There are so gosh darn many myths and rumors circulating out there (mostly online) about Social Security. That’s why I wrote a book called “Social Security: 100 Myths and 100 Facts.” You can get it at Amazon for less than $10. Believe me, you'll learn so much if you read that book.
But there are two groups of people who really have nothing to do with each other but who both seem to have their own special (and very misleading) Social Security rumor mills. I’m talking about military veterans and prisoners. I'll deal with vets first.
Not a week goes by that I don’t get emails from veterans who have been led to believe that they are missing out on some extra Social Security benefits allegedly payable to people who served in the military.
As is so often the case with these misleading internet come-ons, there is a tiny kernel of truth to the rumor. But then, exaggerated claims and false information take over, and things get blown way out of proportion.
Here are the facts in a nutshell: If you were in the military anytime up until 2001, the government may add a small amount of additional earnings to your Social Security record. And note that I am NOT talking about extra money added to your Social Security check. These are simply extra earnings incorporated into your Social Security earnings record—the earnings record upon which your Social Security monthly benefit is based.
So the good news is you get these extra earnings put on your Social Security account. But the bad news is these extra credits are relatively minimal and usually will have little or no effect on the eventual amount of your Social Security check.
And you also need to know that these extra earnings are automatically added to your Social Security account. There is nothing you need to do to get the extra credits.
Now let’s back up and give a little more information about military service and Social Security. If you served on active duty or active-duty training in the military service any time after 1956, you paid Social Security taxes on your earnings just like anyone else working at a job covered by Social Security. And since 1988, inactive duty in the armed forces reserves, such as weekend drills, has also been covered by Social Security. That’s the simple part.
What leads to all the confusion is that Congress decided to add extra earnings credits to the Social Security records of military personnel. And the amount of those credits varies depending on the time served.
If you were in the military between 1957 and 1977, the government adds $300 to your Social Security record for each calendar quarter in which you received active-duty basic pay.
From 1978 through 2001, the government adds an extra $100 to your Social Security account for each $300 you earned in basic pay, up to a maximum of $1,200 per year. There are times when these extra credits aren’t granted. For example, if you enlisted after Sept. 7, 1980, and didn’t complete your full tour of duty, you won’t get the extra credits. Check with the Social Security Administration for more exceptions.
Beginning in 2002, the government stopped adding extra credits to Social Security records for military service.
As I said above, if you are due extra credits, you usually don’t need to do anything to get them added to your record. If you served from 1968 through 2001, those credits are automatically added to your Social Security account. If you served from 1957 through 1967, the credits will be added at the time you file for benefits. In some cases, you may be asked to provide your DD-214 (discharge papers) to verify your military service.
The story is a little different for older vets reading this. If you served in the armed forces between 1940 and 1956, Social Security taxes were not deducted from your military paychecks. But in most cases, the government did add $160 per month in earnings to your Social Security account for the time you served. These credits were automatically added at the time you applied for Social Security benefits.
So that’s the story. There are no big Social Security bonuses for vets. You don’t need to go to your Social Security office waving your DD-214 and expect to get a big pile of cash. (Although, as I pointed out above, folks who served between 1957 and 1967 may need to show their discharge papers at the time they file for benefits to get those extra earnings added to their Social Security account.)
And finally, it’s important that I repeat this message: Those extra earnings you get for your military service aren’t going to make you rich. Because Social Security retirement benefits are figured using a 35-year base of earnings, a few hundred dollars sprinkled here and there into your Social Security account will have little if any effect on your eventual Social Security benefit.
And what about prisoners? First, you should know that Social Security benefits cannot be paid for months that a person is confined to a jail, prison, or certain other public institutions for committing a crime. Or to be more precise, benefits are suspended if someone is convicted of a criminal offense and sent to jail or prison for more than 30 continuous days. Notice that conviction is the key. Lots of people end up in jail while they are awaiting trial or pleas. But until there is a conviction with prison time involved, benefits will continue.
It’s also important to note that while the convict’s benefits are suspended, if he or she has a spouse or child getting monthly Social Security dependent checks on his or her record, those benefits will continue.
Of course, most people don’t spend the rest of their lives in prison. When they are released, Social Security benefits will be reinstated effective the month following the month they get out.
So what’s the rumor being spread on the prisoner grapevine? It would have younger convicts, or rather, soon-to-be ex-cons, believe that as soon as they are released, they can waltz into their nearest Social Security office and sign up for Social Security disability benefits and have those checks start flowing into their bank accounts. There simply is no truth to that rumor.
Of course, anyone has the right to apply for Social Security disability benefits. But no one will get those benefits unless he or she meets all of the rather stringent qualifying criteria. For example, they must have worked and paid Social Security taxes in five out of the last 10 years. And they must have a disability that is so severe it is expected to keep them from being able to work for at least a year, or they must have a condition that is terminal.
