Another wrinkle: how does
earning money affect the choices?
by Phil Moeller | December 4, 2018
Collecting Social
Security while you’re working can be a headache. And figuring out
whether you’re better off with your own retirement benefit or your spouse’s is
another tricky decision.
In this week’s reader
question on Social Security, a widow who’s facing both complications reaches
out to columnist Phil Moeller, the author of Get What’s Yours for Medicare:
Maximize Your Coverage, Minimize Your Costs and the
co-author of the updated edition of The New York Times bestseller How to Get What’s Yours: The Revised
Secrets to Maxing Out Your Social Security.
Got a question of
your own about Medicare or Social Security? Send it to askphil@considerable.com.
How will my job
affect my survivor’s benefit?
Cheri S.: My husband passed on
May 1st of this year, one week shy of his 79th birthday. He started collecting
his benefits at age 62 or 63 and was retired. I am 64 and work full time. I
will be 65 in July 2019. I have been told that I cannot collect any of my late
husband’s Social Security while I have a job and earn more than $17,000 dollars
for the first year I would start collecting benefits.
At age 66 I’m told I
would be able to collect something and be able to earn more than $46,000, which
is about what I would make if I was still working and collecting his Social
Security. Is the first year of collecting a calendar year or the remaining
year, say 2018? Please let me know your thoughts and which direction I should
go.
Phil Moeller: Social Security’s earnings test
does limit your Social Security benefits if your outside earnings are more than
$17,640 in calendar year 2019. After you’ve earned that much, Social Security
will reduce your benefit by $1 for every $2 earned above the threshold. So, you
might get something. It depends on the size of your widow’s benefit and how
much you earn.
In the calendar year
in which you are scheduled to reach your full retirement
age—when you turn 66 in 2020—the threshold jumps to $46.920 (that’s
the 2019 figure—it should be slightly higher in 2020). Your benefit would then
be reduced by $1 for every $3 earned above this limit. Based on your earnings,
you likely would collect all of your
benefits.
While you’re figuring
out what you want to do with your widow’s benefit, I suggest you also find out
about your own retirement benefits. They may well be larger than your widow’s
benefit, and this is very important.
You can find out the
projected size of your retirement benefit by opening an online My Social Security
account.
Your own retirement benefits may well
be larger than your widow’s benefit.
Here’s where things
can get a little tricky, so please bear with me. Your widow’s benefit will
increase in value each year you delay claiming it until you turn 66, when it
reaches its full value. Your retirement benefit, on the other hand, doesn’t
reach its full value until you turn 70.
If your retirement
benefit at age 70 will be larger than your widow’s benefit at age 66, you would
claim the widow’s benefit as soon as you would receive any benefit dollars at
all.
On the other hand, if
your widow’s benefit at age 66 will be larger than your retirement benefit at
age 70, you should defer filing for the widow’s benefit until you turn 66.
Instead, when you turn 62, you should file right away for your retirement
benefit and get what you can even though the earnings test will reduce your
benefit.
I’m sorry this is so
complicated. If it wasn’t, we wouldn’t have needed to write an entire book
about it! Best of luck.
How much do I gain by
waiting to claim?
Wendy, Huntingburg,
Ind.:
I’m retiring in May of 2019 to get Medicare but not to get my Social Security.
Will it benefit me to just leave it for another 1 1/2 years and collect when
I’m 66?
Phil Moeller: You bet! Between the
earliest normal claiming age of 62 and the age of 70, when Social Security benefits reach their maximum, they will rise
by 7% to 8% a year for each year you defer claiming.
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