Ask the Experts: Social Security Benefits and Severance Pay

Illustration by Mark Zingarelli.

Q.  How does severance pay affect the Social Security benefit I’m collecting? The plant I worked at closed in April.  I’m 63.

A  When you apply for benefits, give the Social Security Administration a statement from your former employer verifying that the severance pay is a “special payment” and not part of your regular income. Otherwise, because you’re not full retirement age, your benefit will be reduced $1 for each $2 you earned this year above the earnings limit, which is $14,160 in 2009.

Source: Rick Staszak, Financial Network Investment Corporation, Pittsburgh