Source: American Postal Worker Magazine Articles: July/August edition
Judy Beard, Director
Retirees Department

(This article first appeared in the July/August 2013 edition of The American Postal Worker.)

Alzheimer’s disease has touched the lives of most Americans, either through family members, friends or neighbors. Many of us have thought, “Are misplacing my keys a few times a month temporary moments of memory loss or a sign of Alzheimer’s?” The fear of the unknown and the uncertainty that comes with aging leads to many questions.

According to the Alzheimer’s Association (www.alz.org), one in nine seniors has Alzheimer’s disease, but half are undiagnosed. Early diagnosis is key to managing the disease.

In April, the HOPE for Alzheimer’s bill was introduced in Congress (S. 709 in the Senate and H.R. 1507 in the House). “HOPE” stands for Health Outcomes, Planning, and Education. The legislation would provide Medicare coverage for services such as diagnosis of Alzheimer’s disease and care-planning for the newly diagnosed.

The bill has bipartisan support, but not enough. Please contact your senators and representative and ask them to co-sponsor the bill.

We also encourage you to continue to voice support for the Postal Service Protection Act (S. 316 / H.R. 630). The legislation is urgently needed to provide financial relief to the USPS. The Postal Service Protection Act would end the agency’s pre-funding mandate; allow it to recover overpayments made to the federal Treasury; protect service standards and six-day delivery, and allow the USPS to offer new products and services to generate new revenue.

We also encourage you to continue to oppose the “chained CPI.” President Obama’s 2014 budget would use the chained Consumer Price Index (CPI) to calculate cost-of-living adjustments for Social Security recipients, which would lower living standards. We support strengthening Social Security, cutting tax loopholes for the very wealthy and corporations, and instituting the CPI-E, which more accurately reflects how seniors experience inflation.

Outstanding Debts

Reminder: A proposal by Retirees Department during the 2010 contract negotiations resulted in language that outlines the rights of retirees when faced with a USPS debt.

Before the Postal Service collects an alleged debt, retired USPS employees are entitled to written notice of the outstanding debt, including notice of the right to file a grievance. The retired employee must file a grievance within 14 days at his or her last office of employment. Once a grievance is filed, the Postal Service is prohibited from recovering the debt until the grievance procedure has been exhausted.

Department Grows

Thank you to the APWU locals, state unions, and retiree chapters that sponsored events honoring seniors and recent retirees during the last few months. Your programs help disseminate information about the department and the work we do.

We have more than 40,000 members and we are still growing! Retirees often remark that they take pride in continuing union membership and appreciate the benefits of belonging to APWU.

July 9, 2013

Source: http://www.myfederalretirement.com
Robert R. McGill

A sentry who daydreams while on duty imagines himself awake in the midst of a fantasy, in danger of shooting himself in his foot because of the images of courage he would have, but for the monotony of the momentary lull of dawn’s quietude, as the princess whom he protects softly stirs in the comfort of satin bed sheets.
— A Greek Proverb

What is familiarly known among practitioners of Federal Disability Retirement Law as the “Bruner Presumption” is essentially a recognized legal advantage in a Federal Disability Retirement case.

For those Federal or Postal Disability Retirement applicants who intend to assert such a presumption, and who intend to rely upon the legal force of its persuasive authority, a word of caution:  Act as if you don’t have it.  While it may be well-established law that an employee’s removal for his or her medical inability to perform the essential functions of his job or position will invoke the legal trigger; and further, that such a removal constitutes prima facie evidence that the removed Federal employee is entitled to disability retirement as “a matter of law”; and, finally, that the burden of production then shifts to OPM to produce evidence sufficient to support a finding that the applicant is not entitled to disability retirement benefits (See Bruner v. Office of Personnel Management, 996 F.2d 290, 294 (Fed. Cir. 1993); Marczewski v. Office of Personnel Management, 80 M.S.P.R. 343 (1998) ); nevertheless, one must always expect a wide chasm between what the law “says”, and what the practical application of the law “means”.

Thus, before a Federal or Postal employee considers relying upon the Bruner Presumption for his or her Federal Disability Retirement application, a careful analysis of the efficacy of such reliance upon the legal presumption should be scrutinized and cautiously analyzed.  First, however, let us be clear.  To borrow an oft-worn Shakespearean phrase:  It is better to be, than not to be, just as it is better to have the Bruner Presumption than not.  However, the problem of possession is that it will often lead to loss of vigilance — similar to the proverbial story regarding the underachiever of the young man who comes from wealth and social advantages.  It is precisely because of the lull of the Bruner Presumption and what it portends, that caution must be exercised in the assertion of the Bruner Presumption.

To begin the analysis, we must first review the existent elements of the Bruner Presumption:

Required Element #1:  A Federal or Postal Worker is removed, and the removal is based upon one’s medical inability to perform one or more of the essential elements of one’s job (in subsequent cases, of course, there has been an extension of the presumption, where the Merit Systems Protection Board has held that the Bruner Presumption also applies where “removal for extended absences is equivalent to removal for physical inability to perform where it is accompanied by specifications indicating that the decision to remove was based on medical documentation suggesting that the appellant was disabled and unable to perform her duties.”  McCurdy v. OPM, DA-844E-03-0088-I-1 (April 30, 2004), citing as authority Ayers-Kavtaradze v. Office of Personnel Management, 91 M.S.P.R. 397 (2002).  But for our present purposes, for this discussion, let us hypothesize a clearly-established  removal by a Federal agency, of an employee, which indicates that it was because of the medical inability to perform one’s job that formed the foundational basis of the removal.

Leads to Element #2:  Such a removal constitutes evidence which is prima facie (Latin for, “On the face of it”, or on a first appearance) and essentially referring to a fact which is presumed to be the case, unless it is otherwise disproven.  Thus, in a Federal Disability Retirement case, the fact of an agency removal based upon a medical inability to perform one’s job leads to a legal presumption that one is entitled to disability retirement benefits unless otherwise disproven.  On its face, then, there is a presumption that one is entitled to Federal Disability Retirement benefits when a person is removed for his or her medical inability to perform one or more of the essential elements of one’s job.

Results in Element #3:  Because the Disability Retirement presumption of approval can be “disproved”, the burden of proving the negative logically shifts from the Federal or Postal employee, over to the entity which must disprove it:  The U.S. Office of Personnel Management.

Now, as to each, let us perform the proper analysis and evaluation in order to arrive at an accurate assessment.

 A.  The medical removal.  The spectrum of language can range from the obviously explicit, to the “questionable at best” range, and it is therefore incumbent upon the Federal or Postal employee to fight where necessary, and insist when appropriate, for the insertion of language which will increase one’s chances on a probability scale to enhance triggering the presumption.  Thus, if a proposed removal states that the Federal or Postal Worker is being removed for his or her medical inability to perform the essential duties of the position, then there is little to wrangle over, precisely because such precision of language will unquestionably invoke and trigger the Bruner Presumption.  On the other hand, if language merely implies that the removal is based upon one’s medical condition, there may be difficulties down the road — especially if one’s Federal Disability Retirement application is denied at the Initial Stage of the application, then again at the Reconsideration Stage at the U.S. Office of Personnel Management, and one is therefore forced to file an appeal to the U.S. Merit Systems Protection Board.  There, you will be required to persuade and convince the Administrative Judge that the language contained in the obfuscated content of the removal letter leads to a reasonable inference that should trigger the Bruner Presumption.  In the end, that which is explicit is obviously preferable to an implied administrative action.  Additionally, it goes without saying that the decision to remove the Federal or Postal employee should be consistent with the language contained in the proposal of removal.  A sleight of hand in a bait-and-switch scheme is not unheard of by Federal Agencies and the U.S. Postal Service.

B.  Evidence which triggers a presumption would obviously be that factual basis which naturally results in the so-called Bruner Presumption.  But what does all of that mean?  What, in practical terms, does a presumption lead to, and if one has it, in what way does it result in being entitled to Federal Disability Retirement benefits from the U.S. Office of Personnel Management?  First, the possession of certain elements will lead to a domino effect of subsequent triggers.  Thus, once it has been established that one is in possession of a removal action from the Federal agency, and the removal action was based upon one’s medical inability to perform the essential elements of one’s job, then there is a “presumption” — i.e., an act of acceptance that it is true — that one is entitled to Federal Disability Retirement benefits “as a matter of law”.  But be careful, here — for, the crucial point of reference will depend upon the establishment of what the “it” is, as in, when OPM or the MSPB Administrative Judge must accept that “it” is true, what is the “it” that we are referring to?  Presumably, the “it” refers to the fact that the medical condition for which one has been removed is “true”.  But if the medical condition and the provable documentation which supports the existence and impact of the medical condition are insufficient, then the fact that the agency has removed the Federal or Postal employee because of the medical condition may become neutered and irrelevant.  The circularity of such a problem is the crux of the issue with the Bruner Presumption:  It in no way lessens the burden of persuasion on the part of the Federal or Postal employee who has the Bruner Presumption to prove one’s case.  Thus, whether one is removed for one’s Medical Inability to perform the essential elements of one’s job, or for some other reason, the Federal or Postal employee filing for Federal Disability Retirement benefits must still prove all of the tripartite elements which form the essence of a Federal Disability Retirement application:  The existence of a medical condition; the impact upon one’s positional duties in the Federal job; and the nexus between the former and the latter.

C.  What does it mean to state that the “burden of production” then shifts to OPM to produce evidence sufficient to support a finding that the applicant is not entitled to disability retirement benefits, once the Bruner Presumption is triggered?  On a theoretical level, it would have the greatest meaning in the following hypothetical:  OPM denies a Federal Disability Retirement application both at the Initial Stage and the Reconsideration Stage; the Federal or Postal employee files an appeal to the Merit Systems Protection Board; a hearing is held; the Administrative Judge declares and informs the parties that the Bruner Presumption applies; OPM offers nothing more — no argument, no testimony, nothing; the record is closed and the Administrative Judge makes a decision.  Presumably, the Federal or Postal employee in such a hypothetical would win the case.  But again, there is a built-in caveat — for it is also quite likely that the Administrative Judge will act sua sponte (yes, the ghost of William F. Buckley still lives, where we all like to drop Latin phrases to appear erudite and obnoxious) and review the medical evidence for sufficiency regardless of the Bruner Presumption.

As an aside, there is the further question of what it could actually mean for the burden of production to “shift” to OPM.  Since OPM is not a medical facility, in practical terms this means that they engage in “proof by negative inference”  — meaning, it is time to play hardball law.  They will essentially attempt to undermine the credibility of the doctor through cross examination; question the integrity of the Federal or Postal employee by pointing out other work that the employee has been seen to engage in; show what Supervisors and coworkers have said about the employee; and other evidence which often have little or nothing to do with the medical condition itself.  In short, the law allows that OPM can meet its burden of production by demonstrating a lack of objective medical evidence providing a reasoned explanation of how certain aspects of a particular condition render the employee unable to perform specific work requirements. Trevan v. Office of Personnel Management, 69 F.3d 520, 526-27 (Fed. Cir. 1995).

There is, additionally, a further step involving the Bruner Presumption.  If OPM produces the rebuttable evidence through negative inferences, the appellant then must come forward with evidence to rebut OPM’s assertion that he or she is not entitled to Federal Disability Retirement benefits.   We have thus a back-and-forth interplay:  Presumption; rebuttal of the presumption; rebuttal of the rebuttal.  The Board then considers the totality of the evidence in deciding the Federal Disability Retirement issue, including objective clinical findings, diagnoses and medical opinions, subjective evidence of pain and disability, evidence relating to the effect of the applicant’s condition on his or her ability to perform in the grade or class of position last occupied, and evidence that the applicant was not qualified for reassignment to a vacant position at the same grade or level as the position the Federal or Postal employee last occupied. (See, e.g., Booth v. Office of Personnel Management, 99 M.S.P.R. 13 (2005).  Note the following, however:  Notwithstanding the shifting burdens of production, however, the appellant retains the burden of persuasion at all times. Trevan, 69 F.3d at 527.

What does this all mean?  For, what good is the legal presumption triggered by Bruner, if the burden of persuasion is always retained by the appellant?  One would expect that a legal presumption which asserts that a Federal or Postal employee is entitled to Federal Disability Retirement benefits “as a matter of law”, would be a difficult one to overcome.  However, just when you thought that the right hand giveth, the left hand seemingly taketh away.  For, if the U.S. Office of Personnel Management can undermine a legal presumption — one which raises the entitlement of Federal Disability Retirement benefits as a “matter of law” — merely by conveying a series of negative inferences, then how valuable or effective can the presumption be in the first place?  One way to look at it is as follows:  The legal burden of proof is one of preponderance of the evidence — meaning that the Judge, after reviewing the evidence in its entirety, will find for the Federal or Postal Worker filing for Federal Disability Retirement benefits if it appears to be more likely than not.  That burden of proof is a fairly low one.  As such, in cases where the scale is nearly equally balanced, having the Bruner Presumption may well be enough to tip the scales of justice in favor of the Federal or Postal disability retirement applicant.  How should one NOT view the Bruner Presumption?  By relying upon it too severely, at the expense of submission of sufficient medical documentation.  Thus, in the end, the Bruner Presumption should be viewed as a legal advantage utilized after one has prepared one’s Federal Disability Retirement packet in as thorough and complete a manner as if no such presumption existed.  Then, upon completion of the Federal Disability Retirement packet, the added-advantage should be asserted.

Whether one is removed for one’s medical inability to perform the essential elements of one’s job or not, eligibility for Federal Disability Retirement benefits from the U.S. Office of Personnel Management should be established through careful and concise compilation of one’s case.  The burden of proof must always be met by the applicant, and utilizing the narrow legal maneuver is merely one mechanism from a conglomerate of legal tools which should be utilized with care and discretion.

Posted:  07/09/2013

About the Author

Robert R. McGill is an attorney who specializes in federal disability retirement, a practice area he dedicates 100% of his time helping Federal and Postal workers secure their disability retirement benefits under both FERS and CSRS. For more information about his legal services, publications and forum, please visit his CSRS and FERS Disability Retirement Website.

June 26, 2013
Edward A. Zurndorfer, Certified Financial Planner
Source: http://www.myfederalretirement.com

As more and more of the “baby boomers” (individuals born between 1946 and 1964) retire, the decision of when to start receiving Social Security retirement benefits, and on whose benefits (their own, a current spouse’s, or a former spouse’s) they will apply for, will need to be addressed. In a series of columns discussing strategies for receiving Social Security retirement benefits, this column discusses the “do-over” option.

As a review, an individual can collect a Social Security retirement check provided the individual has at least 40 credits of Social Security. This retirement benefit may be collected as early as the first full month after the month the individual becomes age 62. But if the individual starts collecting starting when they are age 62, the retirement benefit will be permanently reduced. The earliest age an individual can collect a full Social Security retirement benefit is their full retirement age (FRA). FRA depends on what year an individual was born. The following table summarizes FRA by year of birth and the portion of the full retirement benefit (claimed starting the month an individual reaches FRA) that an individual will receive if the benefit is claimed starting the first full month after the individual becomes age 62.

As more and more of the “baby boomers” (individuals born between 1946 and 1964) retire, the decision of when to start receiving Social Security retirement benefits, and on whose benefits (their own, a current spouse’s, or a former spouse’s) they will apply for, will need to be addressed. In a series of columns discussing strategies for receiving Social Security retirement benefits, this column discusses the “do-over” option.

As a review, an individual can collect a Social Security retirement check provided the individual has at least 40 credits of Social Security. This retirement benefit may be collected as early as the first full month after the month the individual becomes age 62. But if the individual starts collecting starting when they are age 62, the retirement benefit will be permanently reduced. The earliest age an individual can collect a full Social Security retirement benefit is their full retirement age (FRA). FRA depends on what year an individual was born. The following table summarizes FRA by year of birth and the portion of the full retirement benefit (claimed starting the month an individual reaches FRA) that an individual will receive if the benefit is claimed starting the first full month after the individual becomes age 62.

Full Retirement Age (FRA) by Year of Birth and Percentage Amount of Full Retirement Benefit Payable at Age 62

Until December 2010, the “do over” strategy allowed individuals to collect reduced Social Security retirement benefits starting as early as age 62 and, at any point up to age 70, “withdraw” their application for benefits, thereby stopping their monthly Social Security retirement benefit. Recipients could then repay all of their accumulated monthly benefits they had received to that point (without penalty and interest), and then at any time restart their benefits at a higher rate. The following example illustrates:

Frank was born Feb. 1, 1943. His FRA is age 66. In early 2005 Frank made the decision to receive his Social Security monthly retirement benefit. His monthly benefit was reduced by 25 percent as a result of starting his Social Security monthly retirement benefit at age 62. By the time Frank reached FRA in 2009, he had collected a total of $100,000 in Social Security retirement benefits. But in early 2009 after selling his principal residence for a profit, Frank repaid to the Social Security Administration the $100,000 in total benefits he had received to date. As a result, Frank’s Social Security benefits were increased by 25 percent when he restarted his monthly benefit in late 2009.

Although these repayments often exceeded over $100,000, before 2010 repaying the Social Security Administration was significantly cheaper than buying an immediate annuity from an insurance company that would generate the same amount of guaranteed income. The “do over” strategy essentially amounted to an “interest-free” loan from the Social Security Administration.

But effective Dec. 1, 2010, the Social Security Administration stopped the “do-over” policy. Under new Social Security Administration regulations that took effect in December 2010, an individual can repay benefits only once in a lifetime, and it must be within 12 months of first claiming benefits. If an individual changes their mind 12 months or later after they initially started their benefits, then they cannot take advantage of the “do over” strategy (“withdrawing” their application).

The question then becomes: Are those individuals who started collecting Social Security retirement benefits starting after 2010 before their FRA and have collected these benefits for more than 12 months out of luck with respect to the “do over” strategy? The answer: Not necessarily.

There is another little known Social Security Administration option that allows individuals who have reached their FRA to voluntarily suspend – but not repay- the Social Security benefits they are receiving. Besides suspending their own benefits, the suspension of benefits includes family benefits received based on their earnings records, such as spousal and children benefits. The suspended benefits earned delayed retirement credits equal to eight percent per year for each year they postpone collecting their benefits until age 70. Consider the following example:

Jean is entitled to a Social Security retirement monthly benefit of $1,600 at her FRA of 66. Jean started receiving her benefit at age 62 at a reduced (25 percent) amount of $1,200. At age 66, Jean contacts the Social Security Administration to suspend her monthly benefit payments. Putting aside any cost-of-living adjustments (COLAs) between ages 62 and 70, Jean’s monthly benefit will increase by eight percent for each year Jean does not receive a benefit until age 70. If Jean decides to reapply for her monthly benefit at age 70, her benefit will increase by 32 percent (four years times eight percent per year), boosting the benefit to 99 percent of what the benefit would have been if she had started collecting these benefits at her FRA.

Here is how the math works: 75 percent (reduced benefits at age 62) times 132 percent (delayed retirement credits from ages 66 through 70) equals 99 percent. For Jean, this means a monthly benefit at age 70 of $1,584 (132 percent times $1,200). Had Jean started collecting her benefit at age 66, her monthly benefit would have been $1,600.

$1,584/$1,600 = .99

Additional Considerations Before “Withdrawing” An Application Within the First 12 Months

Before making a decision to “withdraw” an application within the first 12 months of initially receiving benefits, there are some things individuals need to know about what will happen if they withdraw their application, including:

• An individual who “withdraws” an application must repay all the Social Security retirement benefits based on their retirement application. The repayment also includes any benefits a spouse, a dependent parent or children received based on the individual’s Social Security retirement benefit. Anyone who received benefits based on the individual’s benefits must also consent – in writing – to the “withdrawal” of application.
• Money withheld from the Social Security retirement checks must be repaid. Money withheld includes:  (1) Medicare Part B and Part D premiums (for individuals age 65 and older); (2) Voluntary federal income tax withholding for all years prior to the current year; and (3) Garnishments.
• Those individuals who are already entitled to Medicare benefits may also choose to withdraw their Medicare coverage, but they do not have to.

How to “Withdraw” An Application

For those individuals who are within the first 12 months of receiving their Social Security monthly retirement benefits, they can withdraw their application by filling out and submitting Social Security Form SSA-521. Included on Form SSA-521 must be a reason for withdrawing the application. Once the Social Security Administration receives Form SSA-521, they will then notify the applicant as far as how much in total benefits that needs to be repaid.

How to “Suspend” Social Security Retirement Benefits

For those Social Security benefit recipients who are too late for “withdrawing” their application, they can suspend their benefits once they reach FRA. They may do so by simply contacting the Social Security Administration at 1-800-772-1213 and state they want to suspend their benefits. Note that a suspension of benefits cannot occur until the recipient has reached FRA. They can restate their monthly benefits at any time thereafter by contacting the Social Security Administration.

Posted:  06/26/2013

About the Author

Edward A. Zurndorfer is a Certified Financial Planner, Chartered Financial Consultant, Chartered Life Underwriter, Registered Health Underwriter, Registered Employee Benefits Consultant and Enrolled Agent in Silver Spring, MD — and the owner of EZ Accounting and Financial Services, an accounting, tax preparation and financial planning firm also located in Silver Spring, MD.  Zurndorfer is also is an instructor at federal employee retirement seminars throughout the country and writes numerous columns and books on federal employee benefits.

June 18, 2013
Source: http://www.myfederalretirement.com

A couple of areas federal employees often overlook when planning for retirement are the “five year rules” that apply for keeping both Federal Employee Health Benefits (FEHB) and Federal Employee’s Group Life Insurance (FEGLI) after retirement.

Here are a couple of frequently asked questions regarding these issues from the Office of Personnel Management (OPM):

When can I keep my health insurance benefits after I retire?

You may continue your health insurance coverage only if you meet the following conditions:

• Your annuity must begin within 30 days or, if you are retiring under the Minimum Retirement Age (MRA) plus 10 provision of the Federal Employees Retirement System (FERS), health and life insurance coverages are suspended until your annuity begins, even if it is postponed.
• You must be covered for health insurance when you retire.
• You must have been continuously covered by the Federal Employees Health Benefits (FEHB) Program, TRICARE, or the Civilian Health and Medical Program for Uniformed Services (CHAMPUS):
  • for five years immediately before retiring;or,
  • during all of your federal employment since your first opportunity to enroll;or,
  • continuously for full periods of service beginning with the enrollment that started before January 1, 1965, and ending with the date on which you become an annuitant, whichever is shortest.

What are the requirements to keep life insurance in retirement?

You can keep your basic life insurance in retirement if all of the following conditions are met:

• You have coverage when you retire;
• You have not converted coverage to an individual policy;
• Your annuity begins within 30 days or, (However if you are retiring under the Minimum Retirement Age (MRA) plus 10 provision of the Federal Employees Retirement System (FERS) and you have postponed the commencing date of your annuity, health and life insurance coverage is suspended until your annuity begins) and,
• You were insured for life insurance for the five years immediately preceding retirement or the full periods of service when coverage was available.

You can keep your optional life insurance in retirement if all of the following conditions are met:

• You are eligible to continue your basic coverage; and,
• You were covered by the optional life insurance for the five years immediately preceding retirement or the full periods of service when coverage was available, if less than five years.

May 16, 2013
Edward A. Zurndorfer, Certified Financial Planner
Source: http://www.myfederalretirement.com

The majority of the federal employee workforce is covered by the Federal Employees Retirement System (FERS). One of the three components to the FERS retirement is Social Security. Since most federal employees at some point after they retire from federal service will elect to receive their Social Security retirement benefit, this column will present three strategies for employees — particularly FERS employees — to maximize their Social Security retirement benefit. The first two strategies apply to all employees; the third strategy applies to married and divorced employees.

1. Delay Claiming One’s Benefits For As Long As Possible, Possibly to Age 70

Social Security retirement benefits can be claimed as early as when an individual is age 62. But claiming benefits at age 62 will result in a permanent reduction to one’s benefits. For example, anyone born between 1943 and 1954 will get a full Social Security retirement benefit — their primary insurance amount (PIA) – at age 66. If that same individual claimed their benefit at age 62 their retirement benefit would be permanently reduced by 25 percent of their PIA. For every month the individual waits beyond age 62 to start receiving their Social Security retirement benefit, their benefit will increase by a fraction of one percent. Furthermore, for each year an individual delays claiming benefits past the year they become full retirement age (FRA) and until age 70, the individual’s benefit will increase by 8 percent per year (“delayed retirement credits”). Consider the following example.

Kirk, age 62, finds out by reading his current Social Security statement (downloadable at http://www.socialsecurity.gov/myaccount) that his PIA at age 66 (his FRA) is $1,500 per month. If Kirk elects to start receiving his benefit this year at age 62, he will receive $1,125 (75 percent of $1,500). If he delays the start of his benefit until age 70, he will receive $1,980. The difference between what Kirk will receive at age 62 ($1,125) and age 70 ($1,980) is $855 per month, or 76 percent more of a monthly benefit at age 70 compared to the monthly benefit at age 62.

Delaying Social Security benefits makes good sense if an individual has a guaranteed (defined benefit plan) pension such as a CSRS or FERS annuity. It also makes sense to delay benefits if an individual works past age 62 and their income will spike during their last years of work. This is because an individual’s benefit is calculated based on their highest 35 years of Social Security wages. Any year with no Social Security wages will factor in at zero and will be averaged into the calculations, as discussed next.

2. Maximize Work Credits

An individual’s Social Security benefit is based on their 35 highest years of Social Security wages. Although an individual needs only 10 years worth of minimum Social Security wages (40 credits) in order to qualify for a Social Security retirement benefit, individuals should attempt to maximize the amount of their Social Security wages for all 35 years. Also, one should not “slack off” in their later years of working. This could significantly lower the average 35 years of Social Security wages. In fact, an individual can continue working after starting to receive Social Security benefits. But between age 62 and the year an individual becomes FRA, a Social Security recipient can earn only up to a certain amount without losing any of their benefits (Social Security “earnings” test). For example, during 2013 an individual between ages 62 and 66 drawing Social Security retirement benefits can earn up to $15,120 without losing benefits.  Above $15,120, their benefits will be reduced by 50 cents for each dollar earned above $15,120. For anyone reaching FRA during 2013 (they were born during 1947), they can draw their Social Security benefit and work provided that up until the month they become FRA in 2013 they earn no more than $40,080. For every three dollars earned above $40,080, their Social Security benefit is reduced by one dollar. After an individual reaches FRA, any amount earned will not affect their Social Security benefit. Also, the earnings penalty is not permanent. Once an individual reaches FRA, their benefit will be recalculated to give the individual credit and an enhanced Social Security retirement benefit as a result of continuing to work.

3. Strategies For Married and Divorced Individuals

When it comes to married couples, it is typically the lower earning spouse who collects a “spousal” benefit, which is equal to 50 percent of the higher earning spouse’s Social Security benefit. But there is nothing in the law preventing the higher earning spouse to opt for a “temporary” spousal benefit. But as will be explained, in order to employ this strategy, the higher earning spouse must have reached their FRA.

Here is how the strategy works:

Suppose the higher earning spouse reaches FRA this year (age 66, born during 1947). This spouse wants to delay receiving their own Social Security benefit until age 70, which, as a result of four years’ worth of delayed retirement credits, will be 32 percent larger compared to what the benefit is at FRA. But in the meantime, the higher earning spouse can bring in extra money by applying for half of the other spouse’s (lower) Social Security retirement benefit.  The lower earning spouse would have to apply for their benefit in order to allow the higher earning spouse to apply for half of the other spouse’s benefit.

Suppose the lower earning spouse is 62 and applies for benefits. He or she will get 75 percent of his or her benefits because of applying for the benefit before FRA. At that point, the higher earning spouse can apply for a spousal benefit. Since that spouse has reached FRA, the spousal benefit will not be 50 percent of the other spouse’s reduced benefit but will be 50 percent of the lower earning spouse’s full benefit at the lower earning spouse’s FRA. This is because the higher earning spouse has reached FRA.

This strategy is known as “restricting an application” for a spousal benefit only. The higher spousal earner must have reached FRA. If the higher spousal earner is younger than FRA, then the Social Security Administration will automatically give that spouse the highest benefit that spouse is entitled to, which is most likely the benefit based on their Social Security earnings. In short, if a spouse starts taking Social Security benefits before reaching their FRA, then they do not have a choice as to which benefit (their own benefit, or half of their spouse’s benefit) to take. Note that any time before the higher earner spouse reaches age 70, he or she can switch to their own higher benefit. At that point the lower earning spouse can switch to a higher spousal benefit, although that benefit will be reduced because the lower earning spouse started his or her own benefit before he or she reached FRA. But the survivor benefit for the lower earning spouse will still be 100 percent of the higher earner spouse’s benefit if the higher earner spouse dies first.

A divorced individual is entitled to a spousal or a survivor benefit based on the former spouse’s record. To be eligible, the individual must have been married to the former spouse for at least ten years, been divorced for at least two years, and be at least age 62 to receive a spousal benefit. If the ex-spouse dies, then the surviving ex-spouse can claim a full survivor benefit as early as age 60.

The Social Security rules for divorced couples are almost the same as for married couples. For example, one ex-spouse at his or her FRA can collect half of the other spouse’s benefit. Also a survivor benefit is 100 percent of the deceased ex-spouse’s benefit if the surviving ex-spouse waits until FRA to start collecting.  But there is one important difference between married couples and divorced couples when it comes to Social Security benefits and that is with respect when one ex-spouse can collect half of the other ex-spouse’s benefits. Even if the ex-spouse to whom the other ex-spouse is drawing has not applied for benefits, the other ex-spouse may be allowed to collect benefits. To qualify, both ex-spouses have to be at least age 62 and have been divorced for at least two years.

Divorced women in particular can use the “restrict an application” strategy (see above) to maximize their own benefit which can be a boon for those women trying to enhance their retirement savings. For example, suppose a woman’s own Social Security benefit with delayed retirement credits will be larger than her ex-husband’s Social Security benefit. At her FRA, she takes her ex-husband’s Social Security benefit and she continues to work. At age 70 she switches to her own Social Security benefit, which could be as much as 32 percent larger compared to her benefit at FRA.

Posted:  05/16/2013

About the Author

Edward A. Zurndorfer is a Certified Financial Planner, Chartered Financial Consultant, Chartered Life Underwriter, Registered Health Underwriter, Registered Employee Benefits Consultant and Enrolled Agent in Silver Spring, MD — and the owner of EZ Accounting and Financial Services, an accounting, tax preparation and financial planning firm also located in Silver Spring, MD.  Zurndorfer is also is an instructor at federal employee retirement seminars throughout the country and writes numerous columns and books on federal employee benefits.

February 13, 2013

American Postal Workers Union, AFL-CIO Legislative Fact Sheet:
The Postal Service Protection Act, S. 316 & H.R. 630

On February 13, 2013, S. 316 was introduced in the U.S. Senateby Sen. Bernie Sanders (I-VT),and in the House of Representatives H.R. 630 was introduced by Rep. Pete DeFazio (D-OR). The Postal Service Protection Act, as embodied by the bills, is intended to address key issues that adequate postal legislation cannot do without.

If enacted, the Postal Service Protection Act would grant USPS immediate legislative relief from its current  financial crisis by:

• Ending the aggressive and unsustainable pre-funding mandate that requires the agency to make 75 years of retiree healthcare benefit payments over a 10 year period – a burden no other government agency or private company is forced to bear.
• Allowing the Postal Service to recover over-payments made to the Civil Service Retirement System (CSRS) and the Fed eral Employee Retirement System (FERS).
• Re-establishing overnight delivery standards for first-class mail, which would ensure timely delivery schedules and help keep mail processing facilities open.
• Protecting six-day delivery.
• Permitting USPS to develop innovative products and services that would generate new sources of revenue, such as issuing licenses, ending the prohibition on beer and wine shipments and providing notary services.
• Ensuring security for rural post offices by giving the Postal Regulatory Commission (PRC) binding authority to prevent post offices from being closed based on the effect such closures would have on the community and employees.

Representatives and Senators are urged to support the Postal Service Protection Act which seeks to  alleviate USPS from the massive pre- funding mandate which is driving the agency into insolvency; stop cuts to service and closures, and restore the Postal Service’s ability to remain a viable and competitive institution.

» CLICK HERE to view/download the Postal Service Protection Act Fact Sheet

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