Does work affect Social Security payments? Yes and no

Readers of this page may have noticed an article I wrote about the problem of continuing to contribute to Social Security by working after retirement. To me this was a case of taxation without possible benefit as the amount of Social Security benefit is seemingly fixed at retirement.

Well, I received a call from a reader who said it isn't so, that his benefit was recalculated every year that he contributed after retirement and in fact he had received five checks for back adjustments.

Intrigued, I paid a visit to the Social Security office in Reno. There I met with Patrick M. Sheridan, district manager, and Dianne Lowe, supervisor. Both were informed, cooperative representatives of the system. Despite the fact that the office was being flooded by workers applying for retirement because of the recent ending of deductions for continuing to work, the two did their best to explain a very complex system to me.

At the end of our conversation I came to a very simple answer to the question of continuing to contribute with no benefit: yes and no.

Yes, you may increase your benefit if in continuing to work you pay more in Social Security taxes than you did in any of the last 35 years of employment. The system's computer automatically checks your current payments against past years' payments, and if you contribute more now than anytime in the past 35 years the lower figure will be replaced by the higher figure and an adjustment made to your benefit.

But no, you probably won't increase your benefit because post-retirement employment almost always results in lower pay and thus lower contributions to the system. You will continue to pay but receive no increase in benefits.

Catch 22?

You bet.

The situation is further clouded by a Social Security handbook furnished by the system. On page 12, under the heading of "If You Work and Get Social Security at the Same Time," this sentence appears: "Earnings in, or after, the month you reach 70 won't affect your Social Security benefits." (This booklet was printed before the Congress eliminated the penalties for continuing to work after retirement.)

Interestingly, the entire problem of continuing to contribute after retirement isn't addressed in any Social Security publication I could find. Sleeping dogs lie and all that.

Thanks to Ms. Lowe, I was able to get a printout of my 35 years of contributions. One thing at once obvious was the three years I was in the Air Force and did not contribute to the system. Since I have continued to work and obviously contribute, I thought that those blank years would be replaced by contributing years which would affect my benefit. But apparently not.

Explained Lowe, "When people serve in the military and pay no Social Security tax, we compute their contributions at $160 a month or $1,920 a year. That is automatic so military persons get credit for service.

"And yes, there are cases where retired workers continue to contribute but gain no benefits. Remember, however, this is Social Security, emphasis on social. So contributions of this nature can be thought of as contributing to the social system for the benefit of all workers."

Meanwhile, I thought it might be wise to get an explanation from Social Security headquarters. I called (800) 772-1213 (number in the booklet) and after eight possible numerical choices finally got to a live operator (a triumph in itself!). I then went through two more live operators before being given a number to call: (206) 553-4256. Unfortunately, a voice came on the line and said that number was no longer in service and warned sternly, "No further information is available."

I gave up on Washington.

So, where does this leave us? With a definite yes, additional earnings after retirement will affect your benefit. With a definite no, additional earnings after retirement will not affect your benefit. With a definite maybe, additional earnings after retirement may affect your benefit.

It all adds up. Sorta.

Sam Bauman is editor of the Nevada Appeal's Diversions section.