Social security at retirement

[Beginning]

I am just barely learning the ropes of personal finance here so please bear with me.

If a married couple retire with a pension and significant holdings in IRAs and 401Ks, will they be barred from collecting social security (provided they otherwise qualify for social security on the basis of work and credits etc) ?

This is for my sister - a divorced mother to a severely disabled child. She will have a sizeable nest egg for her son in a special needs trust but also wants him to have SSDI after her time. She plans to start drawing social security and I am wondering if her nest egg might be too big to qualify as a "needy retired American" ? My concern is - if she can't get SS then her son can't get SSDI (and he will need lifelong support).

Please advise - just feeling paranoid here.

[Petunia 100]

I am just barely learning the ropes of personal finance here so please bear with me.

If a married couple retire with a pension and significant holdings in IRAs and 401Ks, will they be barred from collecting social security (provided they otherwise qualify for social security on the basis of work and credits etc) ?

This is for my sister - a divorced mother to a severely disabled child. She will have a sizeable nest egg for her son in a special needs trust but also wants him to have SSDI after her time. She plans to start drawing social security and I am wondering if her nest egg might be too big to qualify as a "needy retired American" ? My concern is - if she can't get SS then her son can't get SSDI (and he will need lifelong support).

Please advise - just feeling paranoid here.

No. Regular SS benefits are based on your service credits and earnings; they are not based on your need or assets.

There is also a program called SSI, which is need based.

[Joan.of.the.Arch]

The Social Security Administration's website is written in plain English, so you can get your basic answers pretty easily.

https://www.ssa.gov/disability/

Social Security administers two different disability programs.

If a person has paid into Social Security for the required number of quarters, then they will get a check in retirement. It doesn't matter if they are Richie Rich or Poor Pitiful Paul.

[Bob B.]

My non-expert understanding is the only difference between Richie Rich and Poor Pitiful Paul - relative to social security retirement benefits - is that Richie Rich pays federal income tax on a portion of SS earnings, where Poor Pitiful Paul doesn't.

Where exactly that break between paying taxes on SS income, and not paying taxes is - I don't know.

[Petunia 100]

My non-expert understanding is the only difference between Richie Rich and Poor Pitiful Paul - relative to social security retirement benefits - is that Richie Rich pays federal income tax on a portion of SS earnings, where Poor Pitiful Paul doesn't.

Where exactly that break between paying taxes on SS income, and not paying taxes is - I don't know.

For single people, if half of SS benefits + all other income is less than 25k, then SS benefits are not taxable.

For married people, if half of SS benefits + all other income is less than 32k, then SS benefits are not taxable.

Those numbers are not indexed for inflation and have not budged in a long time.

[Drake3287]

If the person with a pension applies for SS, he or she will only get a reduced amount based on the fact they they have a pension already. They will NOT get the full SS amount. If both people have a pension, both will only receive this reduced amount also.

I just went through this the other day with SS regarding my situation although I'm still in my 50's. I have a pension so if I had the 40 SS credits required, I would only get a reduced amount of the monthly benefit. Because my wife doesn't have a pension, she get's the full SS amount when she reaches retirement age.

In my case because I worked for a government agency for 30 years, I didn't pay into SS so I don't get anything anyway although I did pay into it prior to this job in my late teen's, early 20's. I asked the SS person what would happen if I went and got a part-time job just to reach the 40 quarter mark. She said even if I reached the 40 quarter mark, I wouldn't receive anything simply because of amount of my pension.

Lot's of people go through life expecting this full SS amount but are surprised to find out later in life that it's not always what they expected.

[Like2Plan]

If the person with a pension applies for SS, he or she will only get a reduced amount based on the fact they they have a pension already. They will NOT get the full SS amount. If both people have a pension, both will only receive this reduced amount also.

I just went through this the other day with SS regarding my situation although I'm still in my 50's. I have a pension so if I had the 40 SS credits required, I would only get a reduced amount of the monthly benefit. Because my wife doesn't have a pension, she get's the full SS amount when she reaches retirement age.

In my case because I worked for a government agency for 30 years, I didn't pay into SS so I don't get anything anyway although I did pay into it prior to this job in my late teen's, early 20's. I asked the SS person what would happen if I went and got a part-time job just to reach the 40 quarter mark. She said even if I reached the 40 quarter mark, I wouldn't receive anything simply because of amount of my pension.

Lot's of people go through life expecting this full SS amount but are surprised to find out later in life that it's not always what they expected.

Drake3287,
This Windfall Elimination Provision applies to a specific group of people.

"This provision can affect you when you earn a retirement or disability pension from an employer who didn’t withhold Social Security taxes and you qualify for Social Security retirement or disability benefits from work in other jobs for which you did pay taxes."

More details found here:

https://www.ssa.gov/pubs/EN-05-10045.pdf

The other side of the coin is the Government Pension Offset

https://www.ssa.gov/pubs/EN-05-10007.pdf

[Like2Plan]

I am just barely learning the ropes of personal finance here so please bear with me.
If a married couple retire with a pension and significant holdings in IRAs and 401Ks, will they be barred from collecting social security (provided they otherwise qualify for social security on the basis of work and credits etc) ?
This is for my sister - a divorced mother to a severely disabled child. She will have a sizeable nest egg for her son in a special needs trust but also wants him to have SSDI after her time. She plans to start drawing social security and I am wondering if her nest egg might be too big to qualify as a "needy retired American" ? My concern is - if she can't get SS then her son can't get SSDI (and he will need lifelong support).
Please advise - just feeling paranoid here.

Now, I would think that her son already qualifies for SSDI on the basis of his disability. As previously mentioned, your sister will qualify for SS based on her work record and may have to pay income tax on it based on other income (not assets). If she created a special needs trust, it should have been drawn up so that it doesn't disqualify her son for the SSDI. But, as such the trust can only be used for certain things.

A few years ago Congress created the Achieving a Better Life Experience (ABLE) act which is a special needs trusts for individuals with disabilities.
The nice thing about this is you don't need to go to a lawyer to set it up. The proceeds from the account must be used for Qualified Disability Expenses or there are penalties as well as any non-qualified funds you withdraw could be counted against you for purposes of determining your eligibility for means-tested public benefits programs.

The cumulative ABLEnow account value limit is currently $500,000. Here is a link that explains the details: https://www.able-now.com/resources/faqs