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Social Security Payments to Retired Military Veterans

In the United States, our Social Security program provides the economic foundation for millions of Americans, including retirees and disabled individuals, as well as the spouses and families of covered workers who are retired, disabled, or deceased. 


In 1935, Congress enacted the Old Age, Survivors, and Disability Insurance (OASDI) program, better known as Social Security. It was designed to alleviate the poverty that many elderly individuals experienced during and after the Depression of the 1930s. Its goal was to provide a financial safety net...essentially, a floor of income protection for wage-earning workers once they retire and no longer receive a steady flow of income.

  • Approximately, 167 million people work and pay Social Security taxes and about 60 million people receive monthly Social Security benefits

  • Most of Social Security recipients are retirees and their families—about 42 million people.

 

Question:“So, what about my Social Security income payments. I served in the military…do I get any?” The question come up often, particularity with retiring military servicemembers.

Answer:The answer is yes. Earnings for active duty military service or active duty training have been covered under Social Security since 1957. Social Security has covered inactive duty service in the armed forces reserves (such as weekend drills) since 1988. If you served in the military before 1957, you didn’t pay Social Security taxes, but we gave you special credit for some of your service.


Important Note: You can get both Social Security benefits and Military Retirement. Generally, there is no reduction of Social Security benefits because of your military retirement benefits. You’ll get your full Social Security benefit based on your earnings.


Today, Social Security provides the following primary types of benefits:

 

  • Monthly disability benefits: are payable to workers who suffer long-term disabilities and are unable to work.

  • Monthly survivor benefits: are payable after the death of an eligible worker or Social Security beneficiary to eligible family members.

  • A nominal death benefit: $255—is payable to a deceased worker’s spouse (or dependent child if there is no spouse) upon the worker’s death.

  • Monthly retirement payments: provide income for eligible retirees and their spouses. The Retirement Income Benefit (RIB) which replaces part of a retiree’s work income is one of the most important components of the Social Security Program. Benefits continue as long as the retiree or surviving spouse live. The benefits could increase due to annual adjustments for inflation. While state and federal pensions are typically adjusted for inflation, most private pensions are not.  A Bureau of Labor Statistics survey reported that about nine percent of blue collar and service industry employees who are in traditional pension plans received an automatic cost of living adjustment in that year.  That number is much lower today. 

 

How Social Security Is Provided (Funding)
Social Security is funded through a dedicated payroll tax system. It is largely a ‘pay-as-you-go’ process. This means that current workers and their employers pay taxes into the program and those funds are used almost immediately to pay monthly income benefits to program recipients aka beneficiaries. It is very important to know ow that Social Security benefits are not funded in advance. Instead, the benefits that retirees or disabled workers receive today are funded by today’s workers who are paying into the system. Simply stated, the worker’s benefit amount is based on their earnings history and age at retirement, not on how much you and your employer paid in Social Security taxes. Typically, for most workers taxes paid are closely tied to their earnings. When today’s workers retire down the road (or if they were to become disabled or die), their benefits will similarly be paid by the next generation of workers.

 

Question: Baby Boomers have always had an outsize presence compared with other generations. They peaked at 78.8 million in 1999 and have remained the largest living adult generation. There were an estimated 74.1 million Boomers in 2016. So, who going to fund the Baby Boomers Social Security payments? Are they not our largest generation that ever lived in America? 

Answer: The answer is twofold. Lets start with Gen X. The the oldest Gen Xer was 51 in 2016, the Gen X population is projected to grow for a couple more years. Gen Xers are projected to outnumber Boomers in 2028, when there will be 64.6 million Gen Xers and 63.7 million Boomers. The Census Bureau projects that the Gen X population will peak at 65.8 million in 2018.


Now come the Millennials, as of 2017…the most recent year for which data are available, 56 million Millennials (those ages 21 to 36 in 2017) were working or looking for work. That was more than the 53 million Generation Xers, who accounted for a third of the labor force. And it was well ahead of the 41 million Baby Boomers, who represented a quarter of the total. Millennials surpassed Gen Xers in 2016 .

 


How Do I Know I Am Eligible to Receive Full Retirement Benefits?
To be eligible to receive full retirement benefits, a person must earn a certain number of credits. Specifically, an individual must have earned 40 credits to be eligible for full retirement benefits. One credit is earned for a stated amount of wages each quarter. In any year, a maximum of four credits can be earned.


Generally, a person must work an equivalent of ten years to qualify for Social Security retirement benefits. A worker who has obtained 40 credits is considered fully insured. Do You Qualify? Use Social Security's ‘Retirement Estimator


Social Security Survivor Benefits
Social Security also provides monthly survivor benefits for a spouse, children, and dependents when an eligible worker dies. The number of credits needed to provide a survivor benefit depends on the worker’s age at death. Generally, the younger a person is at death, the fewer credits needed for family members to receive survivor benefits. However, no one needs more than ten years of work (40 credits) to be eligible for any Social Security benefit. Go to MySocialSecurity for details.

What about Disability Payments before I reach Retirement Age
Social Security also provides disability benefits. However, to qualify for disability benefits, an individual must be unable to do any kind of substantial gainful work. The disability also must be expected to last at least 12 months or to result in earlier death.


The definition of disability under Social Security is different than other programs. Social Security pays only for total disability. No benefits are payable for partial disability or for short-term disability as with commercial Insurance disability coverages.


You would be considered disabled under Social Security rules if:

 

  • You cannot do work that you did before;

  • You cannot adjust to other work because of your medical condition(s); and

  • Your disability has lasted or is expected to last for at least one year or to result in death.


This is a strict definition of disability. Social Security program rules assume that working families have access to other resources to provide support during periods of short-term disabilities, including workers' compensation, insurance, savings, and investments. Get Full Details 

 

Sevicemembers Applying for Social Security Benefits
No matter what age a person decides to begin receiving Social Security, benefits will not start until a person files an application with the Social Security Administration (SSA). Social Security benefits do not automatically begin when a person retires or reaches Full Retirement Age. Individuals can apply online at the Social Security Administration’s Web site.


The Veteran will need more than their DD214 (military discharge papers)  The veteran may be required to submit several documents (including the DD214) that, depending on the individual’s circumstances, may include any or all the following:

 

  • Social Security number

  • Birth Certificate

  • W-2 forms or self-employment tax return for the prior year

  • spouse’s birth certificate and Social Security number if he or she is applying for benefits

  • marriage license if applying for spousal benefits

  • proof of U.S. citizenship or lawful alien status

  • bank name and account number to have benefits deposited directly into the recipient’s personal account

Earliest Age is 62 

The earliest age at which individuals can receive retirement benefits is 62; the earliest that they can apply is three months before they reach age 62. All other applicants should apply for retirement benefits no more than four months before the date they want their benefits to start because the Social Security Administration will not process applications that have later starting dates. After applying, a person’s benefits will be paid the month after they are due. For example, if a person’s benefits will start in April, he or she will not receive a first check until May.


Social Security and Medicare
Once an individual who has worked and contributed to the Medicare system for at least ten years and turns 65, he or she will likely qualify for Medicare. Part A (hospital insurance) is automatically provided at no premium cost to those who qualify; Part B (medical insurance) is optional and requires enrollment and payment of a monthly premium for coverage. Part B premiums are billed directly to the recipient on a monthly or quarterly basis. Once the recipient’s Social Security retirement benefits begin, Part B premiums are automatically deducted from the retirement benefit. Get Started

 

Quick Reminders

  • The Servicemember should remember that to qualify for retirement benefits, a person needs to work for approximately ten years.

  • Also, a person’s retirement benefit will ultimately depend on the amount of his or her earnings over a lifetime as well as the age at which he or she elects to receive benefits.

 

Most of all, the active military servicemember and veteran should keep in mind:

  • Generally, there is no reduction of Social Security benefits because of your military retirement benefits. You'll get your full Social Security benefit based on your earnings.

  • Survivors benefits may affect benefits payable under the optional Department of Defense Survivors Benefit Plan. Check with the Department of Defense or your military retirement advisor for more information.

  • If you have health care protection from the Department of Veterans Affairs (VA), TRICARE (formerly CHAMPUS), or the CHAMPVA program, your health benefits may change or end when you become eligible for Medicare. You should contact the VA, the Department of Defense, or a military health benefits advisor for more information.

 

Resources and References

  1. Military Service and Social Security: https://www.ssa.gov/pubs/EN-05-10017.pdf

  2. Can Your Pension Plan Afford To Give COLAs? |Pension Rights Center | http://www.pensionrights.org/publications/fact-sheet/can-your-pension-plan-afford-give-colas

  3. Millennials Projected to Overtake Baby Boomers as America’s Largest Generation |Pew Research |March 2018 |http://www.pewresearch.org/fact-tank/2018/03/01/millennials-overtake-baby-boomers/

  4. Millennials Outnumber Baby Boomers and Are Far More Diverse, Census Bureau Reportshttps://www.census.gov/newsroom/press-releases/2015/cb15-113.html

  5. Millennials are the largest generation in the U.S. labor force | April 2018 |http://www.pewresearch.org/fact-tank/2018/04/11/millennials-largest-generation-us-labor-force/