Answers to some of the most commonly asked questions financial
advisers get on spousal benefits, including when to take them and how benefits
for ex-spouses work.
By Ken Moraif,
CFP®, CEO and Senior Adviser | Retirement Planners of America May 6,
2019
Social Security is
incredibly complicated, and it gets even more complex when there are two of
you. How and when each of you takes benefits can affect your income as a couple
by hundreds of dollars a month, yet, according to Employee Benefit Research Institute's
2018 Retirement Confidence Survey, only 23% of workers actually try to maximize
their benefits by planning when to claim Social Security.
If you’re among the 77%
who haven’t planned ahead, I want to inspire you to take action. Because the
rules regarding Social Security are so complex, I strongly suggest you talk to
an expert about your particular circumstances, but to get you started, I’d like
to answer a few questions I often hear:
How
much can I receive in spousal benefits?
You can get a maximum of
50% of the amount your spouse would receive in benefits at his or her full
retirement age. You cannot get half of your spouse’s benefits plus your own, so
it only makes sense to take spousal benefits if yours are less than half of
your spouse’s.
When
should I take Social Security spousal benefits?
As with other Social
Security retirement benefits, you can begin taking them at age 62*, but if you
do so, you will receive them at a permanently reduced rate, which is a
percentage based on the number of months up to your full retirement age. If you
wait to take spousal benefits until your full retirement age, you can receive
50% of the amount your spouse would receive at his or her full retirement age,
even if he or she took benefits early at a reduced rate.
Waiting past your full
retirement age will not net you more in spousal benefits.
How
can I determine my full retirement age?
Just plug your birthdate
into Kiplinger’s retirement age calculator. Or, the Social
Security Administration website has a calculator here.
What
happens to our benefits when one of us dies?
As a surviving spouse, you
can receive 100% of your deceased spouse’s benefits once you reach your full
retirement age, or reduced benefits as early as age 60. If you had been taking
the 50% spousal benefit, it would stop and you would begin receiving survivor’s
benefits. Again, if you claim benefits — including survivor’s benefits — before
reaching your full retirement age, they will be reduced and may be subject to the earnings test.
Your benefits could also
be reduced by the Government Pension Offset (GPO)
if you receive a retirement or disability pension from a federal, state or
local government based on your work in which you did not pay Social Security
taxes.
I’ve
heard I can collect on my ex-spouse’s benefits. How does that work?
If you were married for at
least 10 years, are not remarried and both you and your ex-spouse are at least
62, you can file for spousal benefits. It does not matter whether your ex has
remarried, and the fact that you file for spousal benefits will not impact your
ex-spouse's benefits.
A few notes: The spousal
benefit you’d collect from your ex must be greater than your own; your
ex-spouse does not have to be collecting benefits for you to begin; and once
again, if you begin collecting at age 62, your benefits will be permanently
reduced. For more, read Senior Marriage and Social Security: Rules to Know.
What’s
a restricted application?
Some people are allowed to
take a spousal benefit while delaying their own benefits (and letting them grow
to their maximum amount) until age 70. For example, if you are eligible, you
could take half of your spouse’s benefit, let your own grow until you are 70,
and then switch to your larger benefit.
You may only file a
restricted application if you were born before Jan. 2, 1954**. You also must
have reached your full retirement age, and your spouse must already be
collecting his or her own benefit. For more, read Restricted Application Social Security Strategy Is on Its
Way Out.
As you can see, I needed
to add footnotes to even the “simplest” questions, and there are many more
exceptions and permutations
that can affect your benefits. Even so, I hope I’ve answered a few of your
questions, and more so, inspired you to plan ahead with your spouse so you can
both get the most out of your Social Security in retirement.
*You may be able to take
benefits earlier if you are caring for dependent children.
**There are some
exceptions for people who are disabled or caring for dependent children.
Ken Moraif, CFP, is CEO
and senior adviser at Retirement Planners of America,
a Dallas-based wealth management and investment firm with over $4.3 billion in
AUM and serving over 8,000 households (as of May 2019). He is also the host of
the radio show "Money Matters with Ken Moraif," which has offered
listeners retirement, investing and personal finance advice since 1996.
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