Extra Earnings Don't Always Translate to Extra Benefits Q: I know my Social Security benefits will be based on my last five years of earnings before I retire. But here is the problem. I am 60 years old and have just been laid off by my employer. I have few if any prospects of getting another job. I plan …Read more. The So-Called 'New' Social Security Rules Are Actually the Old Rules There is just so darn much misinformation out there about new Social Security rules. These rules have to do with the eventual elimination of the maximizing strategies known as "file and restrict" and "file and suspend." Every single day, I get …Read more. How to Deal With the Social Security Earnings Penalties I've gotten more than a few emails recently from Social Security beneficiaries who are under age 66 and still working and who are trapped in the web of Social Security's convoluted earnings penalty rules and the way they are administered. Those …Read more. Long Gone Husband May Mean Extra Social Security to Some I gave a couple women very nice Christmas presents over the recent holiday season. And I'm not talking about the lingerie I got my wife or the coffee maker I got my daughter. I'm talking about the gift of extra Social Security benefits I got for two …Read more.more articles
Two Women Can Count on the Same Man
Q: In your recent column about benefits to a divorced wife, you failed to mention what happens to the current wife. My husband was previously married for more than 10 years to another woman, but they have been divorced for many years. She never remarried and has no plans to do so. I have been married to my husband for almost 20 years. Will the Social Security benefits paid to my husband's ex-wife reduce the benefits I am due on his record?
A: No. Any Social Security benefits paid to your husband's ex-wife will NOT impact the benefits you are due.
Based on the limited information you gave me, it sounds like the ex-wife will be due divorced wife's benefits on your husband's Social Security account. You will be due regular wife's benefits on the same account. And you do not offset each other. In other words, each of you will collect full benefits on your husband's Social Security record.
Q: In a recent column, you explained that Social Security retirement benefits represent about 40 percent of a person's annual income using a 35-year base of earnings. But isn't there an upper limit to the earnings that can be used? In other words, if a man averages $1 million dollars per year in earnings, will his Social Security benefit be 40 percent of that, or 40 percent of a lesser amount?
A: You're right. There is an upper limit on the annual earnings that can be taxed for Social Security purposes.
For example, Microsoft founder and billionaire Bill Gates probably made $150 gazillion last year. But he paid Social Security taxes on only the first $97,500. So his Social Security benefit won't be based on 40 percent of $150 gazillion, but rather 40 percent of $97,500.
The 'taxable wage base,' as it is known, changes every year.
By the way, the 40 percent figure isn't carved in stone. It's a fluctuating percentage that depends on your earnings but averages to about 40 percent for most people.
Sorry I didn't clarify this in the prior column. But I have learned over the years that if I tried to cover every "if, and or but" associated with all the Social Security rules and regulations, each column would fill an entire newspaper!
Q: I have a 55-year-old friend who has worked hard all her life. Now she's had to stop working because of a bad back and bad knees. She went to the doctor and he signed a paper saying she is disabled. But he said she will have to wait a year to get her Social Security disability. That seems so unfair. Is it true?
A: It's not necessarily true. It normally takes the Social Security Administration about three months to make a decision on a disability claim. (And by the way, the government needs a lot more evidence of a disabling condition than that doctor's signed statement you mentioned.)
If the claim is approved, the first disability payment usually shows up several months after the decision is rendered. That's because Social Security disability law has a built in six-month waiting period. During that time, most people qualify for temporary financial assistance from their employer or from state disability agencies.
There are people who end up waiting a year or more for their Social Security disability payments. These are folks whose first claim for benefits was rejected but who eventually win their case through an oftentimes-lengthy appeals process.
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