It is possible to work and receive retirement or survivors benefits from Social Security. Working affects each of these benefit programs in different ways.

Working affects retirement and survivors benefits in the same way. You can work and receive benefits under these programs. Your age at the time you are receiving benefits determines how working affects the amount of benefits you receive.

• Born between January 2, 1943 and January 2, 1955 – Your retirement age is 66. If you work at full retirement age or older, you can make any amount of money without affecting the amount of retirement or survivor’s benefits you receive.
• If you are younger than 66 in 2009, you can earn $14,160 before Social Security begins to reduce your benefits. Social Security will deduct $1 (from your retirement or survivor’s benefits) for every $2 you earn above $14,160.
• There is a special rule that applies if you retire at age 66 because of employment income, you may have received before retirement and if you take a part-time job that pays less in that same year.

If you are one of the lucky few who have managed to weather the current financial crisis without losing significant value from your retirement funds, this is not an issue. However if you need the addition income to make up for loses or you just enjoy working, it is important to know what the rules are to prevent getting an overpayment. Social Security will seek to recoup an overpayment if that happens.

You should keep accurate records of the income you receive in the event that Social Security should determine that you have been overpaid. Remember any action by Social Security can be appealed.

The amount of money you can earn without triggering any penalties changes every year. You can get information about this by going to www.ssa.gov or contacting the Social Security Administration by phone at 1-800-772-1213.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.

The Social Security program is always in the news. Do you understand as much about what it does or does not do as you think? The Social Security program was created by President Roosevelt during the Great Depression. The purpose of the program was to provide a guaranteed income to older workers when they became 65. Social Security payments are funded through payroll deductions and the social security taxes paid by employers.

There are five programs administered by the Social Security Administration

• Retirement benefits which are based on the amount the worker has paid into the system. A worker must have worked a minimum of 10 years and earned 40 work credits
• Disability benefits are paid to a worker who cannot work because of a medical condition that is expected to last at one year or result in death. This is a very strict definition of disability. Social Security does not pay partial benefits or short-term disability benefits.
• Survivor’s benefits are paid to the spouse and children of a deceased worker. The higher a deceased worker’s earnings, the higher the benefit amount paid.
• Supplemental Security Income – is paid to persons with little to no income or resources. It is administered by Social Security but funded through the government’s general fund. Adults and children who are blind, disabled, 65, or older are eligible.
• Medicare is a health insurance program for persons 65 or over. Disabled persons are also eligible for Medicare.

Receiving Social Security benefits at retirement age should not be your only plan for living when you reach retirement age. Social Security benefits provide only 40 percent of the income you received while you were working. You will need additional sources of income to maintain your lifestyle at retirement. This is an important factor to consider when you begin estate planning.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.

The Social Security Administration manages social security retirement benefits. So, what are retirement benefits? They are funds that help elderly citizens to pay their bills when they are no longer working.

Taxes and Credits

Social security taxes fund retirement benefits. When you work, social security taxes are withdrawn from your paycheck. Every year, you will receive a Social Security statement in the mail that will tell you your lifetime earnings and your social security tax contributions.

This statement will also advise you of how many work credits you have accumulated. Four work credits are given for every full year of work.

Who is Eligible?

You are eligible to apply for and receive Social Security at the age of 62. You must, however, have at least 40 credits. Once you are eligible you can apply for benefits online, by phone or at your local Social Security office.

Social Security Payment

When you receive your social security statement, you may also notice that it tells you what your expected payment is at age 62 and at your full retirement age. Your full retirement age may be 65 to 67 depending upon your birth year. What age you are when you retire and collect social security will affect your benefit amount.

If you collect at age 62, your payment may be twenty-five percent less than if you waited until your full retirement age. At your full retirement age, you may expect close to forty percent of your pre-retirement income.

Disability Benefits Are Different

Social Security retirement benefits are not the same thing as Social Security disability benefits, although the process is similar. There are two types of Social Security disability benefits, which you may also be eligible for you in your lifetime.

The main difference between retirement benefits and disability benefits is the age that you can collect them. If you have a disability that keeps you from working at any age and you have earned enough work credits for your age, you may be eligible for Social Security Disability Insurance (SSDI). Like retirement benefits, SSDI is also funded by social security taxes.

If, however, you are low income and disabled, you may be eligible for Supplement Security Income. This is different than retirement benefits and SSDI, because the funds come from general taxes and not social security taxes.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.

If you’re counting on social security to fund your retirement, you might want to rethink that strategy.

You’ll likely be needing more, even if you’re planning a simple retirement lifestyle. It’s wise to invest, at least a little, in something that will give you more flexibility in your income and strike a balance between saving and spending even after retirement.

Experts suggest you should spend only 8 per cent of your savings for the first five years after you hang your boots. On an average, you should plan for 35 years of retirement.

Also remember that your expenses don’t necessarily go down after you retire. Yes, there’s no more commuting everyday to the office and you probably won’t be dining out every day for lunch, but right after retirement, most people feel an urge to catch up with all the fun they missed out on while working.

You’re more likely to travel the world, visit relatives, take up an expensive hobby, etc. It’s only after a few years of really enjoying your free time that you’ll be more inclined to settle down a bit.

And while we all hope to live a long, healthy life, the reality is that health costs go up as we age, creating a new expense you’re not paying right now.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.