Ask Bob: How Does Social Security Recompute New Earnings

Andy Landis, author of Social Security: The Inside Story, helps a Retirement Daily reader understand how Social Security recomputes new earnings.
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Question

I am a CSRS retiree from the U.S. Postal Service. I retired in 2006 and began receiving Social Security benefits in 2017 when I turned 66. After retiring I began working part-time jobs that paid into Social Security and continue to do so at this time. It is my understanding that my Social Security benefit (which due to the WEP is reduced by about 70%) would increase the more that I worked. I have not seen this, however. The only increases in my benefits have been the annual one-percent-ish increases that everyone gets. What am I missing?

Answer

You're right, says Andy Landis, author of Social Security: The Inside Story. “If you're working and paying FICA taxes, your Social benefits should increase,” he says.

A Social Security Administration operation called AERO (Automatic Earnings Recomputation Operation) should automatically detect any new earnings you have, and recompute your Social Security benefit using the new earnings, says Landis. “If the new earnings are in the top 35 years of your FICA-taxed work, which is very likely in your case, you should get a tiny raise,” he says.

The catch, says Landis, is that the AERO is done at the end of the year, for the year proceeding. “So if you had new earnings in, say, 2018, you would be notified of the AERO in November or December of 2019,” he says. “The tiny raise would apply for all of 2019, so you'd get a small back payment as well.”

To check on all this, Landis suggests the following: See if you have a year-end letter from Social Security with a small back payment.

You can call Social Security at 800-SSA-1213 and ask if the new work is showing up on your work record. “If it is, I bet your payments are correctly computed,” says Landix. “If not, they can work with you to fix the error.

Got Questions?

Email Robert.Powell@Maven.io

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Question

I am a CSRS retiree from the U.S. Postal Service. I retired in 2006 and began receiving Social Security benefits in 2017 when I turned 66. After retiring I began working part-time jobs that paid into Social Security and continue to do so at this time. It is my understanding that my Social Security benefit (which due to the WEP is reduced by about 70%) would increase the more that I worked. I have not seen this, however. The only increases in my benefits have been the annual one-percent-ish increases that everyone gets. What am I missing?

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