Module 5 -2.docx

# Links to an external site it is important to

• Notes
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(Links to an external site.)Links to an external site. . It is important to understand that the earnings test only applies to earned income. It does not apply to pension benefits or distributions from retirement savings accounts. Q: Consider Stacey from our previous examples. Recall that she has AIME of \$5,000 and a monthly benefit (PIA) of \$2,119.10 at her NRA (67). If she retires 30 months early, she will have a monthly reduction of \$353.18, which means a permanently reduced monthly benefit of \$1,765.92 (\$2,119.10 - \$353.18). Stacey decided to do some consulting just after she filed for benefits and she earned \$21,500 annually. What is her monthly Social Security benefit in the first year of her consulting? Q: Consider Stacey from our previous examples. Recall that she has AIME of \$5,000 and a monthly benefit (PIA) of \$2,119.10 at her NRA (67). If she retires 30 months early, she will have a monthly reduction of \$353.18, which means a permanently reduced monthly benefit of \$1,765.92 (\$2,119.10 - \$353.18). Stacey decided to do some consulting just after she filed for benefits and she earned \$21,500 annually. What is her monthly Social Security benefit in the first year of her consulting? A: Stacey will have a monthly reduction of \$185.83 ([\$21,500 - \$17,040] / \$2 then divided again by 12 to get the monthly number). This means that her monthly check (PIA) during the first year of consulting will be \$1,580.09 (\$1,765.92 - \$185.83). Q: Given the answer to #1, will Stacey's reduction be permanent? A: No, reductions from the earnings benefit test are not permanent. The pre-earnings benefit test reduction is removed and the recipient has their check restored to their early filing amount. Q: Consider Stacey from our previous examples. Recall that she has AIME of \$5,000 and a monthly benefit (PIA) of \$2,119.10 at her NRA (67). If she retires 30 months early, she will have a monthly reduction of \$353.18, which means a permanantly reduced monthly benefit of \$1,765.92 (\$2,119.10 - \$353.18). Stacey decided to do some consulting just after she filed for benefits and she earned \$21,500 annually. What is her monthly Social Security benefit in the year in which she attains her NRA? A: Stacey's income is below the same year as NRA threshold of \$45,360. There will not be any reduction. Her monthly check (PIA) will be \$1,765.92.

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Q: Consider Stacey from our previous examples. Recall that she has AIME of \$5,000 and a monthly benefit (PIA) of \$2,119.10 at her NRA (67). Stacey re-evaluated her retirement date based upon guidance from a competent financial planner. She ended-up retiring at her NRA at which point she began consulting in which she earned \$21,500 annually. What is her monthly Social Security benefit in the year in the current year? A: The earnings benefit test only applies when someone retires early. Stacey's monthly Social Security check (PIA) will remain unaltered at \$2,119.10. Applying for Benefits A worker who is planning to retire should plan to file for Social Security benefits 3 months in advance of when they will actually need to receive the payments. This is an arm of the federal government and there will be a delay in the processing because there are so many people being covered by the Social Security System. Benefits can be paid retroactively for up to 6 months. Consider a worker who retires on
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• Spring '14
• VOSS,JAMESA
• Cash balance plan

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