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Social Security

Q&A: Claiming Social Security can get complicated

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Dear Liz: I am 63 years old, born in November 1955. My husband and I divorced five years ago after 37 years of marriage. I work full time and plan to continue until age 70 at least. Am I eligible for the option of applying for restricted benefits under my ex-husband’s Social Security when I turn 66 and then switching to my maximum benefit at age 70? He was always a much higher wage earner than I was, and I’m confused about whether I qualify for any of his Social Security benefits.

Answer: You’re not eligible to file a restricted application for spousal benefits, which would allow you to claim a benefit based on a husband’s or ex-husband’s benefit while allowing your own benefit to grow. Congress eliminated the restricted application option for people born on or after Jan. 2, 1954. Instead, when you apply for benefits, you’ll be “deemed” to be applying for both your own retirement benefit and any spousal or divorced spousal benefit to which you might be entitled, and will essentially get the larger of the two. You can’t switch later.

Something you should keep in mind: Although your own benefit can grow 8% each year you delay, between ages 66 and 70, spousal benefits don’t earn such delayed-retirement credits. There’s no incentive, in other words, for you to wait beyond age 66 to claim Social Security if the spousal benefit is going to be the larger of the two benefits you could receive.

Social Security claiming rules can be complicated. If you don’t have a trusted financial advisor who is well versed in claiming strategies, consider spending $40 or so for a service such as MaximizeMySocialSecurity.com, which can analyze your particular situation and suggest the smartest option.

Q&A: Social Security strategies vary by age

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Dear Liz: My husband has been on Social Security disability since he was 61. He’s now 69 and receives $1,700 a month. I will be turning 66 next year. I still work and want to file for spousal benefits, which would be half of his benefit, but I’m not sure what the best option is. I know I would get $850 a month until I turn 70, when I would get my maximum retirement benefit. Or do I file for my retirement benefit now, which is more than half of my husband’s?

Answer: Since you were born before Jan. 1, 1954, you still have the option of filing a restricted application at 66 for spousal benefits only and then switching to your own retirement benefit when it maxes out at age 70. Since it’s still available for you, you’ll probably want to take advantage of it since you’ll almost certainly get more in total from Social Security that way.

People born Jan. 1, 1954, and later won’t be able to file restricted applications for spousal benefits. Instead, when they apply for benefits, their own retirement check will be compared to their spousal benefit and they’ll get the larger of the two amounts. They no longer have the option of applying just for spousal benefits and then switching to their own benefit later.

Since you’re the higher earner, it makes even more sense to put off taking your retirement benefit as long as possible. Not only will you probably maximize the amount you get, but you’ll also be maximizing the spousal benefit that one of you will have to live on when the other dies. (Remember that at death, one Social Security benefit disappears and the survivor must get by on the larger of the two.)

Q&A: Social Security benefits confusion

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Dear Liz: In a past column, you discussed a potentially advantageous option for people who started Social Security early. You wrote that when they reached full retirement age, they could suspend their benefits and allow them to grow by earning delayed retirement credits. I am turning 66 this month and have been collecting Social Security benefits since age 62.

I went to a local Social Security field office to request the suspension but was told this option is not available. They couldn’t provide definitive documentation to support their statements but said that by starting benefits at 62 the option to suspend and earn delayed credits from 66 to age 70 doesn’t apply. Can you please clarify your comments and, if correct, suggest how I might be able to convince the representatives at the local office that it is still an option? I have been speaking to a supposed “expert” at the office, not the first person screening my request.

Answer: Unfortunately, the advice you get from local Social Security offices isn’t always accurate.

The representatives you talked to may be confusing benefit suspension with the so-called “file and suspend” option, which Congress eliminated a few years ago. With file and suspend, a higher wage earner could file an application for benefits and immediately suspend it. This allowed a married partner to start claiming spousal benefits while the higher earner’s benefit could continue to grow. Under current rules, partners can claim spousal benefits only if the primary earner is actually receiving retirement benefits.

For those not familiar with Social Security claiming strategies: It’s generally advantageous to wait as long as possible to apply for retirement benefits. The amount you can get grows at roughly 7% annually between age 62, which is the earliest you can apply, and your full retirement age, which is currently 66 but which will gradually rise to 67 for people born in 1960 and later. Between your full retirement age and age 70, you can earn so-called “delayed retirement credits” that further boost your check by 8% each year.

If you start early and realize you made a mistake, you can suspend your benefits at your full retirement age. Your checks will stop, but you don’t have to repay past benefits. And the amount you receive — although still reduced by your early start — can earn delayed retirement credits.

This probably isn’t a good option if you have other people drawing benefits based on your record, such as spouses or dependent children, because the suspension would stop their benefits as well.

Suspension also is different from the “do over” option that allows you to repay any benefits you’ve received and completely restart the clock on your benefits, as if you’d never started them. That option is allowed only in the first 12 months after your initial application.

Given that your local reps are confused, you should point them to the Social Security Administration’s web page on the matter.

It couldn’t be clearer. The first sentence reads: “If you have reached full retirement age, but are not yet age 70, you can ask us to suspend retirement benefit payments.” The page goes on to say your benefits will be automatically restarted at age 70, when those benefits max out, but you can restart at any time before that if you want.

Q&A: Waiting your way to better retirement benefits

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Dear Liz: You recently wrote, “When you apply for Social Security now, you’re ‘deemed’ (considered by the Social Security Administration) to be applying for both your own benefit and any available spousal benefit. If a spousal benefit is larger, you’ll get that, and you can’t switch back to your own later.”

I turn 62 in August and recently visited the Social Security Administration to apply for benefits. I worked for 20 years and earned a benefit of $1,400 a month if I waited to apply at 66. Since I was applying at the earlier age of 62, my benefit is lowered to about $1,000 a month. Half of my husband’s benefit is $1,300 a month but I was told my only choices are to take $1,000 at the earlier age of 62 or wait another four years and take my full benefit at $1,400.

What makes me incensed is that had I not worked at all, I would be eligible to take the higher amount of $1,300 spousal benefit at 62. This makes no sense!

Answer: No, it doesn’t, and it may be because you’re misunderstanding what you were told.

Your spousal benefit is half of your husband’s benefit only if you wait until your own full retirement age, 66, to take it. Social Security benefits are reduced if you start early.

If his benefit is currently $2,600, your spousal benefit now would be about 35% of that, or $904. Since your own benefit reduced for an early start is $1,000, you would get the larger of the two checks, or $1,000. If you wait until your full retirement age, you’ll get a substantially larger check — and it will still be bigger than your spousal benefit.

Q&A: Getting spousal benefits after divorce

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Dear Liz: When I retired at 63, my husband had been on Social Security for several years. We had been divorced about six months at that time. Should I have been bumped up to his benefits? We had been married for 42 years.

Answer: You wouldn’t get an amount equal to his benefit if he’s still alive — that’s called a survivor’s benefit, and it’s only available after his death. But you could get a spousal benefit of up to half of his check if that amount is larger than your own retirement benefit.

Both spousal and survivor benefits are available to divorced spouses if the marriage lasted at least 10 years. Neither benefit reduces what your ex or any subsequent spouses get.

You should call the Social Security Administration at (800) 772-1213 to see if you qualify for a larger check.

Q&A: Waiting for Social Security pays off

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Dear Liz: My husband (who will retire in January) just turned 67, but still wants to wait to collect Social Security until he turns 70 to maximize his benefit.

Should he apply for Social Security now, and immediately suspend benefits? Or, should he simply wait until he turns 70 years old to apply? Is there a difference?

Answer: There’s no need for your husband to file for benefits now. He will accrue delayed retirement credits for each month he delays filing, and those credits will add 8% a year to his benefit. Not only will that result in a larger check for him, but that could mean a larger survivor’s check for you should you outlive him.