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Wall St., California

More Benefit to Social Security Recipients

March 28, 2000|KATHY M. KRISTOF

Many seniors (such as Gratia A. Brown in accompanying story) who work after normal retirement age will benefit from a new law expected to be signed shortly by President Clinton.

Who else is affected--and who isn't--under the new law:

* If you are still working, you will have a greater incentive to collect Social Security at normal retirement age.

The law will repeal income limits that require current workers from age 65 to 69 to give up $1 in benefits for every $3 they earned beyond $17,000.

* No change was made in the disincentive to collect Social Security for workers between age 62 and normal retirement.

Such workers still lose $1 in benefits for every $2 earned if they collect Social Security. This limit kicks in at $10,080 this year and is adjusted annually for inflation.

* No change was made in the rules affecting what percentage of Social Security benefits are subject to regular income tax.

* The scheduled increase in the "normal retirement age" narrows the scope of the law.

As the retirement age rises over the next three decades, the number of months a working beneficiary could be subject to the $1-for-every-$2 limitation increases and the number of months the new law eliminates limitations shrink. If no other changes are made, the new law will apply to those age 66 to 69 by 2009 and 67 to 69 by 2027.

* Although waiting until age 70 to collect benefits is not usually a good trade-off now, the advantages of delaying Social Security are increasing.

Delayed retirement credits remain in place and are increasing in value each year. Delay might look like a better deal as life expectancies increase, especially for people born in 1943 and afterward, who receive an 8% credit for each year's delay.

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