Ask Liz Weston

Get smart with your money

spousal benefits

Q&A: Timing those spouse benefits

By

Dear Liz: My husband and I are retired. He is 67 and I’m 65. We have been delaying Social Security as we are financially able to wait until he turns 70 to begin benefits. We both turned 62 before January 2, 2016, and are wondering how the “restricted application” rule applies to us. My husband was the primary worker and will have a payout at 70 that is more than twice what I will be paid, so I would be the one taking the spousal benefit. Would you recommend we continue to wait until he is 70 to start benefits, or does the rule make it smarter for us to begin sooner?

Answer: Typically when someone applies for Social Security, she is “deemed” to be applying both for her own benefit and for any spousal benefit that might be available. Restricted applications allowed someone to apply only for a spousal benefit, allowing her own benefit to grow, since delaying the start of benefits increases the amount by about 7% to 8% each year. She could switch to her own benefit when it maxed out at age 70.

Congress changed the rules to eliminate restricted applications for people who turn 62 on or after Jan. 2, 2016. Although a restricted application is still available to you, your husband must be receiving benefits before your spousal benefits can begin. (There used to be something called “file and suspend,” that would allow your husband to trigger spousal benefits without receiving his own, but that has been eliminated. He would have had to reach his full retirement age and requested the suspension before April 30, 2016.)

One other detail that’s important: While your husband’s benefit will continue to grow if he doesn’t start until age 70, the spousal benefit will not. The maximum spousal benefit is 50% of your husband’s benefit at his full retirement age, which was 66. The spousal benefit is further reduced if you should start it before your own full retirement age (which is also 66).

In most cases, it’s best for the higher wage-earner to wait as long as possible to begin, which would mean you would start spousal benefits in three years when your husband turns 70. Remember that it’s the larger check one of you will have to live on after the other one dies; you don’t continue to receive two checks, so it’s usually worth trying to max out the larger one. If you file a restricted application for spousal benefits only, you’d have the option of switching to your own benefit at 70 if it’s larger. You may want to use the Social Security claiming calculator at AARP’s site to evaluate your options.

Q&A: Timing spousal benefits

By

Dear Liz: My wife, who is 59, lost her job and has been unable to find a new one. Can she file for Social Security spousal benefits at 62? I plan to continue working.

Answer: For her to receive spousal benefits, you need to be receiving your own benefits. If you’re not yet 62, the youngest age at which you can claim retirement benefits, then her only option would be to file for her own benefit.

That may be the right course in any case. If you’re the bigger earner, it often makes sense for you to put off filing as long as possible to maximize not just your own check but the survivor’s benefit that one of you will have to live on once the other dies.

You can start your research into the best claiming strategy by using free calculators, such as AARP’s Social Security calculator or Open Social Security. If your situation is at all complicated — you have a minor child or a pension from a job that didn’t pay into Social Security — then consider paying about $40 to use a more sophisticated calculator, such as Maximize My Social Security, or consulting with a fee-only financial planner.

Q&A: Waiting your way to better retirement benefits

By

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: Social Security spousal benefits

By

Dear Liz: In a recent article, you mentioned spousal benefits. If someone started her own Social Security benefit at 62, is there no way of drawing a spousal benefit at a later date?

Answer: 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 benefit later.

You may be able to switch from your own benefit to a spousal benefit, however. Let’s say that when you applied at 62, your spouse had not yet applied for his or her own benefit. When he or she does apply, you’ll be automatically switched to a spousal benefit if it’s larger than your own.

Before Congress changed the rules, it was possible for one spouse to “file and suspend” — file and immediately suspend an application for retirement benefits, which was enough to allow a spouse to collect a spousal benefit. Today, a spousal benefit is typically only available if the primary earner has started his or her own retirement benefits.

Q&A: When a Social Security spousal benefit goof is suspected

By

Dear Liz: A family member recently lost her spouse. His monthly Social Security check was $1,800 and hers is $750. I have two questions.

First, is my understanding correct that she is able to begin collecting his monthly amount instead of her own?

Second, instead of collecting Social Security based on her earnings history, was she eligible instead to have collected 50% of her husband’s monthly benefit? If so, she was entitled to $150 more than she’s been collecting. If this is accurate, is there any recourse for collecting the additional benefit from Social Security?

Answer: To answer your first question, yes, your relative will now receive a survivor’s benefit equal to what her husband was receiving. She will no longer receive her own benefit.

The answer to your second question is a bit more complicated. Your relative may have started benefits before her own full retirement age, which used to be 65 and is now 66. When people start benefits early, they receive a permanently reduced amount whether they’re receiving their own retirement benefit or a benefit based on a spouse’s earnings. It’s possible that her reduced retirement benefit was more than her reduced spousal benefit.

Another possibility is that she started benefits before her husband. To get spousal benefits, the primary earner typically needs to be receiving his or her own benefit. (There used to be a way around this, called “file and suspend,” that allowed the primary earner to file for benefits and then suspend the application. That no longer exists.)

If your relative started benefits before her husband, she may have been able to get a bump in her check once he applied, assuming her spousal benefit was worth more than her own retirement benefit. That bump in benefits is now automatic, but if she turned 62 before 2016, she would have had to apply to get the increase, says Mary Beth Franklin, a Social Security expert who writes for Investment News.

She wouldn’t be eligible to get all the missed benefits back at this point, but she could get up to six months’ worth.

Q&A: Starting Social Security benefits early will cost you

By

Dear Liz: I started getting Social Security at age 62. I would have only gotten $327 a month based on my work history, but they gave me $666 based on my husband’s work history. He gets $1,966 but your article said I should get half. Should I be receiving more?

Answer: Probably not.

Your spousal benefit would have been half of your husband’s “primary benefit amount” only if you’d waited until your own full retirement age to apply. Because you started several years early at 62, your check was reduced by 30%.

His primary benefit amount is what he would have received if he started benefits at his own full retirement age. Full retirement age is currently 66 and will rise to 67 for people born in 1960 and later.