Ask Bob: Can I Receive Social Security Benefits While Incarcerated?

Question

If you sign up 2-3 years after you are eligible for Social Security, how will the amount be calculated?

If a person is incarcerated when they become age eligible, then later signs up [for Social Security] when they are released, is it possible for the computation to include the 6-month retroactive benefit?

Answer

Your Social Security retirement benefit is adjusted based upon your age when you claim it, explains Joseph Alfonso, CFP®, ChFC®, EA, LTC, RICP®, Aegis Financial Advisory LLC. “You can claim a retirement benefit starting at age 62, however, because this is before full retirement age the benefit will be reduced by roughly 6% for each year before full retirement age.” Full retirement age is the age at which one is eligible to receive an unreduced retirement benefit and is based on your year of birth. Beneficiaries born in 1960 and after have a full retirement age of 67.

“Assuming a full retirement age of 67 and a beneficiary claiming their retirement benefit at age 64, three years early,” says Alfonso, “the retirement benefit will be reduced by 20%. If this beneficiary’s full retirement age projected benefit was $1000, at age 64 they would receive a reduced benefit of $800 per month. This reduction is permanent and lasts until death.”

Your actual reduction will depend on the total number of months you are claiming before your full retirement age,” he adds. The Social Security Administration has a calculator on its website that allows you to determine your reduced benefit.

Regarding Social Security benefits while incarcerated, Kurt Czarnowski, principal, Czarnowski Consulting, says “No, a person is not eligible for Social Security benefits for any month, or part of any month when he/she was confined for more than 30 consecutive days in a correctional institution in the U.S. based on a conviction.” He provides the specific citation from the "SSA Handbook:" Confinement in a Correctional Institution, Do You Receive Benefits If You Are In A Correctional Institution? Your benefits are withheld for any month, or any part of a month, you are confined for more than 30 continuous days in a correctional institution in the U.S. based on a conviction.

In addition, Czarnowski provides this link to an SSA publication covering payments to prisoners.

Adds Alfonso, “Retroactive benefits can only be claimed if a beneficiary is first applying for benefits at or after their full retirement age.

With regard to benefits for imprisoned beneficiaries, entitlement to Social Security benefits stops while serving a prison sentence. Benefits will start based on the age that the beneficiary was released from prison. If a beneficiary was receiving a retirement benefit when first incarcerated, when the benefit restarts after release, the beneficiary will receive an increased benefit based on their current age at release. If a beneficiary is applying for retirement benefits for the first time after release, and even if they are at full retirement age at the time of application, they cannot claim retroactive benefits for any months while they were in prison because they were not entitled to any benefits during that time.”

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