My first Social Security payment landed a month late and it's smaller than the letter said. Where did the rest go?

Filed in February, approved, got the award letter with a number on it. I built next year's budget around that number.

Two things then happened that nobody warned me about. One, March came and went with no payment at all, which I spent a week assuming meant something had gone wrong with my application. Two, when money finally did arrive it was noticeably less than the letter said, and not by a round amount, by a weird one. I have gone through the letter three times looking for a footnote.

I am not accusing anyone of anything, I assume there is a boring explanation and I am the last person to figure it out. But I would like to know what the boring explanation IS before I redo the budget for the third time. Anyone else had the gap between the letter number and the deposit number?

Is Medicare coming out of it? That's my guess. My sister's Part B premium gets taken straight out of her check and she says the deposit never once matched anything she was quoted anywhere.

The month with nothing in it threw me too. Everyone describes Social Security like a paycheck and it isn't quite. Once it starts it is regular as clockwork, on the same day every month, and you stop noticing. It's only the beginning that feels broken.

DebbieFL said:

I would like to know what the boring explanation IS before I redo the budget for the third time

Debbie, there are three boring explanations and you have probably met all three at once. I had the same confusing first two months, so here is what I learned, as a fellow filer rather than as anyone qualified to check your specific letter.

One: benefits are paid the month AFTER the month they are for. So a benefit due for March arrives in April, and that "missing" month isn't missing, it's just the system working the way it always has. On top of that, your payment day is set by your date of birth, not by when you filed, which is why your neighbor gets paid on a different Wednesday than you do. That alone explains a first month that feels like a hole.

Two: Gary is right about Medicare. If you're enrolled in Part B, the premium comes out of the benefit before the deposit hits your account, and if you're in a Part D drug plan that premium can be deducted too. That's usually the biggest single piece of the gap between the letter and the deposit, and it's also why the number looks weird rather than round. If you signed up for Medicare and Social Security close together, the first payment can also carry a catch-up adjustment for premiums, which makes the first deposit look even stranger than the ones that follow.

Three, and this is the one that bites people the following April: Social Security does not withhold income tax unless you ask it to. If you want tax taken out you file a form with SSA (it's Form W-4V) and pick from a short list of flat rates, 7% at the low end up to 22% at the top. Nothing is withheld by default. Depending on your other income, some portion of your benefit may be taxable, which is laid out in taxes in retirement, and it is much less painful to have it trickling out monthly than to meet it in one lump. Your award letter and the detail behind the number are both in your my Social Security account online, and reading your Social Security statement covers where to look.

What I can't tell you is whether the specific dollar figure on your deposit is correct. SSA will walk you through your own record on the phone, and they are better at it than the internet gives them credit for.

Adding one from the hospital side of my life: I have sat with a lot of people who set up autopay for something the week their benefit started and then got an overdraft in the first month, purely because of the arrears thing Linda described. If you have moved any bills onto the assumption that money lands in month one, move them back a month. It is the least interesting piece of advice in this thread and the one most likely to save somebody thirty five dollars.

All three, exactly as predicted. Part B was coming out, the March payment was the April deposit, and I had assumed tax was being withheld because it always had been for thirty years of paychecks. Filed the W-4V and chose withholding so I am not writing a check next spring.

Budget redone for what I hope is the last time, using the actual deposit number and not the letter number. If you are about to file: the letter tells you what you have been awarded, not what will show up in your bank account. Those are two different numbers and nobody says so out loud.