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AARP Bulletin

Top 25 Social Security Questions

Confused about when to claim or whether you're eligible for benefits? We have answers

21. I started collecting Social Security at 62. I heard that if I changed my mind, I could pay back the amount I'd collected and get a higher payment. Is that possible?

That used to be true, but the Social Security Administration just published new regulations that curtail this option. Now, if you want to suspend your benefits, you must do so within 12 months after first receiving them. According to Social Security, 85 to 90 percent of beneficiaries who withdraw their applications do so within this time frame anyway. The new rules, which became effective Dec. 8, 2010, also specify that beneficiaries are limited to one refiling in a lifetime.

22. Can I collect Social Security and unemployment compensation at the same time?

Yes. Unemployment benefits aren't counted as wages under Social Security's annual earnings test, so you'd still receive your benefit. However, the amount of your unemployment benefit could be cut if you receive a pension or other retirement income, including Social Security and railroad retirement benefits. Contact your state unemployment office for information on whether your state applies a reduction.

23. I am 63 and collecting Social Security. If I work, will my benefit be cut?

It depends on your income. Between age 62 and the start of the year when you reach full retirement age, $1 in benefits is withheld for every $2 you earn above a limit, which is $14,160 in 2010. In the year you reach full retirement age, $1 is withheld for every $3 above another limit, $37,680 in 2010. In your birthday month, the limits go away — and your benefit will be recalculated upward to compensate for the money that was withheld.

24. I'm 50. Will Social Security be there when I retire?

The Social Security trust fund, where accumulated assets are held, currently contains about $2.5 trillion. According to the system's board of trustees, that money and continuing tax contributions will allow payment of all benefits at current rates until 2037. After that, there still will be enough tax revenue coming in to pay about 78 percent of benefits. Congress is being urged to make financial fixes to Social Security to ensure it will be there for you.

25. I know I can start collecting Social Security at age 62. But should I?

That depends. If you're healthy and can afford it, you should consider waiting until you reach your full retirement age of 66, or even 70. Here's why.

By law, the age when workers can qualify for full benefits is gradually increasing, from 65 to 67. (It will be 67 for anyone born after 1960.) If you claim benefits before reaching full retirement age, they'll be reduced. That's because the goal set by Congress is to pay the same lifetime benefits to an individual regardless of when they're initially claimed.

So let's say you claim benefits at age 62 and get $1,000 a month. If you can wait until you're 66, you'll get at least 33 percent more ($1,333). And if you can wait until you're 70, you'll get at least 75 percent more ($1,750).

Social Security determines the amount of your benefits based, in part, on your highest 35 years of earnings. So you may get a larger monthly benefit if your extra years of work are your top earning years.

Stan Hinden, a former columnist for the Washington Post, wrote How to Retire Happy: The 12 Most Important Decisions You Must Make Before You Retire. Check out the archive. If you don't find your answer there, send a query. Have a question for the Social Security Mailbox?

Next: Join the Social Security group. >>

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