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Social Security spousal benefit

Social Security Spousal Benefits After a Divorce

We’ve discussed many different factors about Social Security Spousal Benefits, but what happens to Spousal Benefits after the couple has divorced? We know that a divorcee can file for Spousal Benefits if the marriage lasted for at least 10 years – but only after a 2-year period has passed if the ex-spouse has not already filed for benefits.  The only other factors that must be in place are for the ex-spouse to be at least 62 years of age, and of course the ex must have a benefit record to calculate Spousal Benefits from. On the other hand, if a couple is divorcing and one of the spouses (soon to be ex-spouses) has already filed for his or her own Social Security benefits, the other spouse can file for Spousal Benefits either before or after the divorce is finalized with no waiting period, as long as they were married for […]

File and Suspend in the Crosshairs?

Apparently in the President’s recent budget documentation there is a brief mention of a desire to curtail the availability of File and Suspend as an option for Social Security benefit filing. The reason, it appears, is that the Obama administration views this option as one used only by high income folks to take advantage of the government with this valuable option. The problem with that viewpoint is that it is used by folks of all income levels, and in fact if it is taken away this could cause some big problems for folks who can least afford to lose benefits. As if anyone can afford to lose benefits, right? Here’s what happens with File and Suspend: a Social Security benefit recipient has a spouse and/or children that would be eligible for benefits based on his or her record when he or she files for benefits.  If he or she happens […]

The Unmarried Penalty With Social Security (and the Divorce Advantage)

Okay, penalty probably is the wrong term for it – maybe the better term would be short-change. You’ve undoubtedly heard of the marriage penalty for income taxes – this is where it can be beneficial tax-wise for two people to remain single than to be married and be forced to file either jointly or separately.  The tax code contains several ways that this is true.  But did you know that there is a way that married folks might level the field versus singles in the Social Security law-scape?  Plus, divorced folks may also have an advantage over singles AND married folks who were never divorced (or who divorced after marriage of less than ten years)? The Marriage Advantage When a worker remains single over his or her working life, there is an inequality in benefits paid out based on his or her record when you compare it to that of […]

The Inequity of Spousal Social Security Benefits

We’ve covered a lot of ground talking about Spousal Benefits and strategies for filing, and other facts to know about Spousal Benefits.  But did you realize that there is a flaw in the process that shortchanges some couples when it comes to Spousal Benefits? Here’s a pair of example couples to illustrate the inequity: The first couple: Jane has worked her entire life and has earned a Social Security benefit of $2,600 per month when she retires.  Her husband Sam has been a struggling artist his whole life, as well as a stay-at-home Dad to their three kids when they were young.  As a result, Sam has never generated enough income on his own to receive the requisite 40 quarter-credits to have a Social Security benefit of his own. The second couple: Sid and Nancy have both worked and had earnings within the Social Security system over their lifetimes.  Sid […]

Social Security and the Non-Citizen Spouse

With our increasingly global society today, many married couples are made up of a US citizen and a non-citizen.  In some cases, the non-citizen spouse has never been covered by the US Social Security system – he or she may have been covered by another system in his or her home country.  In other cases, the non-citizen spouse may have worked in a Social Security-covered job while living in the US, and so may have generated a Social Security earnings record of his or her own. At any rate, it is important to know that your lawful spouse who is a non-citizen may be eligible for Social Security benefits based on your earnings. As long as other qualifications are met (length of marriage, age of the spouse, and your filing status with Social Security), your non-citizen spouse may qualify for Spousal Benefits based upon your record.  By the same token, your […]

Can Both Spouses File a Restricted Application for Spousal Benefits Only?

In the wake of my post last week, Can Both Spouses File and Suspend?, I received multiple iterations of the same question, which is the topic of today’s post: Can Both Spouses File a Restricted Application for Spousal Benefits Only? Unlike the original situation where technically it is possible to undertake but the results would not be optimal, in this situation it’s not technically possible. (The one exception is in the case of a divorced couple. For the details on how it works for divorcees, see this article: A Social Security Option Strictly for Divorced Folks.) The way the restricted application for spousal benefits works is that there are three rules that must be met: You must be at or older than Full Retirement Age (FRA) Your spouse must have filed for his or her own retirement benefit – does not have to be actively receiving benefits, he or she […]

Can Both Spouses File and Suspend?

This question continues to come up in my interactions with readers, so I thought I’d run through some more examples to illustrate the options and issues.  The question is: Can both spouses file and suspend upon reaching Full Retirement Age, and collect the Spousal Benefit on the other spouse’s record, allowing our own benefit(s) to increase to age 70? Regarding file & suspend and taking spousal benefits, although technically both of you could file and suspend at the same time, only one of you *might* receive spousal benefits at that point. The reason is that once you file (regardless of whether you suspend) the spousal benefit is then limited to the amount over and above your own Primary Insurance Amount (PIA), up to 50% of your spouse’s PIA. (Remember, PIA is the amount of benefit that you would receive at exactly Full Retirement Age.) For example, if you and your […]

Social Security Spousal Benefit at or After FRA

Some time ago I wrote an article on the Social Security Spousal Benefit Before FRA, and an astute reader (thanks, SD!) pointed out the obvious to me: I hadn’t written the complementary piece on calculating the spousal benefit at or after FRA.  So let’s get right to it! When you wait until Full Retirement Age to file for spousal benefits, there is no reduction of that portion of your benefits.  In other words, the spousal benefit will be based on 50% of your spouse’s PIA minus your own PIA, and then this amount will be added to whatever retirement benefit that you’re receiving on your own record.  This additional benefit can’t increase your total benefit to a point greater than 50% of your spouse’s PIA. Here are some examples: Started own benefits early Alice and Terry are both age 66.  Alice started her own benefit early, at age 62.  Her […]

A Good Reason to File and Suspend: Back Benefits

We’ve discussed the file and suspend option in the past as it relates to enabling your spouse or dependents to begin receiving benefits based on your record while you delay filing to accrue the delay credits.  But there’s another reason that you might want to file and suspend at Full Retirement Age (FRA) – and this one has little to do with a spouse, even single folks can take advantage of this. When you file and suspend, what you have done is to establish a filing date notation on your record. By establishing a filing date notation, as mentioned before, your spouse and dependents can file for benefits based upon your record.  In addition, since there is a filing date on your record, you are eligible to change your mind about delaying your filing to a later date and receive your benefits retroactively from that point to the point when […]

Important Ages for Social Security

There are many specific important ages to know as you’re planning your Social Security filing strategy. The ages can become quite confusing and jumbled together as you plan.  It’s important to know at what age you can take specific actions, as well as what the consequences can be if you take a particular action earlier than it is appropriate. These ages are pervasive throughout this blog and my book, but I hadn’t compiled all of the important ages into a single place, so listed below are what I have determined to be the most important ages with regard to Social Security, as well as what is important about that age.  Enjoy! Age Description 22-62 This is the forty years during which your monthly earnings are compiled to develop your initial Average Indexed Monthly Earnings (AIME).  This figure is then used to determine your Primary Insurance Amount (PIA) which is used […]

The Real Breakeven Point for Delaying Your Own Social Security Benefit and Taking the Spousal Benefit

Recently there was an article that I was involved with where we were reviewing the strategies of taking a restricted spousal benefit and therefore delaying your own benefit versus taking your own benefit.  An astute reader (Thanks BL!) pointed out that there was a bit of a flaw in the logic on the costs of delaying, and therefore a significant difference in the breakeven period. Briefly, the example went as follows: Say the wife, Michelle, has a PIA of $1,300 and Mike has a PIA of $2,500.  They’re both age 66, and Michelle files the restricted app and is eligible to receive $1,250 (half of Mike’s), which is only $50 less than she would receive if she filed for her own benefit. After four years of delay, she has given up $2,400 ($50 times 48 months) but now her benefit is $1,716 – $416 more than she would have received […]

3 things you can do if you’ve filed for Social Security benefits too early

I often hear from people who, for whatever reason, decided to file for their Social Security retirement benefit immediately upon reaching 62 (or 66, or whatever age), and now they have found out that this wasn’t necessarily the best option for them to maximize their lifetime Social Security benefits. There are several things that you can do about this – three that come to mind at the moment.  Below we’ll work through each of these ways to fix a situation where you filed too soon. Pay it back If it’s been less than 12 months since you filed, it’s possible for you to withdraw your application for benefits and pay back all that you’ve received to date.  Once you’ve done this, as far as Social Security is concerned, you never filed.  All of your benefit options are intact, just as if you hadn’t filed in the first place. If your […]

Restricted Application is Available via the Online Application

I learn something new almost every day. Today (well, not today but recently), I learned something about the online application for Social Security that I didn’t know: the restricted application for Spousal Benefits is available as a choice when you apply using the online application system! (If you want more information on why a restricted application is important, see this article about Leaving Money on the Table.) For quite a while now I’ve been telling folks that the best way to apply for the restricted application is to go to your local office.  When you get there and explain that you want to submit a restricted application for Spousal Benefits only, the first person that you talk to will likely tell you that you can’t do this, because your own retirement benefit is greater than half of your spouse’s PIA, or something like that.  Then my advice has been to […]

Know Your Options When Talking to Social Security

When you get ready to file for your retirement benefits, it’s important to understand what options are available to you before you talk to the Social Security Administration.  There are many ways to get a good understanding of your options, including working with your financial advisor, reading up on the subject (this blog is a good place to start!), and talking to friends and relatives who have already gone through the process. The reason it’s important to know your options is because the Social Security Administration staff that you may encounter are not trained to help you maximize your lifetime benefits – they are trained to help you maximize the benefit that you have available to you today.  Often the options that the SSA staff present to you are not the best options for you in the long run.  In addition, SSA staff are absolutely overwhelmed by the volume of […]

Earnings Tests Apply to Spousal and Survivor Social Security Benefits As Well

If you’re receiving Spousal or Survivor Social Security benefits and you’re under Full Retirement Age, you need to know that any earnings that you have can have an impact on the benefits that you’re receiving.  These are the same limits that apply to regular retirement Social Security benefits, and they apply in the same manner. For 2013, if you will not reach Full Retirement Age during this calendar year, the earnings limit is $15,120, or $1,260 per month.  For every $2 over that limit that you earn for the year, your Social Security benefit will be reduced by $1.  For example, if you earned $20,000 for the year, you are over the limit by $4,880, and you’ll lose $2,440 of your benefit. If you will reach Full Retirement Age in 2013, the earnings limit is $40,080, or $3,340 per month – and the treatment is different.  In this case, for […]

Calculating the Reduced Social Security Spousal Benefit

Among the pile of very confusing calculations for various Social Security benefits is the incredibly confusing Spousal Benefit.  This calculation becomes even more confusing when filed for prior to Full Retirement Age (FRA), as it is further reduced. Briefly, the maximum amount that a Spousal Benefit can be is 50% of the other spouse’s Primary Insurance Amount (PIA).  PIA, if you’ll recall, is equivalent to the amount of benefit that the other spouse would receive in benefits at his or her own Full Retirement Age.  The calculation is actually a bit more complicated than that. The Spousal Benefit for Jane (on her husband John’s record) is calculated as follows: John’s PIA times 50% minus Jane’s PIA times the early-filing reduction factor That amount is then added to Jane’s benefit, which could be reduced by filing early or enhanced by Delayed Retirement Credits for filing later, to come up with Jane’s […]

Are You Leaving Social Security Money on the Table? You Might Be, If You Don’t Understand and Use This One Rule

Many couples that have done some planning with regard to filing for Social Security retirement benefits have figured out how to coordinate between the higher wage earner’s benefit and the lower wage earner’s benefit.  Often it makes the most sense to file for the lower wage earner’s benefit early, at or sometime near age 62, while delaying the higher wage earner’s benefit out to as late as age 70. This method allows for a maximization of those two benefits.  If you’re really astute, you probably picked up on the concept of file and suspend, as well.  File and Suspend allows for the lower wage earner to increase his or her benefits by adding the Spousal Benefit, while the higher wage earner continues to delay his or her benefit, adding the delay credits. Another little-known method that can be employed in specific circumstances is called the Restricted Application for Spousal Benefits.  […]

Can I Switch to My Spouse’s Benefit At FRA?

This is a question that comes up pretty frequently, in several different flavors.  Basically, here’s the full question: I started benefits at age 62, and now I’m 66 (Full Retirement Age) – can I switch over to my spouse’s benefit now that I’m age 66?  And will it be based on his benefit when he was 66, or his benefit now.  (He’s 70 now, and has been collecting benefits since he turned 66.) There are a couple of questions being asked here, and I’ll cover them one-by-one. Can I switch to my spouse’s benefit? The wording here is troubling, because the asker specifically wishes to “switch” to another benefit.  If an individual is already receiving retirement benefits, the spousal benefit is not a “switch”, but rather an “addition” to the retirement benefit. The second issue is implied, and maybe not troublesome to the question at hand.  The Spousal Benefit at […]

Book Review – Social Security Made Simple

I recently had the privilege of reading Mike Piper’s most recent book in his excellent … in 100 Pages or Less series, entitled Social Security Made Simple.  Just as with his other books in the series (Can I Retire?, Investing Made Simple, Taxes Made Simple and several others), Mike manages to distill the most important points about the topic into an easily-understood, easy-to-read, 100 pages. The layout of the Mike’s book is great for someone just learning about this topic, starting from basic situations that most folks will face, and working through to the more complicated situations.  The last section of the book addresses “when to file” strategies, including some unique ways to consider the value of your potential benefits in context of your financial life. When I read through the book it took me just over an hour to read – granted, I have a bit more than a […]

A Social Security Option Strictly for Divorced Folks

There is a loophole in the rules surrounding how divorced folks’ Social Security benefits are treated.  As you may know from other articles you’ve read here and elsewhere, if you were married for at least ten years and you’ve been divorced for two years, as long as your ex is at least age 62, you are eligible to file for a Spousal Benefit based upon the ex’s record.  In addition, as long as you fit the circumstances, if your ex passes away before you, you will have access to his or her Social Security benefit amount as a Survivor Benefit.  These things are pretty much the same as if you were still married to your ex-spouse. There’s one rule that is different for ex-spouses than for a married couple – and it has to do with the restricted application for Spousal Benefits. Restricted Application for Spousal Benefits If you’ll recall, […]