OK, class. You've been reading my column for a number of years now. It's time to see how much you've learned. So put on your thinking caps, get out your number two pencils, and good luck with this short pop quiz.
Question 1: How many years of earnings are used to compute a Social Security retirement benefit?
Question 2: What is the earliest age at which most people can collect Social Security retirement benefits?
Question 3: What is the bonus that you get if you delay benefits beyond age 66?
Question 4: You can take reduced benefits at age 62 on your own record and later switch to full benefits on a spouse's Social Security record. True or False?
Question 5: Husband Hank's full age-66 benefit is $2,000 per month. But he delayed benefits until age 70 and is getting $2,640 per month. Wife Wilma never worked, so she filed for spousal benefits on Hank's record when she turned 66. How much is she getting?
Question 6: Referring back to question 5, when Hank dies, how much will Wilma get?
Question 7: Referring back to questions 5 and 6, if Wilma dies first, what will Hank get (include any special burial benefits)?
Question 8: Tom is 62 and still working and he and his wife are covered by his employer's health insurance plan. His wife is 65 and retired from her own job that did not offer health insurance. She is about to apply for Social Security and Medicare. Should she take both Parts A and B of Medicare?
Answer to question 1: 35 years. To figure your benefit, Social Security indexes all of your yearly earnings for inflation; pulls out the highest 35 of those years and adds them up; divides by 420 (the number of months in 35 years) to get your average indexed monthly wage; and then multiplies that by a variable percentage depending on your earnings — about 40 percent for average wage earners.
Answer to question 2: This was a bit of a trick question. I bet most of my readers said the answer is 62. That's almost right. But back in 1983, Congress was looking for ways to trim Social Security expenditures. And one of the little noticed cuts they made was to say that you can't get a retirement benefit until you have been 62 for an entire month. So unless you were born on the first day of the month (or the second day of the month for reasons too complicated to explain here), then age 62 and one month is the earliest age when you can collect Social Security retirement benefits.
Answer to question 3: Many of you may have answered "8 percent per year." Others of you may have answered "32 percent if you wait until 70." Both answers are technically correct. But the bonus is actually two-thirds of one percent for each month a benefit is delayed beyond age 66.
Answer to question 4: False (with one exception). Many people now are using various strategies to maximize their Social Security benefits. I've written about them often in this column. One of those strategies is to claim benefits on a spouse's record and later switch to full benefits on your own record. But the key to this strategy is that you must be age 66 to do it. In other words, at 66, you can take one-half of your husband's or wife's Social Security rate (assuming that spouse is getting Social Security) and then at 70, switch to full benefits — with the aforementioned 32 percent bonus. But you can't do that before age 66. Only widows or widowers can take reduced benefits on one record at 62 and later switch to full benefits on the other record.
Answer to question 5: Wife Wilma is getting $1,000 per month. A wife who delays taking spousal benefits until age 66 is due one half of her husband's Social Security benefit. But, she does not share in the delayed retirement bonus that her husband might be getting. So Wilma only gets one half of Hank's age-66 rate of $2,000 — or $1,000.
Answer to question 6: Wilma will get $2,640 per month in widow's benefits. Even though a wife does not share in her husband's delayed retirement bonus, the law says a widow can.
Answer to question 7: Hank won't get a nickel — not even the measly little $255 death benefit. In question 5, I pointed out that Wilma never worked. The death benefit is paid only on the account of someone who worked and paid Social Security taxes.
Answer to question 8: Tom's wife should sign up for Part A Medicare (hospital coverage) because it is free. But she doesn't need to take Part B (covers doctor visits, lab tests, etc.), which costs $104 per month, because her husband is working and she is covered by his employer's insurance. When her husband retires and loses that active employment health coverage, then she should apply for Part B, and she won't pay any delayed enrollment penalties.
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.