By Martin Coffey
Q. Mr. D writes: “I will turn 62 in February and have been thinking about filing for early retirement benefits from Social Security. The last statement I received from Social Security said that I would be able to draw about $1,200 a month if I start drawing at 62. I also plan to continue working for a few more years, even if start receiving benefits. I gross $994 every two weeks. I have medical and 401(k) taken out, and would like to increase the 401(k) amount. What is the maximum that I can have taken out pretax for my 401(k) and will it be worth it for me to start my Social Security early?”
A Social Security counts the amount that you earn before any deductions as your earnings for the retirement test and for Social Security taxes. Based on your gross earnings of $994 every two weeks ($994 x 26 pay periods), your earnings for the year will be approximately $25,834 if you plan to work all year.
If you are correct about your age 62-benefit amount, it is possible that you could receive checks for part of the year and still earn $25,834. Social Security will deduct $1 from your benefits for every $2 you earn over the earnings limit. The earnings limit for 2010 is $14,160. We have not yet received the earnings limit for 2011.
Q. Ms. V asks: “A couple of employees where I work have heard that if we do not enroll in Medicare when we are eligible, we will permanently pay a higher premium.
My insurance company says that when group coverage ends, we will have eight months to enroll in Medica5re Parts A & B without experiencing a delay in coverage or a penalty in higher premiums. My question is do we have to sign up for Medicare at 65 to avoid paying a higher premium, or can we wait until we are 66?”
A.: You do not have to file for Medicare at age 65 if you are still working and covered by an employer group health plan based on your or your spouse’s employment.
You need to file if at any time after 65, your employment or your health insurance terminates. You have six months after that date to apply for Medicare. Part A (hospitalization) of Medicare can be retroactive for six months from your date of filing if you are past age 65 and want it to be retroactive.
It is free if you or your spouse has the necessary credits based on your work. Enrollment in Part B is based on the “special enrollment period” and your entitlement date will be the month after the month in which you apply. There is no retroactivity for Part B, and if you enroll in the special enrollment period, you will pay the same premium that is in effect for people attaining age 65 that year.
Further reference for this question and many others can be found at our website: www.socialsecurity.gov under the Questions segment in the right column. Select “Benefits”, then hit GO. Search by keyword.
Get answers to your Social Security questions each Thursday from the Social Security District Director Martin Coffey. Submit questions by writing to Business Editor John Vass Jr., Chattanooga Times Free Press, P.O. Box 1447, Chattanooga, TN 37401-1447, or by e-mailing him at jvass@timesfreepress.com