Ask Liz Weston

Get smart with your money

Social Security

Q&A: I’m 59 with no retirement savings. What now?

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Dear Liz: I’m 59. In 8 years, I will qualify for an average Social Security income. I have no retirement saved and am not a homeowner but I have been blessed with a modest inheritance. What financial advice would you give in this situation?

Answer: The most powerful action you can take for your future retirement is to delay your Social Security application as long as possible, preferably waiting to apply until your benefit maxes out at age 70.

Each year you delay after your full retirement age of 67 will add 8% to your checks — a guaranteed return that can’t be matched anywhere else. You also don’t have to worry about missing out on inflation adjustments, since those are added into your benefit starting at age 62 whether or not you’ve applied.

Applying early stunts your benefit for life. The longer you live, the more likely you are to run through your other savings, so a maximized Social Security benefit is the ultimate longevity insurance.

If you’re married and the higher earner, your benefit also determines what the survivor will get after the first spouse dies.

Other smart moves would be to start saving what you can for retirement and get your inheritance invested properly, so that your money continues to grow. Consult a fee-only financial planner or an accredited financial counselor for help.

Q&A: How spousal benefits work

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Dear Liz: My best friend was able to get a 50% bump in his Social Security monthly benefit due to his wife having a higher monthly benefit. My wife didn’t work enough to qualify for Social Security, but I did. Can she get the spousal benefit from my record?

Answer: Your wife can qualify for an amount that’s up to half of your benefit at full retirement age, provided you’ve already applied for Social Security. The amount she gets would be reduced if she applies before her own full retirement age, which is 67 for anyone born in 1960 or later.

You mentioned your friend getting a 50% “bump” in his benefit, but that’s not how spousal benefits work. Your friend’s spousal benefit was compared to the benefit he earned on his own work record, and he would get the larger of the two amounts – not both.

Q&A: Why Social Security imposes an earnings test

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Dear Liz: I am under full retirement age, collecting Social Security and working part-time. I just received a letter from Social Security telling me I earned over the $22,320 limit and now have to pay back some of my Social Security. I was aware of the limit, so the letter was not unexpected. What I’m curious about though is what is the rationale behind the earnings limit? Once you’re eligible for Social Security, why do they care how much you earn? Are they trying to discourage applying before full retirement age? Also, and more importantly, I think I read that somewhere down the line, I will get back what I had to pay back. Can you clarify that for me?

Answer: Social Security was designed as insurance for those who could no longer work, and a retirement earnings test has been a part of the system from its creation in 1935. Back then, the test was all-or-nothing: Any earned income would preclude your getting a benefit.

Over time, the test was modified so that people could earn some income without losing all their benefits. The age at which the earnings test no longer applies has changed as well. In the 1950s, it was set at 75. In the 1960s, the age was lowered to 65. In the 1980s, it was adjusted so that the current “full retirement age,” when the test no longer applies, is 67.

The current test withholds $1 for every $2 earned over a certain limit, which in 2025 is $23,400. Once you reach full retirement age, the withheld amounts will be added back into your benefit.

What you won’t get back, however, is the larger benefit you could have earned by delaying your initial application. Most people are better off waiting at least until full retirement age to collect Social Security, if they possibly can.

Q&A: Widower can file for survivor benefits now and his own later

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Dear Liz: My sister and brother-in-law were both 68 when she passed away last December. She had been on Social Security disability since her mid 50s until it was converted to retirement in her 60s. He is the higher wage earner and still working. Can he file for survivor benefits now, and then file for his own retirement benefits after he stops working when he turns 70?

Answer: Yes. Since your brother-in-law has passed his full retirement age of 67, he won’t face the earnings test that would otherwise reduce any Social Security benefits he receives. His applying for a survivor’s benefit now won’t preclude him from applying for his own benefit later. His own benefit can continue to grow until it’s maxed out at age 70.

Note that survivor benefits have different rules than spousal benefits, which are based on the earnings record of someone who is still alive. When applying for a spousal benefit, you’re also considered to be applying for your own, and you’ll get the larger of the two. There’s no switching later.

Q&A: Should a spouse start Social Security now or later?

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Dear Liz: I waited until age 70 to start collecting Social Security. My wife turns 65 this year so her full retirement age is 67. Can she start collecting Social Security benefits now based on my benefit or should we wait until her full retirement age?

Answer: If she applies for Social Security now, she would be “deemed” to be applying for both her own benefit and her spousal benefit and given the larger of the two. She would not be allowed to switch to the other benefit later.

Most people are better off waiting at least until their full retirement age to apply, and many will maximize their lifetime benefits by delaying until age 70. Her mileage may vary, of course, so it’s worth using a Social Security claiming calculator and consider getting advice from an objective source, such as a fee-only financial advisor.