This Couple Has a Couple Options

By Tom Margenau

April 25, 2018 7 min read

Q: My wife and I both turn 66 later this year. (Our birthdays are just two days apart.) I've worked all my life and expect to get a full retirement benefit of about $2,600 per month. My wife has been a homemaker all her life and has no Social Security account of her own. So she will only be due a spouse's benefit on my record. I am thinking of waiting until 70 to claim my benefits, while letting my wife claim her spousal rate now. I am doing this for two reasons. First, to get the 32 percent extra bonus added to both of our Social Security checks. But more importantly, I want to ensure my wife gets a higher widow's benefit once I am gone. Do you think this is a good idea?

A: It certainly is noble and generous of you to consider your wife's future income when making your retirement decisions. But I'm going to give you some food for thought by comparing what you'd be due by taking benefits at 66 versus waiting until age 70 to file.

However, before I do that, I must correct two misconceptions you have about the process. You said you were planning to wait until 70 to file for your own benefits while letting your "wife claim her spousal rate now." She can't do that. Or to put that another way, she can't get any benefits on your record until you are getting benefits yourself. So if you wait until age 70 to file for retirement benefits, she would have to wait until she is 70 to file for spousal benefits.

The second mistake you made is thinking that both you and your wife get the extra 32 percent credit added to your benefits. That's wrong. You get the extra amount at age 70. But your wife's spousal benefit will be based on your age 66 rate. In other words, when you take benefits at age 70 and get a 132 percent retirement benefit, she will get an amount equal to 50 percent of your age 66 benefit.

Although, if you die first, her widow's benefit will include the extra 32 percent. A wife does not share in her husband's delayed retirement bonus, but a widow does. So now let's go over your options.

In option one, both you and your wife file for benefits at age 66. You would get $2,600 per month and your wife would get $1,300 per month — for a total of $3,900 per month. That means in the four years between your 66th and your 70th birthdays, the two of you would get 48 Social Security checks totaling $187,200. (To keep the math simple, I am not going to try to figure future cost-of-living increases into my examples.)

In option two, you follow your current plan — you wait until you are 70 to start your Social Security checks. With the 32 percent "delayed retirement credit," you would start getting $3,432 per month. And recalling what I said about your wife getting half of your age 66 rate, she will still get $1,300 monthly. So your combined income would be $4,732. That's $832 per month more than you get in the first option.

But remember, if you go with option two, you will have forfeited $187,200 in benefits between age 66 and 70. It would take you 225 months, or almost 19 years, to make up the money you lost by not going with option one.

That makes option one look pretty attractive. But there is another side to that coin. Your wife does come out ahead after you die getting a higher widow's benefit with option two. She'd get $3,432 in widow's benefits if you wait until age 70 to file compared with $2,600 if you start your benefits at age 66 using option one.

So now you and your wife have to sit down, munch on that for a while, compare the numbers, and decide which way to go.

Q: I am 65 and started getting my own Social Security about three months ago. I just learned my ex-wife, who owned her own realty company and made big bucks, has recently retired and signed up for her Social Security. Can I now suspend my Social Security checks and then apply for husband's benefits on her record and save mine until I'm 70 to get the 32 percent bonus? By the way, neither my wife nor I ever remarried.

A: No, you can't do that. If you had waited until age 66 before applying for any Social Security benefits, at that time you could have applied for spousal benefits and then saved your own until 70.

But you still have a chance to do something. Anyone who files for Social Security benefits has up to 12 months to change his or her mind. In other words, you could withdraw your retirement claim. As part of that bargain, you would have to repay all the benefits you've received so far.

Then when you turn 66, you could file a claim for divorced husband's benefits on your wife's Social Security record. You would get an amount equal to one-half of her full retirement rate. You would get that until age 70, when you could re-file for your own retirement benefits and get the extra 32 percent added to your full retirement amount.

So think about all of that. Do you think it is worth it to withdraw your current claim, repay all benefits you've already received, wait about a year, and then file for the smaller husband's rate on your wife's Social Security record and live on that for four years — all to get an extra 32 percent added to your retirement benefits when you are 70?

Q: I am about to turn 62 and I just heard some shocking news. I was told that if I have more than $2,000 in the bank, then I will not be eligible for the SSI retirement benefits I've worked for all my life! Is this true?

A: This is yet another example of people mixing up two entirely separate government programs: Social Security and Supplemental Security Income. The former pays retirement and disability benefits to people who have worked and paid taxes into the system, as well as benefits to their dependents and survivors. The latter is a welfare program that pays a small monthly stipend to elderly or disabled people who are very poor. The $2,000 liquid asset limit applies to people getting SSI. You could have a million dollars in the bank and still get your Social Security checks.

If you have a Social Security question, Tom Margenau has the answer. Contact him at [email protected] To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

Photo credit: at Pixabay

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