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Two new terrible Social Security gotchas revealed

Workers in California spend years paying their dues into Social Security Administration coffers. In most cases, they don't think much about what benefits they may represent. That's something to think about at retirement, right?

But if you're among the folks who read this blog regularly, you know that there is a lot more to the SSA program than just providing some funds to individuals in retirement. Two trust funds are fed by payroll deductions and used to pay for both retirement and Social Security Disability Insurance benefits.

Right now, the big issue making news is the trust funds imbalance. While retirement funds seem fine, the draw for disability is said to be on the verge of running dry unless Congress takes action.

The Social Security system is a complicated one. And there are professionals who have spent years learning how to make sure individuals aren't aced out of benefits they are due. It can happen easily because of frustration, confusion or bureaucratic barriers. But even the experts can be blind-sided sometimes.

One of them is Laurence Kotlikoff. Having written a book on how to get the most from Social Security, he recently uncovered two new SSA gotchas he hadn't been aware of before.

One of them has to do with agency rules regarding deferred retirement benefits and the fact that individuals could be forced to take a distribution before they want to. It happens if you haven't expressly told SSA that you are delaying retirement until 70 to earn Delayed Retirement Credits.

The other deals specifically with children disabled before they reach 22 years of age. If after reaching 22 the person earns even a little over a set limit (the source of funds could be just gifts from well-meaning friends and family), he or she could wind up losing out on possible benefits later.

What can happen is that the child may no longer be viewed as being continuously disabled since age 22. If that continuously disabled status is lost, disability benefits become based on the child's own limited work record rather than the parents' more robust contributions to the funds. That's something that shouldn't happen and may require a certain level of diligence to avoid.

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Melissa A. Proudian, Attorney at Law
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Fresno, CA 93711

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