By Mark Miller
Tribune Media Services
I get a huge number of questions from readers about Social Security’s spousal and survivor benefits. Rightly so, because these very important features of Social Security can create powerful amplifying effects that boost lifetime benefits significantly.
This week, I’ll answer some of the most frequently-asked questions on how Social Security works for married couples. However, Social Security’s rules are complicated; a visit to your local Social Security office is in order if you’re planning to file for spousal or survivor benefits.
Q: What is the spousal benefit, and when can I receive it?
A: As a spouse, you are entitled to receive the greater of your own benefit or half of your spouse’s benefit. And many of the rules on spousal benefits revolve around the full retirement age (FRA)-the age at which you can receive retirement benefits that aren’t reduced by early filing penalties.
If you have reached your FRA, you can choose to receive only your spouse’s benefits and continue accruing delayed retirement credits on your own Social Security record. You could then file for your own benefits at a later date and receive a higher monthly benefit based on the effect of delayed retirement credits.
However, you cannot elect to receive spousal benefits below your FRA and later switch to your own benefits.
Spousal benefits are reduced if you file before your own FRA. For example, if your FRA is 66, you could receive 35 percent of your higher-earning spouse’s unreduced benefit at age 62. The amount of the benefit increases at later ages up to the maximum of 50 percent at your FRA.
Q: Can I file for spousal benefits if my spouse (the higher earner) isn’t yet at the full retirement age? If so, how much will my spousal benefits be reduced?
A: Assuming your spouse has already filed for benefits and your full retirement benefit is less than 50 percent of your spouse’s full benefit, you can file for the spouse’s benefits even though your spouse is not yet at the FRA. The amount of reduction is based on your age at the time you claim the benefit.
Q: Can I file for spousal benefits if my spouse isn’t receiving Social Security?
A: The answer is no – with a very important caveat. Let’s say the higher-earning spouse wants to continue delaying taking benefits past his or her FRA. The higher earner could do what is called a file-and-suspend. Here’s how it works:
1. The lower-earning spouse files for benefits at age 62.
2. The higher-earning spouse files for benefits at his/her FRA but immediately files a notice to suspend benefits.
3. The lower-earning spouse elects to receive spousal benefits (half of the higher-earning spouse’s benefit).
4. The higher-earning spouse continues to accrue higher payments for whatever point he or she elects to begin receiving benefits.
Although this approach is completely kosher under Social Security’s rules, it makes sense only if the spousal benefit would be higher than the individual’s own benefit. The result can be much higher combined lifetime benefits for the couple.
Q: If my wife has not worked full time most of her life, can she qualify for Medicare at age 65, and does she get half of my Social Security?
A: If you are at least 62 years old, your wife becomes eligible at age 65 for Medicare based on your employment record. She could receive the free Part A hospitalization coverage, and pay for Part B medical coverage. On Social Security, she would be eligible to receive 50 percent of your Social Security benefit at her own FRA.
Q: What is the survivor benefit?
A: When a spouse dies, the survivor is entitled to receive the greater of his or her own benefit, or 100 percent of the spouse’s benefit, including any cost-of-living increases earned along the way.
If the higher-earning spouse delays filing until the FRA or beyond, then the surviving spouse’s lifetime benefits will be increased substantially.
Maximizing the survivor benefit is an especially important consideration for women. Men not only tend to be the higher wage earners but also tend to die at younger ages than women.
In many cases, this means that a delayed filing by a man can be a critical way to boost lifetime retirement security for older women – a time of life when overall income can decline sharply.
Social Security provides 90 percent or more of income for 47 percent of all elderly unmarried women who receive benefits.
Q: At what age should I apply for survivor benefits?
A: You can receive full survivor benefits when you reach your own FRA (typically 66). You can receive survivor benefits as young as age 60, but the benefit will be reduced. According to the Center for Retirement Research at Boston College, widow(er)s are guaranteed at least 71.5 percent of their deceased spouse’s FRA benefit if they claim the survivor benefit before their FRA, and at least 82.5 percent if they claim the survivor benefit after their FRA.
Mark Miller is the author of “The Hard Times Guide to Retirement Security.” He publishes http://retirementrevised.com, recently named the best retirement planning site on the web by Money Magazine. Contact him with questions and comments at mark@retirementrevised.com
This was printed in the November 6, 2011 – November 19, 2011 Edition.
