Ask Liz Weston

Get smart with your money

Retirement

Q&A: Taking Social Security at 70

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Dear Liz: My husband will be turning 70 in August. Must he start taking Social Security at 70 or can he wait a little longer? He will still be earning money and if I understand correctly that will lower the amount he will receive. Does he have to do anything like apply for it or do they know he is turning 70?

Answer: He should apply for retirement benefits — online at www.ssa.gov, in person at a local office or by calling 800-772-1213 — three months before he turns 70. Benefits max out at that age, so there’s no reason to delay any longer.

The earnings test you fear only affects people who start benefits before their full retirement ages, which for your husband was 66. When you start benefits early, Social Security deducts $1 for every $2 you earn over a certain amount ($15,720 in 2016). After full retirement age, that penalty disappears.

Q&A: Taking Social Security early

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Dear Liz: My wife will be 62 in November and does not work. I am 55 and have a 401(k) for our retirement. I know you preach waiting to take Social Security. But what about if my wife takes it early and we invest all of the money? Would it then make sense to take early?

Answer: You would need to get returns well in excess of 7% to beat the guaranteed annual return you get from waiting to take Social Security. In today’s volatile markets, that would be quite a feat.

You can run the numbers yourself at a Social Security claiming calculator. AARP offers a free one, or you can pay $40 to use one of the more sophisticated options such as MaximizeMySocialSecurity.com.

Q&A: Social Security survivor’s benefits

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Dear Liz: I became a widow in my 40s. My children collected Social Security until reaching age 18. At age 60, I started collecting survivor’s benefits. Now that I’m 65, do I need to do anything to collect my late husband’s full Social Security amount at age 66?

Answer: Starting early means you won’t get his full Social Security benefit.

Survivor’s benefits are based on what your husband would have received at his full retirement age if he hadn’t started benefits when he died, or what he actually received if he had started benefits.

His benefit was reduced to reflect your early start, however. Only by starting at your own full retirement age of 66 would you have received 100% of his benefit.

Starting early with survivor’s benefits can be a good option if you had a solid work history and your own benefit eventually will be larger than the survivor’s benefit. If that’s the case, you can leave your own benefit to grow until it maxes out at age 70 while still receiving Social Security checks. If your own benefit won’t be larger, though, it may have been smarter to wait.

Q&A: Social Security survivor benefits

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Dear Liz: I am 63 and retired but have not started to collect my Social Security. My husband will be 67 in March. He started his Social Security at 62. Our plan is to wait until I am 70 to start my benefit, which would make my monthly amount significantly larger than his. If I predecease my husband, would he be able to collect my benefit instead of his own? If I started benefits now, our checks would be relatively close in size, although mine would be a bit higher than his current amount.

Answer: If you had started benefits already, your husband’s survivor benefit would equal what you were receiving when you died. Since you didn’t start early, though, your husband will get more.

If you should die before your full retirement age of 66 without starting retirement benefits, he would receive a survivor benefit equal to what you would have received at 66.

If you continue to delay benefits past age 66, your retirement — and thus his survivor benefit — would accrue the “delayed retirement credits” that boost your Social Security check by 8% annually between age 66 and age 70, when your benefit maxes out. In other words, if you die between 66 and 70 without starting benefits, he would get the delayed retirement credits and larger check you’d earned even if your checks hadn’t started.

As you can see, delaying the start of benefits is a great way to maximize what a survivor receives. It’s particularly important for the higher earner in a couple to put off filing for retirement benefits for as long as possible.

Q&A: Social Security survivor benefits

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Dear Liz: My 90-year-old father recently passed away. My mother, who will be 90 in February, has a phone meeting with Social Security coming up. It is my understanding that she will have the opportunity to take my dad’s full benefit in place of hers since it is much higher. Is that correct? Is there anything else I should know to help her receive the maximum benefits?

Answer: Survivors get only one Social Security check, and it’s the larger of the two they received when their spouses were alive. So yes, she will get the amount your father got. At this point she can’t do much to maximize her Social Security benefit. What she gets depends on when your father started his benefit. The later he started, the more she’ll receive.

Q&A: Social Security windfall elimination provision

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Dear Liz: You’ve written about the windfall elimination provision, which reduces the Social Security checks of people who get a pension from a job that didn’t pay into Social Security. I am affected by this provision, but a Social Security representative told me that as long as I don’t start withdrawals from my government pension account, I am entitled to full Social Security payments. This ends when I turn 701/2 years old and must start taking automatic withdrawals from my pension. This info might help with the planning process.

Answer: Thank you for sharing this tip. The windfall elimination provision was enacted to keep people with government pensions that didn’t pay into Social Security from receiving proportionately more than people who paid into the system their entire working lives. But as you note, it’s possible to delay the provision by putting off the start of pension benefits.

Social Security can be complex, and claiming strategies that might work for one person could shortchange another. That’s why it’s important to educate yourself and seek out advisors who understand how Social Security works.