Ask Liz Weston

Get smart with your money

Social Security

Q&A: How working abroad affects Social Security

By Leave a Comment

Dear Liz: In your answer to the person who wants to move abroad, you forgot to mention that they would have to have 40 work credits to receive Social Security benefits.

Answer: Actually, the United States has made “totalization agreements” with more than 30 other countries regarding Social Security coverage. Essentially, a worker who doesn’t have enough credits in one country’s Social Security system can use credits from the other country to qualify for benefits. These agreements also ensure that workers don’t face dual taxation; typically, workers abroad who are covered by these agreements pay into the host country’s Social Security system.

Q&A: Should I draw down my 401(k) before accepting Social Security?

By Leave a Comment

Dear Liz: I am a 66-year-old single male working part-time (not by choice, but it’s the best I can get). I earn about $24,000 per year plus another $4,000 in unemployment during the summer. Work provides healthcare, so I don’t have Medicare premiums yet. With fixed expenses at roughly $50,000 per year, I am withdrawing from my 401(k) to cover the gap until I reach full retirement at the age of 70. If they will let me, I hope to continue to work until 75 because I love my job. At this rate, I will have exhausted the 401(k) by age 70, leaving me with a $100,000 CD earning 4%. Am I right to use the 401(k) as a bridge to full Social Security?

Answer: The advantages of delaying Social Security are typically so great that financial planners often recommend tapping other resources, including retirement funds, if that allows you to put off your application. Social Security’s delayed retirement credits boost your payment by 8% each year between your full retirement age and age 70, when benefits max out. A maxed-out payment is a powerful hedge against longevity risk, which is the danger of living so long that you deplete your savings.

However, a financial planner probably would suggest you also look for ways to decrease your living expenses to avoid completely exhausting your retirement accounts. As you’ve discovered, older people can have a harder time staying employed, even when their health cooperates. You may not be able to work as long as you’d like, and the average Social Security check is closer to $2,000 than the $4,000 or more you would need to meet your fixed expenses.

Consider seeking out a fiduciary financial advisor who can review your situation and offer personalized advice. Your employer or 401(k) provider may offer access to such advisors, or you can look for a financial coach or accredited financial counselor affiliated with the Assn. for Financial Counseling & Planning Education at www.afcpe.org.

Q&A: Medicare premium increase offsets cost-of-living boost

By

Dear Liz: My wife and I are well over 70 and receive Social Security. We pay for Medicare Part B as well as IRMAA (Income-Related Monthly Adjustment Amount) for Part B and Part D via deductions from our monthly checks. We just received our annual notice from the Social Security Administration of the 2.8% cost-of-living increase for 2026. At the same time, our Medicare deductions were increased such that we ended with a monthly $20 increase in Social Security for my wife and $80 for me. That hardly goes along with the sentence in the standard letter from the SSA that the COLA helps us keep up with the cost of living. Are we just lucky that our monthly checks from the government did not actually decrease?

Answer: In a word, yes.

The cost of healthcare and healthcare insurance typically rises faster than the general rate of inflation. Medicare costs haven’t increased as quickly as those for private insurance. However, it’s still not unusual for higher Medicare premiums to wipe out Social Security cost-of-living increases for the year.

Fortunately, you have other resources to help you cope with inflation. IRMAA is a Medicare surcharge that kicks in for people with modified adjusted gross incomes over $109,000 if single or $218,000 if married filing jointly. The surcharge is determined by your income tax return from two years ago, so your 2026 IRMAA is based on your 2024 filing.

Q&A: How “deeming” works for Social Security spousal benefits

By

Dear Liz: I will be turning 64 next year and my wife will be turning 62. I plan to wait as long as I can to file for my Social Security, hopefully till 70. My benefit at full retirement age (age 67) is around $3,400 monthly and my wife’s is about $1,100. Half of my benefit will always be higher than hers, even if she waits until age 70 to file. Can she file for early benefits next year (around $800 a month), then switch over to half of mine when I finally file? Will the ‘deeming’ rule affect this? Will she actually get half of mine if she files early?

Answer: If you had already started receiving your benefits, your wife would be “deemed” to be applying for both her own benefit and her spousal benefit and would be given the larger of the two. She couldn’t apply for just one, and there would be no switching later.

Because you haven’t started yet, though, the spousal benefit hasn’t been triggered. The only benefit she can currently apply for is her own. When you apply, the spousal benefit will become available and she will be switched to that if it’s larger (which sounds like it will be the case).

Spousal benefits can be up to half of what the primary earner would get at full retirement age, but the amount is reduced when started early. If you apply for benefits before she reaches full retirement age, in other words, her spousal benefit would be less than 50%.

Plus, any benefit started before the applicant’s full retirement age is subject to the earnings test, as described above.

Because so many different factors are at play, it could make sense to use one of the paid Social Security claiming strategy sites such as Social Security Solutions or Maximize My Social Security.

Q&A: How should I receive Social Security survivor benefits?

By

Dear Liz: I am 68 and still working. I plan to wait until age 70 to maximize my benefit before taking Social Security. My spouse (born in 1956) passed away in 2018 after just beginning to draw her Social Security benefits at age 62.

Even though I was the higher earner, I believe that I can draw survivor benefits now from my wife’s Social Security if I apply. I also believe that I can switch to my own benefit when I turn 70, and my benefit would then be higher.

But I cannot find an answer to whether, if I did such a switch at age 70, my benefits would be at maximum because I waited until age 70, or would be less than the maximum because I started taking my wife’s survivor benefits or even worse, because my wife started benefits early. I see many articles that dance all around this question but never answer it. Can you please be the one who answers this question?

Answer: Social Security can be incredibly complex, with different rules applying depending on age, marital status and the type of benefit involved. Survivor benefits have different rules than spousal benefits, for example, and both work differently from the retirement benefit people earn on their own work record. You’re smart to want to understand exactly how the rules affect your individual situation before applying.

You are correct that you can apply for survivor benefits now and then switch to your own retirement benefit when it maxes out at age 70. Your retirement benefit will not be reduced because you collected survivor benefits first, or because your wife started her benefit early.

However, your survivor’s benefit will be smaller than it might have been because of her early start. The survivor benefit is determined by what the deceased spouse was receiving at the time of death.

Survivor benefits can begin as early as age 60, or 50 if the survivor is disabled, or at any age if the survivor cares for minor or disabled children from the marriage.

But starting early would have further reduced your benefit, plus you would have been subject to the earnings test, which withholds $1 for every $2 you earn over a certain limit (which in 2025 is $23,400). The earnings test goes away when you reach full retirement age, which for someone born in 1957 is 66 years and 6 months.

There was no benefit to delaying your application past your full retirement age. That means you’ve missed out on several months of survivor benefits you could have been receiving. You can get six months of back benefits when you apply, but that’s the limit.

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

By

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.