Your Social Security by Tom Margenau

Q: I am 66 and my wife is 62. Throughout our careers, I have made more money than my wife. So, I am due a higher Social Security benefit. However, neither of us has signed up for Social Security yet. A financial adviser just told us about a Social Security plan that sounds too good to be true. He said my wife could file for reduced retirement benefits now, and then I could file for spousal benefits on her record (at 50 percent of her rate). We could receive those benefits for the next several years.

Then at age 70, I would stop getting spousal benefits on my wife's record because I would file for my own Social Security benefits. I would receive a much higher benefit than I would have been due at age 66 because I'd get a bonus for delaying retirement. And on top of it, my wife could start getting spousal benefits on my record to supplement her own reduced Social Security benefit. Does the Social Security Administration allow this? Is it legal?

A: Yes, it's legal, and yes, the Social Security Administration allows people to do this. But there are several caveats.

One: This plan only works if the spouse with the higher Social Security benefit is age 66 or older. If you were under your "full retirement age," the law does not allow you to file for spousal benefits on your wife's record without taking your own retirement benefits first.

Two: This scheme tends to work only for higher income people — those for whom Social Security payments are just icing on the cake when it comes to their retirement income. Most average income people can't afford to wait until age 70 to file for Social Security; they need the income from their retirement benefits at age 66 or earlier to just help pay the rent and buy the groceries.

Three: When you turn 70 and switch to your own retirement benefits, you are right that your wife can get some spousal benefits on your record.

But those spousal benefits would be a percentage of your age 66 rate, not your age 70 rate. The law says she does not share in those "delayed retirement credits" you receive.

Four: This plan only works assuming the person who delays retirement until age 70 doesn't get hit by a bus at age 71!

Not being so flippant, no one really knows how long he or she is going to live. And in this case — even with the "delayed retirement credits" you mentioned, which could add as much as about 40 percent to your Social Security benefits — you would have to live quite a long time past age 70 to come out ahead financially.

Think of it this way. You said you're age 66. So, you are due full Social Security retirement benefits right now on your own record. Let's say they are $2,500 per month. That means you're essentially throwing away $120,000 ($2,500 per month times 48 months) by delaying your retirement for four years.

Of course, part of that would be offset by whatever amount you collect in spousal benefits between now and age 70. The higher your wife's own retirement benefits are, the more money you'll collect on her record and the more advantageous this plan could be for you.

And as mentioned, you also get the delayed retirement bonus. I know someone in your shoes who has a better calculator than I do. And he figured out that he would have to live until about 84 to come out ahead using this scheme.

Here's the bottom line: No one really knows the right age or the most financially advantageous time to start his or her Social Security benefits. And that's because no one really knows how long he or she is going to live. In other words, you just never know when that bus is going to come along and whack you, making a shambles of your Social Security payment scheme ... not to mention — you!

To find out more about Tom Margenau and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

COPYRIGHT 2009 CREATORS.COM.