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Social Security Survivor’s Benefits

Social Security Survivor’s Benefits

When you think of Social Security, you probably think of retirement. However, Social Security can also provide much-needed income to your family members when you die, making their financial lives easier.

Your family may be entitled to receive survivor’s benefits based on your work record

When you die, certain members of your family may be eligible to receive survivor’s benefits if you worked, paid Social Security taxes, and earned enough work credits. The number of credits you need depends on your age when you die. The younger you are when you die, the fewer credits you’ll need for survivor’s benefits. However, no one needs more than 40 credits (10 years of work) to be “fully insured” for benefits. Under a special rule, you’re only “currently insured” at the time of your death. Your children and your spouse who is caring for them can still receive benefits.

Survivor’s benefits may be paid to:

  • Your spouse age 60 or older (50 or older if disabled)
  • Your spouse at any age, if caring for your child who is under age 16 or disabled
  • Your ex-spouse age 60 or over (50 or older if disabled) who was married to you for at least 10 years
  • Your ex-spouse at any age, if caring for your child who is under age 16 or disabled
  • Your unmarried children under 18
  • Your unmarried children under 19, if attending school full time (up to grade 12)
  • Your dependent parents age 62 or older

This is a general overview–the rules are more complex.

How much will your survivors receive?

An eligible family member will receive a monthly survivor’s benefit based on your average lifetime earnings. The higher your earnings, the higher the benefit. This monthly benefit is equal to a percentage of your basic Social Security benefit. The percentage depends on your survivor’s age and relationship to you.

For example, at full retirement age or older, your spouse may receive a survivor’s benefit equal to 100 percent of your basic Social Security benefit. However, if your spouse has not yet reached full retirement age at the time of your death, he or she will receive a reduced benefit, generally 71 to 94 percent of your basic benefit. Your dependent child may also receive 75 percent of your basic benefit.

Benefit rate cap

A maximum family benefit rate caps the total amount of money your survivors can get each month. The total benefit your family can receive based on your earnings record is about 150 to 180 percent of your basic benefit amount. If a total family benefit exceeds this limit, each family member’s benefit will be reduced proportionately.

You can get an estimate of how much your survivors might be eligible to receive by filling out a request form at your local Social Security office or by visiting the SSA website. Also, you can find this information on your Social Security Statement, which the SSA mails annually to every worker over age 25. You will receive this statement about three months before your birthday.

Don’t forget the lump-sum benefit

If you’ve accumulated enough work credits, your spouse may receive a lump-sum benefit of $255. Your spouse must have been living with you at the time of your death or have been receiving benefits based on your earnings record if living apart from you. However, if you’re not married at the time of your death, the death benefit may be split among any children you have who are eligible for benefits based on your earnings record.

If a loved one has died, contact the Social Security Administration immediately

If a loved one has died and you are eligible for survivor’s benefits, you should contact the SSA right away. But, if you’re already receiving benefits based on your spouse’s earnings record, the SSA will change your payments to survivor’s benefits. But if you’re not yet receiving any Social Security benefits or if you’re receiving benefits based on your own earnings record, you’ll have to fill out an application for survivor’s benefits.

It’s helpful to have the following documents when you apply, but if you don’t have all the information required, the SSA can help you get it:

  • Proof of death (a death certificate or funeral home notice)
  • Your Social Security number, as well as the deceased worker’s number
  • Your marriage certificate, if you’re a widow or widower
  • Dependent children’s Social Security numbers, if available
  • Deceased worker’s W-2 forms, or federal self-employment tax return, for the most recent year
  • The name of your bank, as well as your account numbers, for direct deposit
  • Your birth certificate
  • Your divorce papers, if applicable

Visit your local SSA office or call (800) 772-1213 for more information on survivor’s benefits and how to apply for them.

Disclosure:The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Sterling Group United recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

Social Security Disability Benefits

Social Security Disability Benefits

Like most people, you probably don’t expect to become disabled. However, you are three times more likely to become disabled due to illness or injury than to die during your earning years*. It’s important to know what disability benefits you may be entitled to under Social Security.

The Social Security Administration (SSA) administers two programs that pay disability benefits. The Social Security Disability Insurance (SSDI) program pays benefits to qualified individuals who are under full retirement age. This is regardless of their income. The Supplemental Security Income (SSI) program pays benefits to qualified individuals with limited income. We discuss the SSDI program here.

To qualify for benefits, you must meet a strict definition of disability

The definition of disability that the SSA uses is strict. It’s hard to qualify for Social Security disability benefits. To receive benefits as an adult, you must:

  • Have a physical or mental impairment that has lasted and is expected to last for at least 12 months
  • Is expected to result in your death
  • Impairment be severe enough to prevent you from performing any “substantial gainful activity”

The SSA has a list of impairments that are considered so severe that they automatically define you as disabled. If your condition is not on the list, the SSA must decide if it’s severe enough.

When determining your ability to work, the SSA will consider:

  • Your medical condition
  • Age
  • Education
  • Past work experience
  • Transferable skills

If you’re working, the amount of income that you are able to earn also plays a role. Special rules and income limits apply if you’re blind.

You’ll also need sufficient work credits to qualify

When you work and pay Social Security taxes, you earn credits that enable you to qualify for Social Security benefits. You can earn up to 4 credits per year. This depends upon the amount of income that you earn. The number of credits that you need depends on how old you are when you become disabled.

If you’re age 31 to 42, you’ll need to have earned 20 credits within the last 10 years, ending with the year in which you became disabled. If you’re younger than 31, you’ll need fewer credits. If you’re older than 42, you’ll need more.

Your family members don’t need work credits

If you qualify for disability benefits, certain family members can also collect monthly disability benefits based on your work record. Eligible family members may include your:

  • Spouse age 62 or older, if married at least one year
  • Former spouse age 62 or older (if you were married at least 10 years)
  • Spouse or former spouse of any age, if caring for your child who is under age 16 or disabled
  • Children under age 18, if unmarried
  • Children under age 19, if full-time students (through grade 12) or disabled
  • Children older than 18, if severely disabled

Each eligible family member may receive a monthly check equal to as much as 50 percent of your basic benefit. This is in addition to your benefit, your check doesn’t get reduced.

The amount of money that you’ll receive depends on your Social Security earnings record

The amount of your monthly disability check is based on your average lifetime earnings. Generally, you’ll receive an amount equal to what you would receive were you to begin receiving Social Security retirement benefits at full retirement age. You can review your earnings record and get an estimate of the Social Security disability benefit that you might be eligible to receive. To do this, you can order a Social Security Statement from the SSA. You can call by phone visit, in person, or on its website. You can also wait for it to come in the mail.

Eligibility for other state and federal benefits may affect the amount of your SSDI check. The SSA will periodically review your case and decide whether you are still disabled. Your disability benefits may stop altogether. This will happen if:

  • Your medical condition improves to the point that you’re no longer considered disabled
  • If you are able to earn a substantial amount of money.

Finally, once you reach full retirement age, your disability benefits will automatically convert to Social Security retirement benefits (the amount is usually the same).

You should apply for benefits as soon as possible

You should apply for benefits at a Social Security office as soon as you become disabled. Especially if it appears that the disability will continue. Keep in mind, there’s a five-month waiting period before you’ll get your first check. You can file for benefits in person, through the mail, online, or over the telephone. You’ll be asked to provide the following information:

  • An original or certified copy of your birth certificate (if you were born in another country, you’ll need to provide proof of U.S. citizenship or legal residency)
  • An original or certified copy of your military discharge papers (DD 214) if you were in the military
  • A copy of your W-2 form (or, if self-employed, a copy of your federal tax return for the past year)
  • Workers compensation information, including date of injury, claim number, and payment amount
  • Social Security numbers of your spouse and children
  • Your checking or savings account number
  • Name, address, and phone number of a person who can get in touch with you if necessary
  • Medical and job information, including information about physicians who have treated you, names of medicines you are taking, medical records you have, and jobs you worked in during the 15 years before your disability began

Once your application is complete and has been reviewed by your local Social Security office, it will be sent to the Disability Determination Services (DDS) office in your state. The DDS determines whether you are disabled under Social Security rules. If the claim is approved, you’ll receive a letter showing the amount of benefit that you’ll receive and when your benefits will begin. If your claim is denied, you’ll receive a letter explaining the decision and telling you how to appeal if you don’t agree with it.

How we can help

At Sterling Group United, we can assist you with your Social Security concerns. We can discuss relevant Social Security topics, that include disability, to help meet your financial needs. Contact us today and set up your complimentary consultation with one of our financial advisors.

*(Source: 1985 Commissioner’s Individual Disability Table A.)

The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Sterling Group United recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

Tax Tips: Homeowners Insurance

Tax Tips: Homeowners Insurance

The purpose of home insurance is obvious. The tax rules surrounding home insurance, though, aren’t always so clear. For example, if your insurance won’t cover you for a given loss, are you simply left holding the bag, or can you expect some tax relief? And what about premiums–can you deduct them or not? Here are some tax tips to help you make sense of it all.

If your home or possessions are damaged, destroyed, or stolen, you may get a tax deduction

If you suffer a home-related loss, begin by reading your homeowners policy carefully. Section 1 of your policy explains the types of property coverages. It lists the specific perils that you’re insured against such as damage caused by fire, theft, and hail. It also describes the exclusions from coverage such as damage caused by a flood or earthquake), and details any conditions that you must meet for coverage to apply.

In many cases, your homeowners insurance will reimburse you for your loss. Sometimes, though, you’ll be only partially reimbursed or not compensated at all. In such cases, you may be entitled to some tax relief.

If your home is damaged or destroyed in an accident or by an act of nature (e.g., windstorm, lightning), and your homeowners insurance does not completely reimburse you for the loss, you may be able to claim a casualty loss tax deduction on your federal income tax return. In addition, if your personal possessions are stolen, damaged, or destroyed, you may be able to claim a theft or casualty loss tax deduction if you’re not fully reimbursed for your loss.

How does the theft or casualty loss deduction work?

You must file federal Form 1040 and itemize your deductions on Schedule A to claim a casualty or theft loss deduction. For individual taxpayers, the casualty or theft deduction is subject to two limitations. First, you can’t deduct the first $100 of any loss. For example, if your $99 watch was stolen from your bedroom and nothing else was taken, you’re out of luck. Second, even if your loss exceeds $100, you can only deduct casualty and theft losses if the total amount you lost in the year (after the $100 per casualty threshold) exceeds 10 percent of your adjusted gross income .

If you’re reimbursed for your loss by your insurer, you must subtract this reimbursement amount when calculating your loss for tax purposes. In other words, you do not have a casualty or theft loss to the extent you are reimbursed. Also, keep in mind that if you do suffer a property loss and the property is covered by insurance, you should file a timely insurance claim. Otherwise, you may not be able to deduct your loss.

Calculating the amount of your loss

If you suffer a personal (as opposed to business) property loss, the amount of your loss is the smaller of (1) the decrease in the fair market value (FMV) of the property as a result of the loss or (2) your adjusted basis in the property before the loss. (Adjusted basis is usually your cost, increased or decreased by various events.) After determining the smaller figure, you subtract any insurance reimbursements.

For example, assume a fire severely damaged your home. You bought the house for $50,000 (adjusted basis) a few years ago, and it was appraised at $75,000 before the fire. It was worth only $15,000 after the fire. Your insurance company paid you $45,000 for the loss. Here’s what you do:

  1. Adjusted basis in the property before the loss: $50,000
  2. Decrease in property’s FMV: $60,000 ($75,000 minus $15,000)
  3. Loss: $50,000 (smaller of 1 or 2, above)
  4. Subtract insurance reimbursement of $45,000
  5. Amount of loss: $5,000

Finally, you’d apply the two deduction limitations ($100 deductible; 10 percent of AGI) to determine the amount of your casualty loss deduction.

In general, you’ll use Form 4684 to figure the amount of your deduction; consult a tax professional if you need help. IRS Publication 584 can also provide you with additional information.

What about insurance deductibles?

With most homeowners insurance policies, you must pay a deductible before the insurer will reimburse you (partially or fully) for your loss. If you have a policy with a $500 deductible and you suffer a theft loss, you’ll have to cover the first $500 of your loss out of pocket. It’s possible that you’ll be able to write off this deductible as a theft loss on your federal tax return (subject to the $100 and 10 percent rules).

Can you normally deduct your homeowners insurance premiums on your tax return?

If you’re like most people and use your home only for personal purposes, you can’t deduct your homeowners insurance premiums on your tax return.

Deducting your homeowners insurance premiums when you have a home office

If you have a home office and qualify to take a home office deduction, you may be able to deduct some of your housing expenses. This includes part of your homeowners insurance premiums, on your federal income tax return. A formula is used to determine which portion of your housing expenses may be traced or allocated to your home office. Through that, you’ll be able to deduct the same percentage of your homeowners insurance premiums. For example, if you can allocate 15 percent of your housing expenses to your home office, you’ll be able to deduct 15 percent of your premiums.

If you have a home-based business, though, you should consider purchasing additional insurance. A standard homeowners policy typically won’t provide coverage for your business equipment in the home. It also won’t cover business-related personal liability losses at all (including the delivery person who slips and falls). You may be able to add an endorsement to your existing homeowners policy, buy a home-based business package policy, or buy individual business insurance. Those insurance premiums would then be fully deductible against business income.

We can help

Having a financial advisor to help guide your decisions is critical and our team at Sterling Group has you covered. If you would like to minimize your tax liability, contact us today and set up a consultation!

The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Sterling Group United recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

Social Security Retirement Benefits

Social Security Retirement Benefits

 

Social Security was originally intended to provide older Americans with continuing income after retirement. Today, though the scope of Social Security has been widened to include survivor’s, disability, and other benefits, retirement benefits are still the cornerstone of the program.

How do you qualify for retirement benefits?

When you work and pay Social Security taxes (FICA on some pay stubs), you earn Social Security credits. You can earn up to 4 credits each year. If you were born after 1928, you need 40 credits (10 years of work) to be eligible for retirement benefits.

How much will your retirement benefit be?

Your retirement benefit is based on your average earnings over your working career. Higher lifetime earnings result in higher benefits, so if you have some years of no earnings or low earnings, your benefit amount may be lower than if you had worked steadily. Your age at the time you start receiving benefits also affects your benefit amount. Although you can retire early at age 62, the longer you wait to retire (up to age 70), the higher your retirement benefit.

You can check your earnings record and get an estimate of your future Social Security benefits by filling out a request at your local Social Security office or by visiting the Social Security Administration (SSA) website. You can also find this information on your Social Security Statement, which the SSA mails annually to every worker over age 25. You will receive this statement about three months before your birthday. Review it carefully to make sure your paid earnings were accurately reported–mistakes are common. Call the SSA at (800) 772-1213 for more information.

Retiring at full retirement age

If you retire at full retirement age, you’ll receive an unreduced retirement benefit. Your full retirement age depends on the year in which you were born.

If you were born in:Your full retirement age is:
1937 or earlier65
193865 and 2 months
193965 and 4 months
194065 and 6 months
194165 and 8 months
194265 and 10 months
1943-195466
195566 and 2 months
195666 and 4 months
195766 and 6 months
195866 and 8 months
195966 and 10 months
1960 and later67

Retiring early will reduce your benefit

You can begin receiving Social Security benefits before your full retirement age, as early as age 62. However, if you retire early, your Social Security benefit will be less than if you wait until your full retirement age to begin receiving benefits. Your retirement benefit will be reduced by 5/9ths of 1 percent for every month between your retirement date and your full retirement age, up to 36 months, then by 5/12ths of 1 percent thereafter. For example, if your full retirement age is 67, you’ll receive about 30 percent less if you retire at age 62 than if you wait until age 67 to retire. This reduction is permanent–you won’t be eligible for a benefit increase once you reach full retirement age.

Still, receiving early Social Security retirement benefits makes sense for many people. Even though you’ll receive less per month than if you wait until full retirement age to begin receiving benefits, you’ll receive benefits several years earlier.

Delaying retirement will increase your benefit

For each month that you delay receiving Social Security retirement benefits past your full retirement age, your benefit will increase by a certain percentage. This percentage varies depending on your year of birth. For example, if you were born in 1936, your benefit will increase 6 percent for each year that you delay receiving benefits. If you were born in 1943 or later, your benefit will increase 8 percent for each year that you delay receiving benefits. In addition, working past your full retirement age has another benefit: It allows you to add years of earnings to your Social Security record. As a result, you may receive a higher benefit when you do retire, especially if your earnings are higher than in previous years.

Working may affect your retirement benefit

You can work and still receive Social Security retirement benefits, but the income that you earn before you reach full retirement age may affect the amount of benefit that you receive. Here’s how:

  • If you’re under full retirement age: $1 in benefits will be deducted for every $2 in earnings you have above the annual limit
  • In the year you reach full retirement age: $1 in benefits will be deducted for every $3 you earn over the annual limit (a different limit applies here) until the month you reach full retirement age

Once you reach full retirement age, you can work and earn as much income as you want without reducing your Social Security retirement benefit.

Retirement benefits for qualified family members

Even if your spouse has never worked outside your home or in a job covered by Social Security, he or she may be eligible for spousal benefits based on your Social Security earnings record. Other members of your family may also be eligible. Retirement benefits are generally paid to family members who relied on your income for financial support. If you’re receiving retirement benefits, the members of your family who may be eligible for family benefits include:

  • Your spouse age 62 or older, if married at least one year
  • Your former spouse age 62 or older, if you were married at least 10 years
  • Your spouse or former spouse at any age, if caring for your child who is under age 16 or disabled
  • Your children under age 18, if unmarried
  • Your children under age 19, if full-time students (through grade 12) or disabled
  • Your children older than 18, if severely disabled

Your eligible family members will receive a monthly benefit that is as much as 50 percent of your benefit. However, the amount that can be paid each month to a family is limited. The total benefit that your family can receive based on your earnings record is about 150 to 180 percent of your full retirement benefit amount. If the total family benefit exceeds this limit, each family member’s benefit will be reduced proportionately. Your benefit won’t be affected.

How do you sign up for Social Security?

You should apply for benefits at your local Social Security office or on-line two or three months before your retirement date. However, the SSA suggests that you contact your local office a year before you plan on applying for benefits to discuss how retiring at a certain age can affect your finances. Fill out an application on the SSA website, or call the SSA at (800) 772-1213 for more information on the application process.

Contact the experts at Sterling Group United today and we can assist you with your Social Security concerns, and discuss relevant Social Security topics to help meet your financial and retirement needs.

Understanding Social Security

Understanding Social Security


Over 50 million people today receive some form of Social Security benefits, including 90 percent of retired workers over age 65. (Source: Fast Facts & Figures About Social Security, 2008) But Social Security is more than just a retirement program. Its scope has expanded to include other benefits as well, such as disability, family, and survivor’s benefits.

How does Social Security work?

The Social Security system is based on a simple premise: Throughout your career, you pay a portion of your earnings into a trust fund by paying Social Security or self-employment taxes. Your employer, if any, contributes an equal amount. In return, you receive certain benefits that can provide income to you when you need it most–at retirement or when you become disabled, for instance. Your family members can receive benefits based on your earnings record, too. The amount of benefits that you and your family members receive depends on several factors, including your average lifetime earnings, your date of birth, and the type of benefit that you’re applying for.

Your earnings and the taxes you pay are reported to the Social Security Administration (SSA) by your employer, or if you are self-employed, by the Internal Revenue Service. The SSA uses your Social Security number to track your earnings and your benefits.

Finding out what earnings have been reported to the SSA and what benefits you can expect to receive is easy. Just check out your Social Security Statement, mailed by the SSA annually to anyone age 25 or older who is not already receiving Social Security benefits. You’ll receive this statement each year about three months before your birthday. It summarizes your earnings record and estimates the retirement, disability, and survivor’s benefits that you and your family members may be eligible to receive. You can also order a statement at the SSA website, at your local SSA office, or by calling (800) 772-1213.

Social Security Eligibility

When you work and pay Social Security taxes, you earn credits that enable you to qualify for Social Security benefits. You can earn up to 4 credits per year, depending on the amount of income that you have. Most people must build up 40 credits (10 years of work) to be eligible for Social Security retirement benefits, but need fewer credits to be eligible for disability benefits or for their family members to be eligible for survivor’s benefits.

Your retirement benefits

If you were born before 1938, you will be eligible for full retirement benefits at age 65. If you were born in 1938 or later, the age at which you are eligible for full retirement benefits will be different. That’s because full retirement age is gradually increasing to age 67.

But you don’t have to wait until full retirement age to begin receiving benefits. No matter what your full retirement age, you can begin receiving early retirement benefits at age 62. Doing so is often advantageous: Although you’ll receive a reduced benefit if you retire early, you’ll receive benefits for a longer period than someone who retires at full retirement age.

You can also choose to delay receiving retirement benefits past full retirement age. If you delay retirement, the Social Security benefit that you eventually receive will be as much as 6 to 8 percent higher. That’s because you’ll receive a delayed retirement credit for each month that you delay receiving retirement benefits, up to age 70. The amount of this credit varies, depending on your year of birth.

Disability benefits

If you become disabled, you may be eligible for Social Security disability benefits. The SSA defines disability as a physical or mental condition severe enough to prevent a person from performing substantial work of any kind for at least a year. This is a strict definition of disability, so if you’re only temporarily disabled, don’t expect to receive Social Security disability benefits–benefits won’t begin until the sixth full month after the onset of your disability. And because processing your claim may take some time, apply for disability benefits as soon as you realize that your disability will be long term.

Family benefits

If you begin receiving retirement or disability benefits, your family members might also be eligible to receive benefits based on your earnings record. Eligible family members may include:

  • Your spouse age 62 or older, if married at least 1 year
  • Your former spouse age 62 or older, if you were married at least 10 years
  • Your spouse or former spouse at any age, if caring for your child who is under age 16 or disabled
  • Your children under age 18, if unmarried
  • Your children under age 19, if full-time students (through grade 12) or disabled
  • Your children older than 18, if severely disabled

Each family member may receive a benefit that is as much as 50 percent of your benefit. However, the amount that can be paid each month to a family is limited. The total benefit that your family can receive based on your earnings record is about 150 to 180 percent of your full retirement benefit amount. If the total family benefit exceeds this limit, each family member’s benefit will be reduced proportionately. Your benefit won’t be affected.

Survivor’s benefits

When you die, your family members may qualify for survivor’s benefits based on your earnings record. These family members include:

  • Your widow(er) or ex-spouse age 60 or older (or age 50 or older if disabled)
  • Your widow(er) or ex-spouse at any age, if caring for your child who is under under 16 or disabled
  • Your children under 18, if unmarried
  • Your children under age 19, if full-time students (through grade 12) or disabled
  • Your children older than 18, if severely disabled
  • Your parents, if they depended on you for at least half of their support

Your widow(er) or children may also receive a one-time $255 death benefit immediately after you die.

Applying for Social Security benefits

You can apply for Social Security benefits in person at your local Social Security office. You can also begin the process by calling (800) 772-1213 or by filling out an on-line application on the Social Security website. The SSA suggests that you contact its representative the year before the year you plan to retire, to determine when you should apply and begin receiving benefits. If you’re applying for disability or survivor’s benefits, apply as soon as you are eligible.

Depending on the type of Social Security benefits that you are applying for, you will be asked to furnish certain records, such as a birth certificate, W-2 forms, and verification of your Social Security number and citizenship. The documents must be original or certified copies. If any of your family members are applying for benefits, they will be expected to submit similar documentation. The SSA representative will let you know which documents you need and help you get any documents you don’t already have.

Contact the experts at Sterling Group United today and we can assist you with your Social Security concerns, and discuss relevant Social Security topics to help meet your financial needs.