Today’s Social Security column addresses questions about when you might need it and when you can file retroactively, how disability benefits are calculated compared to standard retirement benefits, and reduction rates for filing early. Larry Kotlikoff is a professor of economics at Boston University and the founder and president of Economic Security Planning, Inc.
see more Ask Larry answers here.
Have your own questions about Social Security that you’d like answered? Ask Larry about Social Security here.
If my Social Security application is delayed, can I file it retroactively now?
Hi Larry, I think I was late applying for my Social Security early retirement benefits. I plan to retire in September and was hoping to start my benefits at that time as well, but I think I forgot to file on time. Do I have to apply four months before my benefits start? Do I need to apply retroactively? I can do that? thank you carl
Hi Carl, I don’t think you’re late. You can apply anytime through September 30, 2022, and still claim benefits beginning in September 2022. And yes, if your claim isn’t processed on time, then Social Security will pay any back payments due when it’s processed. your claim. Just FYI, if you claim September as your month of entitlement, your first payment would be due in October. Social Security pays benefits one month late.
However, when you claim benefits before your full retirement age (FRA), you cannot claim benefits for any month prior to the month of your claim. Therefore, you could not, for example, apply in October and claim benefits retroactively to September since you are not yet on your FRA.
However, before you apply, you may want to consider using my company’s software: Maximize my Social Security either MaxiFi Planner — to ensure your household receives the highest benefits for life. Social Security calculators provided by other companies or nonprofit organizations may provide adequate suggestions if they are carefully constructed. best larry
Why doesn’t your benefit rate increase when you reach full retirement age if you receive SSDI?
Hi Larry, Why won’t your Social Security amount be higher in FRA than what you get for SSDI? That doesn’t seem fair. thanks brian
Hi Brian, Social Security Disability Benefits (SSDI) are calculated based on a person’s Social Security-covered earnings, just like Social Security retirement benefits. In other words, both benefits are calculated based on the same income and using the same basic calculation formula.
The only difference between the calculation formula for SSDI benefits and unreduced Social Security retirement benefits is that fewer calculation years are used to calculate SSDI benefit rates if a person becomes disabled before age 62. This acts to prevent a person from being penalized for having no earnings in years that they were unable to work due to their disability.
Basically, qualifying for SSDI benefits simply entitles a disabled person to be paid their full Social Security retirement benefit rate without reduction before they reach the FRA, which is why their benefit rate does not change. when your SSDI benefits convert to regular Social Security retirement benefits when you reach your FRA. best larry
Would it make a difference if my sister took her Social Security at 65 and six months instead of 65?
Hi Larry, my sister was born in 1957, so her full retirement age is 66 and 6 months. Her plan is to take her Social Security retirement benefit when she turns 65. Will it make a difference if she waits to apply at 65 and six months of benefits? thanks betty
Hi Betsy, yes. Social Security benefits are reduced for each month you start collecting before full retirement age (FRA). The applicable reduction percentage in the case of your sister would be 5/9 of 1% per month. So if your sister claims her Social Security retirement benefits 18 months before her FRA, her unreduced rate will be reduced by age by 10%, compared to a reduction of about 6.66% if she starts collecting 12 months before his FRA. best larry