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How Social Security Keeps Divorcées and Widows in the Dark About Their Benefits
By Larry Kotlikoff
Social Security cites misguided "privacy" restrictions, Larry Kotlikoff argues, for not sharing information about former spouses' earnings records with surviving and ex-spouses. Photo courtesy of Flickr user João Ferreira.
Larry Kotlikoff's Social Security original 34 "secrets", his additional secrets, his Social Security "mistakes" and his Social Security gotchas have prompted so many of you to write in that we now feature "Ask Larry" every Monday. We are determined to continue it until the queries stop or we run through the particular problems of all 78 million Baby Boomers, whichever comes first. Kotlikoff's state-of-the-art retirement software is available here, for free, in its "basic" version.
Larry Kotlikoff: Here are some questions I've been receiving a lot since Paul asked me to write this column 15 months ago:
The Social Security Administration won't let divorcées have access to their ex spouses' earnings records. Nor will it let widows and widowers have access to their late spouses' earnings records.
This policy, which Social Security claims is for privacy purposes, is simply outrageous.
I suspect a darker explanation. Congress, which sets Social Security's "privacy" rules, remains an old boys club. Keeping ex-wives from getting access to their former husbands' earnings records keeps ex-wives from demanding higher alimony if their former husbands start earning more money. Of course, this could go both ways, men could demand higher alimony too. But the Social Security Administration does spouses a disservice by not letting them see what their ex or late spouses were earning.
I may be off base about the underlying explanation for these provisions. But what I know for sure is that given Social Security's benefit formulas, the earnings histories of, say, Mary's ex-husband, Joe, and Linda's late husband, Sam, are just as much the private property of Mary and Linda as they are of Joe and Sam.
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Mary and Linda have a legal claim to benefits based on their former husbands' earnings records. But if they can't get access to these earnings records, they can't properly plan when to retire, how much to save for retirement, in which order to take their spousal, retirement and survivor benefits, or when to take them at all.
Yes, once Mary and Linda are in spitting distance of being able to collect benefits on their ex or their deceased husbands, which is very late in the day, they can find out from Social Security what these benefits will be. And if they are really knowledgeable about the system, they can roughly infer what their husbands must have made and then run through the potentially thousands of combinations of benefit collection dates to figure out which one is optimal. But this is not something I recommend anyone try on their own.
As for learning whether your ex is collecting benefits, don't expect Social Security to notify you. First off, the Social Security Administration doesn't know who is or was married to whom. You need to establish you are or were married by providing a copy of your marriage certificate or your final divorce decree. But to collect divorcée spousal benefits, you need to have been married at least 10 years, have an ex who is at least age 62 and have been divorced for two or more years or have an ex who has filed for his or her retirement benefit. Because of those requirements, knowing whether your ex has filed matters a great deal if you were divorced less than two years ago. But the only way to know if your ex has filed is to ask him or her.
The AARP, which has close to 40 million members, should lobby Congress to make the Social Security Administration provide access to former spouses' earnings records because it's the private information of the surviving and ex spouses as much as it is of their former spouses.
Kathy C. -- McKinleyville, Calif.: Is it possible to benefit from a previous spouse's Social Security if I married and divorced again?
Larry Kotlikoff: Provided you're not now married yet again and that you were married to both former spouses for 10 or more years, you can take the larger of the two spousal benefits (provided you are eligible for both). To collect a spousal benefit as a divorced spouse, your ex-husband needs to be over 62 and either he has to have filed for a spousal benefit or you need to have been divorced for at least two years.
Given those conditions, some divorcées may need to take a spousal benefit from their lower-earning ex first and then switch to taking a spousal benefit from their higher-earning ex. Make sure you let Social Security know about both former spouses.
Also, be aware that if one or both of your 10-years-or-more-in-the-saddle exes dies, you can collect survivor benefits based on the deceased ex's earnings record. The survivor benefit of the lower-earning spouse might well exceed the spousal benefit from the higher-earning spouse. So you might, under the right circumstances, go from taking a spousal benefit on the lower-earning spouse to taking a spousal benefit on the higher-earning spouse or even from taking a survivor benefit on the lower-earning spouse to taking a survivor benefit on the higher-earning spouse.
Keep on top of the Social Security Administration to determine from whom you should be collecting benefits and when because they won't necessarily keep track.
Anne J. -- Oakland, Calif.: My husband of 25 years started drawing his reduced Social Security benefits 10 years ago at the age of 62. Is there a spousal benefit for which I am eligible? I am 65, and we are thinking about my filing for spousal benefits at 66 and deferring my own Social Security until 70. Since he is on reduced benefits for taking it early, would my spousal benefit be based on his current benefit amount or what he would have received if he had waited until 65?
Larry Kotlikoff: If you wait until 66 to file, you'll be, as you correctly understand, able to apply just for your own spousal benefit while letting your own retirement benefit grow by 32 percent through age 70. In this case, your spousal benefit will equal your full spousal benefit, which is half of your husband's full retirement benefit -- not half of what he's currently collecting. What he's currently collecting is a reduced retirement benefit since he started his own benefit at 62. So your spousal benefit will be more than half of the retirement benefit he's now getting.
David -- Calabasas, Calif.: My question is about a wife who receives a Social Security disability benefit. The husband, who's turning 65 in December, has applied for his Social Security benefits, but the Social Security Administration says that the wife's disability benefit will terminate once the husband receives his retirement benefit. This doesn't seem right, but I cannot locate anything on this situation. Help, please.
Larry Kotlikoff: It doesn't seem right for a good reason. It's not. The wife's eligibility for a disability benefit doesn't depend on the husband's taking his Social Security retirement benefit. Her eligibility for receiving an excess spousal benefit, in addition to her disability benefit, is conditional on the husband filing for his retirement benefit.
Perhaps the Social Security staffer was referencing what happens to the wife's disability benefit when she, not her husband, reaches full retirement age. At this point, unless the wife withdraws her retirement benefit, her disability benefit automatically converts to her retirement benefit.
The wife, in the situation you describe, can choose to not take her excess spousal benefit and withdraw her retirement benefit when she reaches full retirement age, then apply, at full retirement age, just for spousal benefits, and wait until age 70 to restart her retirement benefit, at which point it will be 32 percent higher (and adjusted for inflation).
Sydne -- Pottstown, Pa.: My husband will be 62 next February. I am 60 and have been the higher wage earner for many years. He is a farmer and I'm a nurse. With what I've been reading, it sounds like, if necessary, it would be best for my husband to apply for his retirement benefits early, and then check when I turn 66 to see if the spousal benefits would be greater than his reduced retirement benefits. Does that sound right? (I provide health benefits through my employer.)
Larry Kotlikoff: My mom was born in Pottstown! But back to business. No, this doesn't sound right. What may be the best option is for you to take your retirement benefit at age 64, thus permitting your husband to apply, at his full retirement age, just for his spousal benefit based on your earnings history. When he reaches age 70, he can then apply for his own retirement benefit. When you reach age 66 (your full retirement age), you would suspend your retirement benefit and start it up at age 70.
Robert C. -- Palm City, Fla.: My wife passed away 18 years ago and had worked 15 to 20 years. Can I collect survivor benefits? I am 63 and plan on working until 66. Her earnings were quite high during her career, so how does that affect my benefits?
Larry Kotlikoff: Survivor benefits are available starting at age 60. Let me ignore for the moment the fact that you're still working and assume that your age-70 retirement benefit exceeds your survivor benefit. If you start taking your survivor benefit immediately, it will be permanently reduced because you'll be taking it before reaching full retirement age. Still, this is likely to be the best move if you were the higher earner. At 70, you should collect your own retirement benefit when it will start at its largest possible value. Social Security will pay you the larger of either your own retirement benefit or your survivor benefit, so at 70, your survivor benefit will disappear.
Now let's add the fact that you are working. If you are earning enough to lose all your survivor benefits to the earnings test, which wipes out a portion of benefits for those still making a certain amount of money, you might as well wait until you reach January 1 of the year you'll turn 66 to take your survivor benefit. The earnings test will apply in that year until the month you reach your 66th birthday. After you reach your 66th birthday, the earnings test ends.
On the other hand, if you have been a low earner, it may be best to take your own retirement benefit for the few months between January 1 of the year you reach 66 and your 66th birthday. Then, upon reaching full retirement age, you should start taking your survivor benefit, which I'm now assuming will exceed not just your full retirement benefit, but also your age-70 retirement benefit -- the retirement benefit you'd collect if you first file at age 70 for a retirement benefit.
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