SOCIAL SECURITY Early RETIREMENT APPLICATION?
Asheville, NC – Oct 2011. Waiting for the doors to open at the S S office, I surmised that most of the middle aged scraggly looking crowd was seeking very early retirement via a disability claim. With jobs scarce in this government-induced great recession, who can blame them? My 9 am appointment was planned to avoid a long wait during my limited time in the US. It worked! After the multitude took their seats, I was invited to be the first one at the claim window.
My first words set my surprising objective, “my goal is to obtain an original signature on a government form or letter stating that I am eligible for retirement benefits.” Silly me. The clerk promptly informed me that no one signs anything. He generously offered to sign a printout (useless for obtaining an Ecuadoran visa). Printouts can come off anyone’s printer. And I needed to obtain a S S card. Mine disappeared 25 years ago. The required form was the one that the reception lady said was not necessary.
OK. Let’s determine the benefit amount first. He was very good at that. Again, I had done my homework: internet research on gov’t sites, blogs, years in financial product marketing. Earned income was going to be my issue. We are allowed about $1300 a month in 2012. Half of earnings over that had to be paid back to SS. My benefits would be recalculated at my “normal retirement” age of 66. However, only the highest 35 years counted – I am way beyond those years. So any SS money paid back went to gov’t money heaven. No recalculation needed.
Yes, I had done everything legally allowed to reduce my future income stream from many years of long term insurance sales residuals. Silly me, I had yet to learn gov’t math. Example 1.01 equals 2 when calculating equivalent months of excess earned income. No, Gary, you do not refund half of excess earnings for each month when filing the annual IRS 1040. SS uses the entire annual estimated excess earnings divided by monthly benefit to determine months of excess. So calculation is not refund half of excess for each month, but to determine months of zero retirement checks. Does your head hurt yet?
Result: Rounding alone cost me a month’s benefit next year. And since I had over two months equivalent excess, I may lose all of three months 2011 benefit. Yes, I can file for benefits starting October 26, but the checks will be for zero and a LIFETIME 22% reduction. Ok, I will wait until my 63 birthday on January 26 to claim benefits. We requested a letter from the District Director in St Louis. I may get it in two weeks. I knew SS pays in arrears, but they also take another month to process the check. So I will get 80% (early retirement at 63) of normal retirement starting in January. My first check may be in late April. I must refund in advance for a year’s excess earnings. Rounding and timing!
The SS letter: Prompt, confusing, self-contradictory, robo-signed form letter on letterhead. Cost for four Fed Ex mailings, Raleigh, NC Apostille stamp, and Washington DC Ecuador consulate was nearly $200. The first two paragraphs:
“We have approved your application for retirement benefits. Your entitlement date is January 2012.”
“We cannot pay you because or your work.”
The next paragraph stated my future monthly benefit rate, etc. Now how is a native Spanish speaker in Quito going to interpret all that?
I signed directly below the Dist Director, had my original signature notarized and sent Fed Ex to NC Secretary of State. Whew, they apostillized it!
Now many of you are asking “WHY?” would I apply early, losing 20% of my benefits. Yes, I know the math says if I live over early 80’s my lifetime benefits are greater if I apply at 66. The obvious Answer: Two governments and inflation. The resident visa requirements in beautiful Ecuador are constantly changing, and the US is becoming unpredictable as it moves to socialism. Oh, and what do you think a dollar is going to be worth in 10, 20 years?
Lessons: 1.apply 120 days in advance 2.Beware of rounding and timing 3. Do not earn much money in early retirement 4. beware the government.
Learning by doing,