By Stanley A. Tomkiel, III
Imagine going to Social Security to file for Retirement Benefits when you turn 65 and getting an extra few thousand dollars in benefits that you didn't expect to receive. Now imagine going to file, and being told "It's too bad you didn't come in sooner because we could have paid you extra money, but now it's too late." By using a "protective filing statement" you could be leaving the Social Security office with a grin on your face. It's a lot better making plans for an unexpected windfall than kicking yourself for not acting sooner.
Many times, a retiree can be eligible for benefits before he or she would expect because of the way the rules work. Many folks think they can't get any benefits before they retire, but sometimes they can. It depends on your annual earnings and month of filing for benefits.
If a beneficiary's annual earnings do not exceed $15,500 in 1999 (for those who turn 65 this year, or $9,600 for those under 65) he or she can receive benefits for ALL months of the year if at least age 62 in all months. BUT, the application must be filed, or the filing date protected, early in the year, because applications for benefits have limited retroactive scope.
The general rule is that an application for retirement benefits cannot be retroactive for more than six months before it is filed, or the date the filing is protected. If the beneficiary is under 65 in any prior month, there is no retroactivity for such a month. Let's look at some examples to see how these rules work.
Let's say John Smith will turn 65 in May and plans to retire then. He will work till April, but his annual earnings will be only $15,000. He figures he will start collecting his $1200 monthly benefit beginning in May. He goes to the Social Security office then and is told that because his yearly earnings are less than the $15,500 annual limit, he could have been eligible for benefits for all months of 1999, starting with January. But because benefits for those months would require a slight age reduction, his application cannot be retroactive. He loses the benefits for January through April.
Now let's say that John had filed a protective filing statement with Social Security in January. When he goes to file for his benefits in May he is told that his application can be effective as of January, because he protected his filing date. He will receive a slightly reduced benefit due to the fact that he is four months under age 65 in January, but the reduction is only 5/9 of 1% for each month. This reduces the benefit by $28, from $1200 to $1172, but he collects benefits for four extra months. He picks up $4688 for the retroactive period. If he passed up this retroactive money, it would take him 14 years at the extra $28 per month to recoup it.
There are many other ways that a protective filing can save you benefits, but time does not allow a discussion of all of them. The rules on earnings limitations and application retroactivity rules are too complex to discuss fully in this space. For a complete discussion, see my book, Social Security benefits Handbook by Sourcebooks, Inc., which you can order online through this website or Amazon.
Any written statement showing intent to claim benefits filed with the Social Security Administration can protect the filing date for an applicant who later files the formal application.
In order to qualify as a protective filing statement, the statement must be written, it must indicate an intent to claim benefits and it must be signed by the claimant, the claimant's spouse or by a person who could sign an application. All it needs to say is: "I wish to claim social security benefits." You should put your social security number on it along with your name and address.
SSA considers the protective filing statement filed as of the date it receives it or the date it is mailed by the U.S. Postal Service. In that case, the postmark will be used as the date of filing if that is before it is received by Social Security. Of course, it is a good idea to mail a protective filing statement by certified mail, return receipt requested, so that you can prove the date it was mailed.
Even better is to visit your District Office and ask the Claims Representative to prepare a protective filing statement for you. Ask for a copy and also ask him or her to date-stamp your copy so that you can prove that it was filed on that date. Protective filing statements have been known to get lost in the local District Office. As long as you have your copy with a date stamp you will not have to worry about that.
SSA will also accept as a date of filing of a protective filing statement the date such a statement is filed with a Medicare-participating hospital in which you are a patient as long as the hospital sends the statement to SSA.
After receiving a protective filing statement SSA will send a notice to the claimant advising him that an application must be filed within six months. The protective filing statement will be effective for that six-month period. The six-month period does not begin however, until Social Security actually sends the notice. If they never do, then the protective filing statement could be good forever.
It costs nothing to file a protective filing statement and can save some people hundreds or thousands of dollars. You should file one in January of every year you are at least age 62, because you never know when you may be filing for Social Security. With the liberalization of the earnings limitation rules, many people can collect partial benefits even though they are still working, but the filing date must be protected to take full advantage. We will discuss these rules in future columns on this site. And of course, you can find a full discussion in the Social Security Benefits Handbook.( See Below on how to receive your copy.)
One last advice: you have a right to file the protective filing statement, so don't let Social Security talk you out of it. They try to do this sometimes to avoid the follow up work.
To receive the Social Security Benefits Handbook click here. This comprehensive guide answers many of the questions individuals seek regarding social security benefits. Easy to read. Highly informative. If you are looking to maximize your benefits, get everything you deserve and minimize the red tape, then this book is a must. Ordering is handled through Amazon.com at a substantially discounted price. After ordering please use you browsers back button to return to this page.