Q & A
When I file for benefits, will they be the same the rest of my life?
Complete Question: I will be eligible for Social Security benefits this year. I am supposed to be able to receive $1,700/month, which sounds okay to me. But I doubt I can live off of that amount in 10 years. Will I get $1,700 per month for the rest of my life?
Answer: There are a lot of people in your situation that do not know if they should take their benefits now or later, and you are doing the right thing by thinking about what you will need in 10 years or so. The Social Security website (www.ssa.gov) does have a life expectancy calculator. Unfortunately, this estimate is based on generic lifespan expectancies for men versus women, and does not take into account things like genetics and health. With that in mind, there are things that will affect your benefit payments over time:
1) COLA (Cost of Living Adjustments): COLA will increase benefits each year. However, many people believe that COLA is not enough to cover actual cost of living increases. For example, the 2014 COLA increase was 1.5% and the 2015 COLA increase will be 1.7%. In rare circumstances, COLA could even be 0%.
2) A net benefit can actually decrease if the cost of Medicare increases faster than COLA: Since most Medicare premiums are deducted from your Social Security check, then a rise in Medicare costs that are higher than the COLA increase would cause your net benefit payment to go down.
3) Increasing your average earnings: If you continue to work while receiving Social Security and you earn more than you did in other years, you may increase your 35-year average earnings, which increases your base benefit amount (PIA = primary insurance amount).
4) If you become a widow(er), your surviving spouse benefits may be much higher. A spouse is entitled to 50% of the primary worker’s benefits while a widow(er) is entitled to 100% (at Full Retirement Age).
5) You can always choose to voluntarily suspend your benefits and earn delayed retirement credits until you reinstate your benefits. (NOTE: This option is only available between the ages of FRA and 70).
Regardless of what happens, make sure you think about your options carefully. Everybody’s situation and needs are different and there is no one option that is right for everyone.