| Cost of Living Allowance (COLA) |
Social Security benefits are subject to an annual increase linked to inflation. In recent years COLA increases have taken effect in December. |
| Delayed Retirement Credits |
A worker claiming their own benefits after FRA receives increased benefits for each month they delay up to age 70. These increases are referred to as Delayed Retirement Credits, and while they don't affect spousal benefits based on the worker's account, they do improve survivor benefits. |
| Employment record, work record, account |
When filing for Social Security benefits, a person may have a choice of filing on their own account with the Social Security Administration (SSA) - i.e. filing based on their own work history as linked to their Social Security Number - or filing on someone else's account (e.g. a husband might file for spousal benefits based on his wife's account). |
| Full Benefit at Retirement or Primary Insurance Amount (PIA) |
An amount determined by the SSA, which represents a worker's anticipated monthly benefit if they claim at their FRA. The PIA is used as the basis for all benefit calculations based on the worker's record: the worker's own benefit, plus any dependent benefits such as those for a spouse or widow(er). |
| Full Retirement Age (FRA) |
The age at which a worker, spouse or survivor receives the full retirement benefit amount. Claiming benefits before FRA results in a reduced benefit, and claiming certain benefits after FRA can lead to an increased benefit. A worker's FRA varies based on their year of birth, and can be as high as 67 for younger clients. |
| Government Pension Offset (GPO) |
For a spouse or widow(er) receiving spousal or survivor benefits on another worker's record, and who receives a pension from government employment, their benefit is typically reduced by 2/3 of the monthly pension amount, and may even be eliminated completely. More details on the rules regarding the GPO can be found at http://www.ssa.gov/pubs/EN-05-10007.pdf. |
| Initial eligibility |
The earliest age at which a person is able to receive a benefit: typically age 62 for worker or spousal benefits, and age 60 for survivor benefits. |
| Social Security Administration, or SSA |
The U.S. Federal government agency that administers Social Security benefits in the United States. Its website is www.ssa.gov. |
| Spousal benefits |
The benefits received by the spouse (and/or in some cases the ex-spouse) of a worker, when filing for spousal benefits on the worker's account. |
| Survivor benefits |
The benefits a widow or widower (also, in some cases, children and even dependent parents) is eligible to receive based on their deceased family member's work record. LifeYield's Social Security Optimizer currently only considers benefits for a surviving spouse, and not other family members. |
| Suspended payments, "file and suspend" |
After reaching FRA, a worker is able to file for Social Security benefits but then suspend payments (i.e. ask to receive no payments). While their benefits are suspended, they earn Delayed Retirement Credits in just the same way as they would had they not filed. The suspension often happens in conjunction with the worker’s spouse filing for spousal benefits (often referred to as “file and suspend”). In order for a spouse to claim spousal benefits against the worker’s account, the account must have been established (by the worker filing for benefits). The file and suspend strategy, when a possibility for a couple, can be advantageous since it allows spousal benefits to be claimed earlier than they would be if the spouse waited for the worker to start receiving benefits, and with no adverse effect on the worker’s own benefits. However, as part of the Bipartisan Budget Act of 2015, spousal benefits may only be claimed against accounts suspended before April 30th 2016. For any suspensions that take place on April 30th 2016 or later, it will not be possible for a spouse to claim spousal benefits. As a result, the file and suspend strategy will not be suggested from April 30th 2016 onwards, but is still a consideration up until that date. |
| Restricted application |
The type of application a spouse may be eligible to file in order to claim spousal benefits only when they’re eligible for either their own benefit or a spousal benefit at FRA or later. Their application for benefits is “restricted” to only the spousal benefit from their spouse’s record. While receiving only spousal benefits, they continue to accrue Delayed Retirement Credits on their own account. After the Bipartisan Budget Act of 2015, the filing of a restricted application is only possible for persons who attain age 62 prior to 2016. For anyone attaining age 62 in 2016 or later, they will simply file for retirement benefits and will be deemed to be filing for their own benefit and a spousal benefit if eligible for both at the time of filing, which will lead to their receiving the higher of the two amounts. |
| Widow(er)'s Limit |
A limit to the maximum amount of survivor benefits a surviving spouse is able to receive. This limit only takes effect when the deceased worker filed for benefits before reaching their FRA. |
| Windfall Elimination Provision (WEP) |
For a worker who receives a pension from government employment, reached initial eligibility in 1985 or later, and worked fewer than 30 years in a job where Social Security taxes were paid, a reduction in their PIA of up to half their monthly government pension amount may apply. This adjustment also impacts dependent benefits such as spousal benefits, but does not impact survivor benefits. More details on the WEP and the rules surrounding it (including some exemptions) are available at http://www.ssa.gov/pubs/EN-05-10045.pdf |
| Worker benefits, retirement benefits, Retirement Insurance Benefits (RIB) |
The benefits received by a person filing for benefits on their own SSA account. A summary of the rules around worker benefits, spousal benefits and many other aspects of Social Security can be found at http://www.ssa.gov/pubs/EN-05-10035.pdf |