Cou­ples and claim­ing ben­e­fits

Daily Press (Sunday) - - Success - By San­dra Block

So­cial Se­cu­rity strate­gies to con­sider

For mar­ried cou­ples, claim­ing ben­e­fits “is a house­hold de­ci­sion, not an in­di­vid­ual de­ci­sion,” says Paula McMil­lan, a cer­ti­fied fi­nan­cial plan­ner in Greens­boro, N.C. And un­der a cou­ple of sce­nar­ios, it makes sense for one spouse (or wid­owed spouse) to claim ben­e­fits be­fore full re­tire­ment age.

You’re the lower-earn­ing spouse

If you were born on or be­fore Jan. 1, 1954, you can still take ad­van­tage of a strat­egy known as re­strict­ing an ap­pli­ca­tion to in­crease the com­bined pay­out of your ben­e­fits as a cou­ple.

Here's an ex­am­ple of how it works: One spouse files for So­cial Se­cu­rity ben­e­fits be­fore full re­tire­ment age, while the other — who must have al­ready reached full re­tire­ment age — files a re­stricted ap­pli­ca­tion to col­lect spousal ben­e­fits only, which are equal to half of the first spouse's full ben­e­fits. The sec­ond spouse waits un­til 70 to col­lect his or her own ben­e­fit, thus tak­ing ad­van­tage of de­layed re­tire­ment cred­its.

Even if you're in­el­i­gi­ble for that strat­egy, it may make sense for the low­erearn­ing spouse to file as early as age 62, says Jim Blanken­ship, a CFP in New Berlin, Ill. While that spouse will see a 25 per­cent re­duc­tion in ben­e­fits, the cou­ple can use in­come from the low­erearn­ing spouse's ben­e­fits, along with other sources of in­come, to pay ex­penses, en­abling them to de­lay the higher earner's ben­e­fits un­til age 70.

You’re el­i­gi­ble for sur­vivor ben­e­fits

You can file for So­cial Se­cu­rity based on your late spouse's earn­ings as early as age 60 (50 if you're to­tally dis­abled). Your ben­e­fits will be based on your de­ceased spouse's ben­e­fits when he or she died. If your spouse died be­fore fil­ing, your pay­out will be based on the amount your spouse would have earned at full re­tire­ment age.

To re­ceive 100 per­cent of your late spouse's ben­e­fit, you must wait un­til your own full re­tire­ment age to file; oth­er­wise, it will be re­duced by a cer­tain amount for ev­ery month you file your claim be­fore your full re­tire­ment age. But whether you wait un­til full re­tire­ment age or file ear­lier, claim­ing sur­vivor ben­e­fits won't af­fect your own pay­out.

Claim­ing sur­vivor ben­e­fits, even if they're smaller than your own, al­lows your own ben­e­fits to con­tinue to grow. At age 70, you can switch to your own ben­e­fits, which will have been en­hanced by the de­layed re­tire­ment credit.

Sur­vivor ben­e­fits are also avail­able to di­vorced spouses whose former spouses have passed away, al­though many don't re­al­ize they're el­i­gi­ble, says Jayson Owens, a CFP in An­chor­age, Alaska.

If you were mar­ried for at least 10 years, you can claim ben­e­fits as early as age 60 based on your late ex's earn­ings record. As is the case with sur­viv­ing spouses, this strat­egy of­fers a way to post­pone claim­ing your own ben­e­fits un­til age 70, Owens says. Re­mar­riage won't af­fect your el­i­gi­bil­ity for sur­vivor ben­e­fits as long as you're at least 60 years old (50 if you're to­tally dis­abled). San­dra Block is a se­nior ed­i­tor at Ki­plinger’s Per­sonal Fi­nance mag­a­zine. Send your ques­tions and com­ments to mon­ey­[email protected]­


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