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How will six years of zero earnings have an effect on my Social Safety pension profit?

Ask Larry

Economic Security Planning, Inc.

Today’s column examines questions related to the impact of years of no income on social security benefits, how the maximum family amount that can be claimed for a single record can affect the distribution of benefits across multiple children, and what happens to benefits when the recipient dies. Larry Kotlikoff is Professor of Economics at Boston University and the Founder and President of Economic Security Planning, Inc, which market Maximize My Social Security and MaxiFi Planner.

You can find more answers from Ask Larry here.

Do you have any questions of your own about social security that you would like to have answered? Ask Larry about social security here.

How will six years of zero earnings affect my Social Security pension benefit?

Hi Larry, I’ve been paying into social security for 29 years. I know that my highest income from 35 years will be used to calculate my performance. How will six zero years affect my benefit amount in these 35 years? Thanks, Tim

Hi Tim, Including six years of zero earnings in a 35 year earnings average naturally lowers the average annual amount. For example, if a person has earned an average of $ 50,000 per year for 29 years, their average 35-year earnings will be $ 41,428.57. This lower average would, in turn, result in a lower Social Security pension rate for that person.

However, the actual difference your early retirement would make to your 35-year earnings average depends on how much you would have otherwise made if you had continued to work. My company’s software – Maximize My Social Security or MaxiFi Planner – can use your actual and projected earnings to accurately calculate your benefit rate, so you may want to use the software for your social security calculations and planning. Social security calculators provided by other companies or non-profit organizations can provide suitable suggestions if they have been prepared with the utmost care. Best of all, Larry

If the oldest of three children are no longer receiving benefits, should their benefits be shared between the other two?

Hi Larry, if three children receive the same amount of survivor benefits when the oldest graduates from high school, should their money be given or dropped to the remaining two children? I was told that when applying the total could be divided by the three or given all to one so that after graduation the child was expected to still have that amount for the other two, but it was dropped. Is that right? Thanks Dan

Hi Dan, the answer to your question depends on the FMB Family Maximum Benefit (FMB). The FMB that can be paid on a deceased worker’s record can vary between 150% and 188% of their Primary Insurance Amount (PIA), which is their Full Retirement Benefit Amount (FRA).

However, if children are eligible for multiple-parent benefits, the parent’s FMBs may combine to pay more than 188% of the higher parent’s PIA.

In general, the full benefit rate of the oldest child can only be fully redistributed between the two remaining eligible children if the FMB involved makes up at least 150% of the PIA of the deceased parent.

Otherwise, the termination of the oldest child benefit would lead to an increase in the two remaining eligible child benefit rates, but not to a complete redistribution of the third child benefit amount. Best of all, Larry

Does social security always take back a person’s benefits after death?

Hi Larry, When a person dies and they receive benefits, does Social Security always take everything back? Thank you, Rob

Hi Rob, Social Security generally only requires reimbursement of benefits when benefits are paid after someone dies. For example, let’s say Gary dies on August 28, 2021

No Social Security benefits are paid for the month a person dies, so no benefit would be payable for Gary in August.

However, since the Social Security benefits are paid a month later, the benefit Gary received in August (ie for July) could be retained. But if Gary’s benefit payment for August is delivered in September, that payment would have to be paid back to Social Security. Best of all, Larry

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