now I’m wondering if maybe the administration recently changed the way it asks that question on its online retirement questionnaire. I don’t know how it was worded in the past. But I can now see how the “When do you want your benefits to begin?” question can be confusing. Perhaps they could include something like: “For example, if you want your benefits to begin at age 66, and you are 66 in March, then your answer should be March.”
Another reader recently asked me about the same issue. She wanted to start her Social Security at age 66. She was turning 66 in January 2018. She wanted to know if she should answer by indicating January (when she turns 66) or February (when her first payment would be due). Again, the answer is January.
But then she had a couple follow-up inquiries about other questions on the retirement application form that confused her. They asked her to indicate how much money she thought she would make in 2018. And then they further asked her if she planned to retire at some time during the year — and if so, when?
She told me she wasn’t sure if or when she would retire . And because of that, she had no idea how much money she would make during the year. She told me that she was concerned that if she answered the question incorrectly, she might get in trouble or might get her benefits paid incorrectly.
I told her not to worry. Rules say that once you reach 66, your earnings are no longer a factor in determining your eligibility for benefits. In other words, she could answer that question by saying she planned to work all year and thought she’d make a million dollars per month. Or she could answer the question by saying she was already retired and wouldn’t make a dime in 2018. Either way, because she is 66 in January, she would be due her full retirement age benefit amount for every month of the year.
Having told her all that, I still suggested she just answer the questions with her best guess . But my main point was that she shouldn’t worry about her answers.
Question: I am turning 63 in March 2018. I plan to retire the end of that month, and I want my Social Security to start in April. The online application form is asking me about my anticipated earnings in 2018. It also asks how much I will make per month. I work as an airline pilot and I make about $20,000 per month. So I will earn approximately $60,000 from January through March. In addition, after I retire, I will get another $60,000 paid to me over a three-month period. This money includes unused sick and vacation pay, and a small severance payout. I’m not sure how to answer the questions.
Answer: I purposely put your question behind the last one to help explain the reasons why the application asks about your anticipated earnings. I told the person who sent the first email that the questions were essentially meaningless. And in her case, they were. But in your situation, your answers to the questions are crucial. Here is why.
The law says if you are a beneficiary under age 66, you must keep your earnings under specified limits to be eligible for your checks. In 2018, that limit is $17,040. For every two dollars you exceed that limit, one dollar must be held back from your Social Security benefits. It sounds like you are going to make about $120,000 in 2018, well above the earnings threshold.
But two rules will make you eligible for benefits starting in April. One says that in the first year you retire, if your earnings exceed the yearly limit ($17,040), you can still get a check for any month your earnings are under a monthly limit. Because you are retiring at the end of March, you won’t be making over $1,420 after that month, so you are due benefits from April on.
The second rule says that income paid after retirement, like unused sick and vacation leave or severance payments, or any pension benefit you might be due, doesn’t count toward the earnings thresholds. So you answer the questions by saying you will make $60,000 in 2018, but that your earnings will be “zero” from April through December.