Who Do You Trust?

By Tom Margenau

December 21, 2018 7 min read

You know how sometimes one thing can lead to another? The other day, I was watching Jay Leno's TV show, "Jay Leno's Garage." He was driving around in a car once owned by his "Tonight Show" predecessor, Johnny Carson. It was a car that Johnny grew up with -- his father's 1939 Chrysler. Jay mentioned that Johnny had once done a TV special in which he drove that Chrysler back to Norfolk, Nebraska, and took viewers on a tour of his hometown.

I remembered that show, so later that night, I rewatched it on YouTube. And, as I said, one thing leads to another, and I next watched a couple episodes of Johnny's TV debut, a program called "Who Do You Trust?"

So what's all of this have to do with Social Security? Well that show's title got me to thinking about emails I get from my readers. They frequently tell me what they heard from a representative at their local Social Security office. And, more often than I hoped would be necessary, I tell them that what they were told (or maybe what they thought they were told) is wrong.

I then proceed to explain the way things really work. And I think I've done my job. But watching that old game show led me to wonder: "Who do you trust?" My readers heard one thing from a Social Security clerk and something else from me. So do they trust me? Or do they trust the clerk? Well, I've been doing this stuff for 45 years, and I think I'm pretty well versed in Social Security rules and regulations. And I hope that when people go back to their SSA office, they either learn that they misunderstood the agent the first time, or they get someone who verifies that what I told them was correct. Here are some examples of what I am talking about.

Q: My wife is about to turn 65. We went to our Social Security office to sign her up for Social Security. I am 73. I started my Social Security at age 70. I get $2,788 per month. We said my wife wanted to file and restrict -- taking spousal benefits on my account and then saving her own until 70. The clerk said that would be fine. He said she would get half of my benefit now, or $1,394. Then at age 70, she could switch to $1,995 on her own record. We then asked about widow's benefits when I die. He said she would get 82.5 percent of my benefit, or $2,300 per month. We decided to put everything on hold so we can think about it and ask you for your advice. What do you think?

A: I think you either misunderstood what the Social Security agent was telling you. Or you got a clunker of a clerk. Because most of what you told me is messed up.

First, your wife can only employ the maximizing strategy called "file and restrict" if she is 66 years old.

Second, even if your wife were 66 and wanted to file for spousal benefits on your record, she would not get half of your current benefit, which includes a 32 percent bonus that you got for delaying your own benefits until age 70. Her spousal rate would be based on your full retirement (age 66) benefit amount.

And the widow's rate the clerk quoted you is way off base. The 82.5 percent rate is close to the minimum amount a widow can receive. Assuming your wife is over age 66 when you die, she will get 100 percent of your retirement benefit, and this time it will include the extra money you are getting for delaying your retirement.

So what are your wife's options? If she does want to file at age 65, her only choice would be to take her own retirement benefit. She'd get about 92 percent of her full retirement rate. Or if she does want to do the "file and restrict" thing, she could wait until she is 66 and file for spousal benefits and get 50 percent of your full retirement rate. Then at 70, she could switch to 132 percent of her own retirement benefit.

Q: I am 64 years old. I just got back from my Social Security office where I went to sign up. The clerk told me that I could collect my own Social Security now, and then later on, switch to higher benefits from my divorced husband. He is 72 and already getting his Social Security. She told me to come back when I was 66 to file for his benefits. She also mentioned something about widow's benefits. But I was a little confused. Can you tell me what is going on?

A: I wonder if you misunderstood what the Social Security representative was saying. She might have been telling you that when your ex-husband dies, you could switch to higher benefits on his record. In fact, assuming you are over age 66 when that happens, you would get 100 percent of his Social Security rate, less what you are getting on your own account.

I hope that's what the clerk was trying to tell you. Because if she was telling you that you could file for reduced retirement benefits now, and then later on switch to higher benefits on his record while he is still alive, then she was wrong.

That's because of the "deemed filing rule" that says this: If you file for one kind of Social Security benefit, you are deemed to be filing for any and all benefits you are due at the same time. So because your ex is already getting benefits, if you file for your retirement now, you must also file for divorced wife's benefits now. You can't wait until a later date and file for spousal benefits.

Q: I turned 68 yesterday. I had previously decided not to file for my own benefits until I reach age 70. But financial circumstances forced me to change my mind. I need my benefits now. So imagine my shock when I called Social Security and was told that once I made my decision to wait until 70, I can't change my mind. Is this true?

A: It is absolutely NOT true. You will have two choices. File now with no retroactivity. You will get your full benefit along with 24 months worth of "delayed retirement credits." That means your ongoing benefit rate will be 116 percent of your full rate. Your other option would be to take six months worth of retroactive benefits. Then your ongoing rate would be only 112 percent of your full rate, but you would get a big retroactive check.

Tom Margenau’s column, "Social Security and You," can be found at creators.com.

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