Q&A: Social Security survivor’s benefit

Dear Liz: My husband will retire next spring but has wisely decided to not collect Social Security until he is 70. I have been retired for several years and have been collecting my Social Security benefits, which are significantly less than what his will be because he was the higher wage earner. Should he die before age 70, would I still be able to claim, as his surviving spouse, his larger benefit, even though he would not have started collecting it yet? The information I read only talks in terms of the higher wage earner already collecting Social Security benefits before his or her demise.

Answer: Even if your husband dies before starting Social Security, you can collect the larger benefit he’s earned, including any delayed retirement credits from putting off his application.

Those delayed retirement credits increase his benefit, and yours as the surviving spouse, by 8% each year between his full retirement age of 66 and age 70. That can make a huge difference in the quality of life of the surviving spouse, who has to get by on a single check after the other partner dies.

Monday’s need-to-know money news

shutterstock_101159917Today’s top story: When and how much a Fed rate hike will cost you. Also in the news: The art of lowering your bills, how to become Social Security savvy, and why you should check your credit report after getting married.

Fed Rate Hike: When and How Much It Will Cost You
What to expect when the Fed pulls the trigger.

Ace the Art of Lowering Your Bills
Treat it like a science.

Are You Social Security Savvy?
What you know and don’t know.

Check Your Credit Report for Inquires After You Get Married
Checking for changes.

Q&A: Why surviving spouses aren’t always entitled to Social Security benefits

Dear Liz: I am confused. I thought all wives were entitled to Social Security if the husband’s earnings qualified. My husband is deceased and he received a larger Social Security benefit than I because he worked longer in a qualified system. We were married almost 49 years. Most of my earnings are from a job that didn’t pay into Social Security. I was told because I had a high retirement income, I could not qualify for a percentage of my husband’s benefit. I didn’t know there was an income basis for Social Security. My income was severely reduced when he died. I appreciate any resource in understanding Social Security you could provide.

Answer: It sounds like your survivor’s benefits were eliminated by something known as the “government pension offset,” or GPO. While this sounds draconian, the GPO is actually meant to ensure that people in your situation don’t wind up getting a bigger benefit than people who paid into the Social Security system.

If you had paid into Social Security, you would get the larger of either your own benefit or your husband’s after his death. You wouldn’t be able to continue receiving both checks. Since you’re receiving a government pension from outside the Social Security system, you would be receiving much more than a typical survivor if you could keep that pension AND get your husband’s check. The GPO reduces your survivor benefit by two-thirds of your government pension to compensate. If your pension is big enough to completely eliminate your survivor’s benefit, that means you’re still better off than you would have been just receiving your husband’s check.

Friday’s need-to-know money news

budgetToday’s top story: Mapping your financial journey. Also in the news: What Wells Fargo’s settlement might mean for you, six unusual ways to get out of debt, and surprising Social Security benefits for divorced spouses.

Mapping Your Financial Journey
Building a roadmap to success.

What Wells Fargo’s $185 Million Settlement May Mean for You
The Wells Fargo wagon has rolled into some big trouble.

6 Unusual Ways to Get Out of Debt
You don’t have to deliver pizzas.

2 surprising Social Security benefits some divorced spouses can get
All is not lost.

Q&A: Social Security survivors benefits

Dear Liz: My husband and I were married after dating for over four years, but he died suddenly on our honeymoon. When I got home, I was told by our local Social Security office that I did not qualify for survivors benefits because we were not married long enough. I am going to be 66 next month and he was already receiving Social Security benefits. People have been advising me to look into getting this marriage benefit, even by contacting my Congressional representative, since I don’t plan to apply for my own benefit until I’m 70 and could really use the survivor benefit now.

Answer: Social Security isn’t likely to help you cope with your devastating loss. The rule that couples have to be married for at least nine months is meant to prevent deathbed marriages designed just to give the survivor benefits.

There are some exceptions to the nine-month rule, such as when the death was accidental or in the line of duty for service members, or if you had a child together. The exceptions are outlined on the Social Security’s site: https://www.ssa.gov/OP_Home/cfr20/404/404-0335.htm

Q&A: Getting through to Social Security

Dear Liz: I read your article about checking your Social Security earnings record and benefits. I tried to set up an account with the Social Security Administration to track my retirement benefits (I turn 65 in December). Apparently the Social Security Administration will only text a required security code to a cellphone. I do have a cellphone but live in an area with very sketchy reception. I couldn’t get a signal the day I tried to set up the account. Do you have any suggestions about an alternate source or method for accessing my benefits?

Answer: The Social Security Administration briefly required people to use a one-time code sent to their cellphones in order to set up an online account. You weren’t the only one who was having trouble with this new hurdle, and the administration has since dropped the requirement.

People still have the option of getting and using a code if they’re comfortable doing so. This so-called two factor authentication — which uses both something you know, such as a password, and something you have, such as a code sent to your phone — is a smart idea for any sensitive online account. Banks and brokerages should offer this option to further protect customers’ security, but many of them don’t.

By the way, the Social Security Administration allows only one account per Social Security number, so you’d be smart to continue setting up your account. That will prevent someone else from doing so and making unauthorized claims or changes.

Q&A: Survivor benefits for divorcees

Dear Liz: I am 76 and widowed. I’ve been collecting half of my ex-husband’s Social Security payment for the last nine years. We were married for 20 years. He remarried in 1987 and his wife is still living. He is now terminally ill with cancer. Am I eligible for survivor benefits?

Answer: You will be. If you qualify for divorced spousal benefits while your ex is alive, you will qualify for divorced survivor benefits when he dies. Instead of collecting an amount equal to half his benefit, your check will increase to 100% of the amount he was receiving.

Survivor benefits differ from spousal benefits in another key way. If you remarry, divorced spousal benefits end. Survivor benefits can continue after marriage, as long as you’re 60 or over when you re-tie the knot.

By the way, your benefits don’t take any money away from his current wife. She, too, will be eligible for a survivor benefit equal to what he was getting, unless her own retirement benefit is greater. One primary earner’s work record can support a number of divorced spouses in addition to a current spouse, as long as the previous marriages lasted at least 10 years each.

How the Wrong Choice Could Ruin Your Spouse’s Retirement

1403399192000-retire-workThree key decisions about retirement benefits can help couples make their money last — or dramatically increase the chances the survivor will end up old and broke.

Widowed women are twice as likely as their male counterparts to live in poverty during retirement, according to a March study by the National Institute on Retirement Security. But anyone who outlives a mate can be vulnerable to a big drop in income and lifestyle because of shortsighted decisions about claiming benefits.

In my latest for the Associated Press, how to make the right choices for your retirement.

Q&A: Accessing Social Security account data

Dear Liz: I read your answer to the gentleman trying to locate his W-2 forms to add missing years to his Social Security account. I wonder why, even as you give advice about keeping old W-2 forms indefinitely, you didn’t mention that the Social Security Administration allows everyone who has paid into the system to receive an annual report showing the income, year-by-year, that was subject to Social Security taxes. I have been receiving that report for most of my adult life (I’m 60 now) and I don’t find the need to keep old W-2’s past seven years if I’ve already compared their totals against the annual SSA report. I wonder why this gentleman didn’t do likewise over the years.

Answer: You may not have noticed, but those annual statements went missing for a few years.

Social Security began mailing annual reports to workers 25 and over starting in 1999 but suspended those as a cost-saving measure in 2011. The suspension saved the government about $70 million each year in printing and mailing costs, but workers lost easy access to information about their future benefits and their earnings.

People with access to the Internet could create online accounts to check their earnings records, and about 26 million have done so. But that still left the majority of workers in the dark about whether their earnings were being properly credited to their accounts.

In 2014, mailings resumed but only for workers reaching ages 25, 30, 35, 40, 45, 50, 55 and 60 and over.

Q&A: When to take Social Security benefits

Dear Liz: I’m about to turn 66 and my wife is 60. I plan to delay Social Security benefits until I’m 70. My benefit will be large enough that whenever she starts benefits, her spousal benefit will be larger than what she earned on her own. Here’s the question: I think that the time for her to start taking benefits will be immediately upon reaching her full retirement age, not waiting until 70, as I am doing. Correct?

Answer: Correct. You will earn delayed retirement credits that will boost your benefit by 8% for each year you put off applying. Spousal benefits don’t get those credits. The maximum spousal benefit is 50% of your primary insurance amount, or the amount you would get if you applied at age 66. She’ll receive that maximum if she applies for spousal benefits at her own full retirement age.