Questions and Answers about Social Security Benefits

Q: A couple is both age 67 and both have an extensive working history of 30-plus years. They are getting a divorce this year. Is it possible for each to file for spousal benefits and let their own benefit grow?

A. This is a problem. Because they will have been divorced less than two years, they can't both claim spousal benefits based on the other's record. It will be as if they are still married, where one spouse would be required to file for his/her benefit in order for the other spouse to become entitled to, and file a restricted application for, the spousal benefit.

I would recommend that rather than forgoing both spousal benefits, they work out an agreement whereby the higher-earning/older spouse files and suspends and the lower-earning/younger spouse files for the spousal benefit. You can do the math for each (50% of PIA x number of months between now and age 70) and make a recommendation as to which spouse should claim the spousal benefit. Because the total spousal benefits could be $40,000 or more, this should be part of their divorce agreement, factored into the mix with other assets being divided.

Q: Rosemary is 66 years of age. Her PIA is $757 per month. She just started receiving it in April of this year. Steven, Rosemary's husband, is 67 and his PIA is approximately $2,400. Steven has not filed; he plans on claiming at age 70. I know Rosemary may return her benefits that she has received (since she is within the first 12 months of claiming). If Steven files and suspends after Rosemary repays her benefits can Rosemary then claim on Steven after he files and suspends this year or at all?

A: It will not be necessary for Rosemary to repay her benefits. She can simply add on her spousal benefit once Steven files and suspends. They should go to their SSA office together and explain what they want to do: Steven will file and suspend and Rosemary will file for her spousal benefit. She will receive a spousal add-on so that the total of her own benefit plus the spousal will approximately equal one-half of Steven's PIA.

Q: I ran into a client who took notes from an "advisor" who mentions some Social Security secrets that will increase your benefits. He mentions two forms, 3881-DK and SSA-25. Both of these forms provide an increase in benefits. Any talking points would be great. To my knowledge there are no silver bullets or magic forms that increase benefits.

A: While there are some little-known rules that may help people get more Social Security than they expected, they are not all available to all people, and you have to know the rules. The ones mentioned by this advisor are pretty arcane. For example, Form 3881-BK relates to getting SSI for disabled adult children. If you don't have a disabled adult child, it doesn't apply. Form SSA-25 relates to reduced spousal benefits. I guess the value in presentations like this is that they get people into the advisor's office where you can look at the client's individual situation and see which rules apply to them. But throwing out mysterious teasers like that seems misleading to me. It's not necessary and could undermine confidence.

Q: Let's say a spouse files for her benefit at 62 and receives a benefit based on her own earnings history as well as a spousal benefit based on her husband's record. At 66 can she suspend or otherwise restrict her application such that she is receiving solely the spousal benefit, thus earning delayed credits on her own benefit? Or does filing early prevent that?

A: Yes, she can suspend her benefit at FRA and receive only the spousal add-on while her own benefit builds delayed credits to age 70. The credits would be applied to the reduced benefit amount, of course.

Q: Do long-term disability insurance payments affect Social Security disability payments if the client qualifies for SSDI?

A: No. Receipt of disability insurance benefits does not affect SSDI. If he qualifies, he can get the full SSDI benefit.

Q: I just had a conversation with a 67-year-old divorced man. He was divorced over 3 years ago. I told him he could be collecting a spousal benefit and that he should have started at age 66. Can he get back payments from SS for the year he missed?

A: He can get six months worth of retroactive benefits only.

Q: I have an old friend—male, age 67. He had been married for over 10 years to wife A. Divorced Wife A. At some point thereafter married for 3 months total to wife B. Currently divorced. He began taking SS at his FRA, about 15 months ago. Is it too late to suspend and go for spousal benefit based on his first wife's benefit?

A: Yes, it is too late for him to file a restricted application for his spousal benefit. To do so, he would have to withdraw his application, and it is too late for that. Too bad he didn't come up with the idea three months ago.

Q: I have clients, husband age 71 and wife age 69. The husband claimed his benefits at FRA 66 and receives $1,355 monthly. The wife filed for benefits at 64 years and 9 months and receives $1,947. I'd like to recommend the wife suspend her benefits for 1 year and receive delayed credit of 8%. Would she be immediately eligible for spousal benefits, 44.8% of husbands PIA, for a year? Or are the spousal benefits not available since she's already filed? —Brenda C.

A: The wife may suspend her benefit for a year, but she would not be able to receive a spousal benefit. That's because she has already filed for her benefit and her PIA is more than one-half of his PIA. It's too bad these clients didn't come to me earlier. The optimal strategy would have been for the wife to file and suspend at 66 and the husband to file a restricted application for his spousal benefit at 68. Then they could both claim their maximum benefit at 70, and get four years of 8% annual delayed credits. For now, all she can do is suspend for that one year and at least get one year of 8% credit.

Q: I have a client who was previously married for 30 years and is now divorced and remarried for just a year now. They are concerned about her survivor benefit in the event that something might happen to him. His ex-wife is also remarried and his current wife's ex-husband is deceased.

A: If I follow this correctly, the client is the husband and he is concerned about his current wife's survivor benefit. The answer is that his previous marriage will not hamper his current wife's ability to draw a survivor benefit on his record. Both wives—his widow and his ex-wife—can draw a survivor benefit on his record if he dies (the ex-wife would have to be unmarried or remarried after age 60). Speaking of which, when did they remarry? Was the current wife over age 60? If so, she may be entitled to a divorced-spouse survivor benefit from her deceased ex-husband. You should look into that.

Q: My client is currently on Social Security disability and her 16-year-old daughter is receiving 1/2 of her benefit. The client's husband turns 62 soon and will begin receiving his benefit. Can the daughter claim 1/2 of his benefit, as well?

A: She can claim on one or the other. I would discourage the father from filing at 62 just to raise the child's benefit. It would permanently reduce his benefit and his wife's eventual survivor benefit. And if he's still working, both his and the daughter's benefits would be withheld for the earnings test. They may be better leaving well enough alone, having the child continue to draw on the mother's record.

Q: I have female divorced clients nearing 62 without a work history of their own. With older ex-husbands, can the argument actually be made for the younger ex-wives to start spousal benefits at age 62 because that benefit will be lost once the ex-husband dies and the benefit jumps from spousal to survivor without the survivor benefit being penalized for the early spousal start date?

A: It all depends on the ex-husbands' respective life expectancies. If they live a long time, the women will be stuck with permanently reduced benefits if they file early. (Note: taking direct action to accelerate survivor benefits is not considered a valid strategy ;-)

Q: Is the following true?: 1) If the worker spouse has his own benefit reduced due to the earnings test, any spousal benefit will be based on the worker's reduced benefit. 2) Once the earnings test no longer applies to the working spouse, the spousal benefit is increased accordingly. 3) A spouse whose spousal benefit is reduced due to the earnings test applied to her husband will have her spousal benefit further reduced by the earnings test if her own earnings also exceed the earnings test threshold. 4) Benefits based on the record of a spouse (spousal/survivor) withheld due to the earnings test before FRA are lost forever. 5) Divorced spouse benefits (spousal/survivor) are never subject to the earnings test.

A: 1) Not exactly. Spousal benefits are always based on the worker's PIA. If the worker's benefit is withheld for the earnings test, it will affect his benefit amount, but not his PIA and so the spousal benefit will not be calculated differently. HOWEVER, if the worker's benefit is withheld for the earnings test, the spouse's benefit will also be withheld. 2) Again, not exactly. When the worker's benefit is recalculated at FRA, his PIA doesn't really change (unless the additional earnings improve his earnings record), and so the spousal benefit would remain the same as the initially calculated amount, but with no withholding now since he'll be over FRA. 3) Yes. Her spousal benefit may be withheld for both his earnings and her earnings. 4) Survivor benefits are recalculated at FRA and so they are not lost forever. I'm not sure about spousal benefits. 5) NO! All benefits received before FRA are subject to the earnings test. I wish all clients who work would just wait until FRA to file. The earnings test is a mess. It involves extra administrative hassles for the client and there is no real advantage to filing early.

Q: Just double checking for someone who will earn over $100,000 in calendar 2014 and intends to file at full retirement age (August 5). 1) Are there any problems with the earning amounts? 2) Do they file to have Social Security start in August (like Medicare) or September?

A: As long as his benefit starts at FRA, high earnings earlier in the year will have no effect. If his birthday is in August, his effective date would be August 1, with his first check payable in September (benefits lag by one month).

Q: Wife will continue to work until age 64 but at a relatively low rate ($21,195). In looking at the offset amount and doing the calculations $21,195-$15,480=$5,715/2=$2,857. So is the $2,857 the amount of the offset? Would there be no offset until around end of September based on this? Or how would this work? How is her payroll and benefits coordinated?

A: When a person under FRA is receiving benefits, they are asked to estimate their earnings for the year. Then SSA withholds the benefits right away. Whole checks are withheld until the excess is worked off. So in this case, the client would receive no benefits for the first 2 or 3 months (depending on the benefit amount) until the $2,857 is worked off. Any overage or adjustment would be made up after the first of the year when the employer reports her earnings to SSA.

Q: 65-year-old client is anticipating taking spousal benefits off her ex-husband's record at age 66 and waiting for retirement benefits at age 70, but she may be getting married in the near future too. Upon remarriage is there a 12-month waiting period to get benefits off the new husband? Do you have a POMS for this? I've never gotten such terrible information from the SSA reps.

A: If she is receiving divorced-spouse benefits at the time of the remarriage, the one-year marriage requirement is waived for spousal benefits. See the 3rd bullet under 2(B): https://secure.ssa.gov/apps10/poms.nsf/lnx/0300202001.

Q: I have clients, wife age 66 and husband age 64. He is the higher wage earner and his PIA is $2,220. Her PIA is $1,131. I believe the best strategy for them is for her to make a 'restricted claim' ($1,110) until age 68, when she will claim her own benefit ($1,131 + 16%). He will then be FRA and eligible to make a 'restricted claim' while his own benefit grows 32% until he claims it at age 70. Any thoughts?

A: This won't work. Let's walk through it to see why. In 2 years she will be 68 and he will be 66. Because he is now over FRA, he can file and suspend to entitle her to her spousal benefit. She files a 'restricted claim'. Two years later, she will be 70 and can file for her own maximum benefit. However, he cannot file a restricted claim for his spousal benefit because he has already filed for his benefit (the file-and-suspend he did at 66). This is why we say that spousal planning involves deciding which spouse should claim the spousal benefit. In this case the choice comes down to two years of spousal benefits for her ($1,100 x 24 months=$26,400) versus four years of spousal benefits for him ($566 x 48 months=$27,168). So the optimal strategy here is that when he turns 66, she would file and suspend and he would file a restricted application for his spousal benefit. Then they each claim their own maximum benefit at 70.

Q: Husband is primary worker. Spouse did not work nor contribute to Social Security. If non-working spouse dies, are the husband and children entitled to any Social Security benefit on the deceased spouse?

A: No. We sometimes forget that a person must achieve basic Social Security eligibility (i.e., 10 years of work) in order to have benefits paid on their work record. Since the wife does not qualify for Social Security on her work record, no benefits can be paid to family members if she dies.

Q: I have a question about one spouse taking a spousal benefit then switching to own benefit then other spouse switches from own benefit to spousal. Wife is a few months older than Husband. Wife began own benefits at her FRA. Husband began spousal only benefits at his FRA and delayed own benefits. At age 70, Husband files on his own record. Wife's spousal benefit is greater than her own benefit she is receiving. Is she able to pull on his record now that he has filed?

A: Yes. As soon as the husband files for his own benefit at 70, the wife can file for her spousal benefit. If one-half of his PIA is more than her PIA, she will receive the difference added to her existing benefit.

Q: Per my understanding, a person who is married can file for a lump sum benefit after filing and suspending after 66 and before 70. Can this be done if one files and suspends—then takes a spousal benefit? I have a client who is 68 and drawing a spouse benefit while his spouse drew at 62 and continues at her current age 66.

A: No. If he is receiving a spousal benefit, it means he filed a restricted application for the spousal benefit. He did not 'file and suspend'. If he had filed and suspended, it would have meant that he filed for his own benefit, which would disallow him from receiving a spousal benefit if his own benefit is higher. Since he hasn't filed, he can't go back and collect a lump sum. Married couples must be made aware that they can do one or the other—file and suspend (and retain the right to receive a lump sum back to FRA) or file a restricted application for the spousal benefit. They can't do both.