Hi, Gail-

My husband is 63 and I’m 62. We’re both working. His job is pretty secure, but I’m nervous about mine because my company has already had lay-offs and more are supposed to be coming. I want to know what some of my options are if that happens.

If I lose my job can I file for Social Security based on my husband’s benefit instead of mine? His is going to be higher because I took 15 years off to raise our kids. Even 50% of his benefit would be more than what I’d get on my own work record.

What if I find a job after I’ve started collecting Social Security? Can I stop it and re-start later when I’d be entitled to a bigger benefit?

Thanks,
Laurie

Dear Laurie,

I’m glad you’re thinking ahead. Timing is everything when it comes to applying for Social Security and the rules can seem complicated.

According to a spokesperson for the Social Security Administration, as a spouse who is age 62 you are notentitled to 50% of your husband’s benefit. Since you would be applying before your “normal” retirement age -- the age at which you are entitled to 100% of your benefit -- even your spousal benefit would be reduced. Because you were born in 1947, your normal retirement age is 66.

In addition, you’re not eligible to claim Social Security based on your husband’s benefit unless he is already receiving it. From what you describe, your husband intends to keep working. So even if you would settle for less than 50% of his benefit amount, this isn’t an option for you.

To sum this up: the only way Spouse A can receive a benefit equal to 50% of what Spouse B receives is if each of you has reached his/her normal retirement age. In other words, you would both have to be at least age 66.

Because of this rule, if your husband files for Social Security in 2012 at his normal retirement age [66] and you file for a spousal benefit that year, you would still receive less than 50% of the amount he’s getting because you will not have reached your normal retirement age until 2013.

In terms of your second question, let’s suppose you are laid off next month and decide to file for Social Security based on your own work record even though your benefit will be reduced. Then, in October you find another job.
Although you are now working, it is possible for you to continue to receive Social Security. However, your monthly check might be reduced based on the “earnings test.” This year, if the total amount you earn from your job[s] exceeds $14,160, Social Security will withhold $1.00 in benefits for every $2.00 over this annual limit.

This rule is frequently misunderstood, so take a deep breath.

The operative word is “withhold.” You won’t loseany benefits you’ve earned. You just don’t receive the full amount -- for now. Instead, you’ll get a credit for any amounts withheld and this will be factored into your future benefit when you reach your normal retirement age. (At that point, the earnings test disappears and no matter what your salary is it will not affect the size of your Social Security check.)

You also have another option: if you return to work after starting Social Security you can stop -- or “suspend” -- your benefit checks. According to Social Security’s spokesperson, “Once they reach their full* retirement age we’ll re-compute their benefits to pay any amounts they’re due.”

In fact, returning to work and suspending your benefits could boost the size of the check you receive in a couple of ways: 1) you will earn credits for additional time in the paid workforce, and 2) if your new salary is higher, this will also result in a higher benefit.

The Social Security Web site has a wealth of information about the importance of carefully considering when to begin receiving benefits. The timing of this impacts both the worker as well as his/her spouse. Click on the “Retirement” tab and then choose the link to “Plan Your Retirement.” Or you can click here and be automatically taken there.

You might also want to make an appointment with a Social Security claims representative to go over your options and their consequences.

Last fall Social Security launched a new online calculator that enables you to see how the amount of your monthly check will change based on when you file for benefits. It uses the information from the Estimated Benefit Statement you receive the month before your birthday, so you’ll want to have that handy. Enter different dates and compare how not only the year, but the monthin which you begin collecting Social Security, impacts the size of your check.

*Originally, Social Security referred to the age at which you are eligible for 100% of your benefit as your “full” retirement age. Years later it was changed to your “normal” retirement age. This is what’s it’s called on the Social Security Web site. However, folks who work for Social Security use the two terms interchangeably.

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.