Most people will receive Social Security benefits at some point in their lifetimes, but how much do you know about this important source of income? Take this quiz to learn more.
1. Can you receive retirement and disability benefits from Social Security at the same time?
2. If your ex-spouse receives benefits based on your earnings record, your benefit will be reduced by how much?
a. Reduced by 30 percent
b. Reduced by 40 percent
c. Reduced by 50 percent
d. Your benefit will not be reduced
3. For each year you wait past your full retirement age to collect Social Security, how much will your retirement benefit increase?
a. 6 percent
b. 7 percent
c. 8 percent
4. Monthly Social Security benefits are required to be paid by which of the following methods?
a. Paper check only
b. Paper check, direct deposit, or debit card
c. Direct deposit or debit card
5. Are Social Security benefits subject to income tax withholding?
6. Once you’ve begun receiving Social Security retirement benefits, you can withdraw your claim if how much time has elapsed?
a. Less than 12 months since you’ve been receiving benefits
b. Less than 18 months since you’ve been receiving benefits
c. Less than 24 months since you’ve been receiving benefits
1. b. No. If you receive a disability benefit, it will automatically convert to a retirement benefit once you reach full retirement age.
2. d. Your benefit will not be reduced if your ex-spouse receives Social Security benefits based on your earnings record.
3. c. Starting at full retirement age, you will earn delayed retirement credits that will increase your benefit by 8 percent per year up to age 70. For example, if your full retirement age is 66, you can earn credits for a maximum of four years. At age 70, your benefit will then be 32 percent higher than it would have been at full retirement age.
4. c. Since 2013, the Treasury Department has required electronic payment of federal benefits, including Social Security. You can sign up for direct deposit of your benefits into your current bank account or open a low-cost Electronic Transfer Account (ETA) at a participating financial institution. Another option is to sign up for a Direct Express® prepaid debit card. Under this option, your Social Security benefits are deposited directly into your card account, and you can use the card to make purchases, pay expenses, or get cash.
5. b. No. Withholding isn’t mandatory, but you may voluntarily ask the Social Security Administration to withhold federal income tax from your benefits when you apply, or later, if you determine you will owe taxes on your Social Security benefits (not everyone does). You may choose to have 7 percent, 10 percent, 15 percent or 25 percent of your benefit payment withheld. Ask a tax professional for help with your situation.
6. a. If something unexpected happens and you’ve been receiving Social Security benefits for less than 12 months after signing up, you can change your mind and withdraw your claim (and reapply at a later date). You’re limited to one withdrawal per lifetime, and there are also financial consequences. You must repay all benefits already paid to you or your family members based on your application (anyone affected must consent in writing to the withdrawal), and repay any money previously withheld, including Medicare premiums or income taxes.
Did you know that 94 percent of all workers are covered under Social Security?
Source: Social Security Fact Sheet on the Old-Age, Survivors and Disability Insurance Program, July 2017
Tim Bartholomew is an Investment Representative with Greene Investment Services located at the Bank of Greene County. Call 518-943-2600 ext. 2153 with your comments or questions.