Unraveling the Subtleties of Social Security Benefits

Question: I am a County of Los Angeles employee who contributed regularly to the Social Security system until the county dropped out in 1982. I was told by the Social Security people that I need 40 quarters of covered earnings to be eligible for benefits but now have only 38.

How do I go about getting the last two quarters now that the county is out of the system? If I don’t get those last two quarters, what happens to all the money I paid into the system over the 38 quarters?--R.M.

Answer: Depending on your age, what you will eventually receive from the Social Security Administration ranges all the way from not very much to nothing. Theoretically, at least, this should be a moot point with you at retirement time because the county will be picking up the tab--a tab of comparable worth, presumably.

The entire Social Security program operates under a baffling array of formulas and computations, and even when a worker’s covered earnings and employment history are as uncomplicated as the recipe for mashed potatoes, there is still a lot of hedging and “howevers” thrown into any projection of future benefits.

And in your case where, at age 65, you will have spent X number of years covered by Social Security and Y number of years uncovered (under the county’s program), the whole thing gets very involved indeed.

In order to receive some sort of benefit (but not very much), according to Dana Edwards of the Social Security Administration’s external affairs division in San Francisco, the older you are, the fewer number of quarters you need to qualify. Thus, if you were, for instance, 67 or 68 at present you could receive a small benefit with as few as 28 quarters of coverage (seven years). If this year you were 61 (and would become 62 next year), you could qualify with 36 quarters (nine years of coverage).

“But for anyone who turns 62 in 1991 or later--62 is the normal age for early retirement--he’s going to have to have the full 40 quarters. No one, under any circumstances, needs more than 40 quarters however,” Edwards said.

A Part-Time Job?

You didn’t mention your own age, but I am guessing that you have always been covered by Social Security--at least until the county elected to abandon the program in December, 1982. And this would mean that you have been employed about 9 1/2 years under Social Security (38 quarters) and--come this December--four years uncovered for a total work experience of 13 years. That means, unfortunately, that you will, indeed, need a full 40 quarters--10 years--of coverage.

“What the man might do,” Edwards suggested, “is to get a part-time job somewhere that is covered by Social Security. He would only have to earn $440 in this calendar year to add one quarter to his coverage, or $880 spread over two quarters to earn both of the quarters he needs.

“This amount goes up, year by year, in accordance with the inflation rate, but it isn’t a significant amount with inflation running so low. Last year, for instance, he would have had to earn only $410 per quarter.”

If you do nothing, alas, you’ll get no Social Security benefits at all at age 65 (or 62). The amount you’ve paid will simply stay in the kitty.

But we don’t want to raise your hopes too much about getting a nice windfall at age 65 by working part time long enough to pick up those missing two quarters--although, logically, even a small monthly check in addition to your county retirement benefit would seem to make the effort worthwhile.

Complicated Computations

Benefits, Edwards explained, are determined (assuming you have at least 40 quarters) by going back over your years of work and throwing out the five years of lowest earnings in order to establish the average on which the Social Security benefits are based. But even that sounds a lot simpler than it is in actuality, as we shall see, anon.

Now, assuming you began working at age 21 and are now 34 years old, this means that you still have 31 years ahead of you before normal retirement at age 65. That will be a work history of 44 years and, Edwards noted, “a lot of years of zero earnings” as far as determining Social Security benefits are concerned.

In other words, of the 44 years of work history when you hit 65, you will have 9 1/2 showing covered earnings, but 34 1/2 additional years showing zero earnings (uncovered, as far as Social Security is concerned). But, as a result of your being shy two quarters (as it now stands), the whole thing is a moot point because you won’t be entitled to any benefits anyway. What happens, though, if you follow Edwards’ advice and take a part-time job to pick up those missing quarters? Well, it will help, but not in any sort of dramatic way.

In other words, knocking out the “five lowest years” simply eliminates five of those zero-earnings’ years and results in a benefit based on an average of 10 covered years

and 29 zeroes (34 less the five “lowest” years).

Under the best of circumstances, this is going to result in a pretty low “average,” and it’s compounded further by the fact that new regulations became effective in 1983, which will reduce it even more. (We warned you that “average” gets very complicated as far as Uncle Sam is concerned.)

Normally, Edwards added, the computation of these Social Security benefits is skewered in favor of workers in the lower-income brackets in terms of the percentage of their earnings that go into the complicated determination of the overall “average” on which the benefits are based.

Retirees in the lowest-income bracket have 90% of their earnings going into this computation, those in the middle-income bracket have 32% of their earnings computed and those in the highest bracket have 15% of their earnings included.

But a few years ago, Edwards continued, Congress determined that a large number of workers were benefiting unfairly under this formula: those who had spent most of their working years in an occupation not covered by Social Security (like you) but who, at the same time, had managed to compile 40 quarters under Social Security.

“We had a situation where people were taking their regular retirement and pension, and then picking up another job--with relatively low earnings--simply to accumulate enough credits to qualify for Social Security,” Edwards added, “and they were getting a disproportionately higher benefit than someone who had paid into Social Security, exclusively, all his life.”

This was particularly prevalent among the military where, even at normal retirement, men were still in their prime.

To eliminate what Congress saw as a windfall, the rules were changed in ’83 in determining benefits for those spending the bulk of their life in non-covered jobs but who had managed to accumulate 40 quarters.

Under the new benefit determination, such people have 40%--instead of 90%--of their earnings figured into the computation of benefits.

Still, it seems it would pay you to pick up those two remaining quarters in some sort of part-time job, but clearly, at age 65, it’s not going to give you a monthly check--in addition to your county retirement check--that will finance very many posh vacations of boating down the Rhine.

Don G. Campbell cannot answer mail personally but will respond in this column to consumer questions of general interest. Write to Consumer VIEWS, You section, The Times, Times Mirror Square, Los Angeles 90053.