One of the most significant financial decisions you will make pertaining to retirement is when and how you will file for Social Security benefits. The “when” part is well known: the age at which you begin receiving checks directly impacts how much you’ll receive.

Setting aside the politics, (many experts contend that Social Security’s solvency issues can be solved with relatively minor tweaks, provided politicians have the guts to make them), at its most basic, Social Security is a government-guaranteed, inflation-adjusted, lifetime annuity.  There is simply no financial product available that can duplicate what Social Security offers. 

Unlike other sources of income and savings, your Social Security income will not run out no matter how long you live.

Furthermore, many seniors are surprised that by the time they reach their late 80s or early 90s, the check that may have initially made up only a minor portion of their monthly income has grown to represent the lion’s share--thanks to the magic of cost-of-living adjustments (COLAs).  And, the bigger your check when you begin benefits, the bigger the impact of these (usually) annual inflation increases.    

As I’ve written previously, if you start benefits based on your own work history before your “Full Retirement Age” [FRA], your monthly benefit will be smaller- perhaps as much as 25% less. If you wait until the month you turn 70 your check could be 50% larger.    

The  “how” part of the decision comes into play if you are, or were, married, because that creates a choice:  Are you better off filing for benefits based on your own work record (assuming you had experience in the paid workforce) or on the work record of your current, ex-, or deceased spouse? 

With so many two-income baby boom couples heading into retirement- many divorced and/or married to different spouses- the decision can become confusing and overwhelming. Especially since it is generally irrevocable. Claim benefits the wrong way and you lose out on thousands of dollars in income over your retirement.  Ouch.

While there is a wealth of information on the Social Security Web site, there is no single place where you can see all of the options, conditions and consequences for a spouse beneficiary laid out side by side. 

Until now.

I hope you find the below chart as a useful resource to help make an informed plan about how you will create the income you will need as you move into retirement.

 

 If 'Spouse A' isIf 'Spouse A' is:If 'Spouse A' is:
 current spousedivorced spousewidow(er)/
surviving divorced spouse
Earliest age to begin
(reduced) benefits (1)
62 (1)62 (1)60 (2)
50, if disabled

 

If re-marry

N/A- You must be UNmarried when you file for spouse benefits.
-Generally lose benefit until new marriage ends by divorce, death or annulment (3)
-Must be UNmarried when you file for widow(er)’s benefits or your new marriage must be one that SS can disregard (4)
-Can continue to receive benefit if re-marry after age 60/ 50, if disabled
Impact on benefit amount paid to workerNoneNoneNone
If Spouse A has not reached FRA and continues to work

Benefits will be reduced by $1 for every $2 you earn over that year’s limit

 

Benefits will be reduced by $1 for every $2 you earn over that year’s limit

 

Benefits will be reduced by $1 for every $2 you earn over that year’s limit

 

Special considerations-Worker must be receiving benefits for Spouse A to receive-Must have been married at least 10 years
- Not entitled to receive higher benefit on your own work record
-Worker is receiving benefits
- If worker is not receiving benefits but qualifies, you must be divorced for at least two years
- Must have been married at least 9 months prior to the worker’s date of death, however, there are exceptions
-If begin widow’s benefit at age 60, at age 62 you can switch to benefits based on your own work record if this is higher
-If you switch after your FRA you will receive Delayed Retirement Credits
-If you re-marry, at age 62 you may switch to spousal benefits based on your new spouse’s record, if this is higher
Maximum Benefit50% of Worker’s PIA50% of Worker’s PIA100% of Worker’s PIA
If Worker Started Benefits Prior to FRASpousal benefit is not affectedSpousal benefit is not affectedThe maximum benefit is limited to what the workers would receive if he or she were alive

 

1. Spouse benefit reduction chart found at: http://www.socialsecurity.gov/retire2/agereduction.htm

 

2. Widow(er)/Surviving Divorced Spouse benefit reduction chart found at: http://www.socialsecurity.gov/survivorplan/survivorchartred.htm.  Click on the year that corresponds to when you were born to find the fractional amount by which your benefit will be reduced based on the precise age at which you apply for benefits.  For instance, if you were born from 1945-1956, your Full Retirement Age (FRA) is 66.  You will receive 100% of your survivor’s benefit at this age.   However, if you start receiving benefits the month you turn 60, your survivor’s benefit will be reduced to 71.5% of this amount (i.e. 28.5% less).  If you begin benefits when you turn age 60 and 8 months, it will be reduced to 74.7% (i.e.25.3% less), etc.

 

3. Even though you re-marry, in certain cases you can continue to receive benefits based on the work record of your former spouse.  This would be the case if, for instance, your new spouse is someone of the opposite sex who is receiving widow(er) or parent’s benefits.

 

4. Social Security can disregard a new marriage under certain circumstances.  An example would be in the case of a disabled widow(er) or a disabled surviving divorced spouse who is at least age 50 but not yet 60 who re-married after age 50 and was disabled at the time of the re-marriage.

 

 

Ms. Buckner is a Retirement and Financial Planning Specialist at Franklin Templeton Investments. The views expressed in this article are only those of Ms. Buckner or the individual commentator identified therein, and are not necessarily the views of Franklin Templeton Investments, which has not reviewed, and is not responsible for, the content. 

If you have a question for Gail Buckner and the Your $ Matters column, send them to: yourmoneymatters@gmail.com, along with your name and phone number.

Ms. Buckner is a Retirement and Financial Planning Specialist and an instructor in Franklin Templeton Investments' global Academy. The views expressed in this article are only those of Ms. Buckner or the individual commentator identified therein, and are not necessarily the views of Franklin Templeton Investments, which has not reviewed, and is not responsible for, the content. 

If you have a question for Gail Buckner and the Your $ Matters column, send them to: yourmoneymatters@gmail.com, along with your name and phone number.