What happens to your Social Security benefit when you marry?
Social Security rules are complicated and change often. For the most recent “Ask Larry” columns, check out maximizemysocialsecurity.com/ask-larry.
Boston University economist Larry Kotlikoff has spent every week, for over two years, answering questions about what is likely your largest financial asset — your Social Security benefits. His 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 feature “Ask Larry” every Monday. Find a complete list of his columns here. And keep sending us your Social Security questions.
Kotlikoff’s state-of-the-art retirement software is available here, for free, in its “basic” version. His new book, “Get What’s Yours — the Secrets to Maxing Out Your Social Security Benefits,” (co-authored with Paul Solman and Making Sen$e Medicare columnist Phil Moeller) was published in February by Simon & Schuster.
Watch Larry explain how Paul and his wife could collect an extra $50,000 in Social Security benefits:
Joan: Thank you so much for taking my call today. I wasn’t expecting you to answer the phone on a Saturday, and I really wasn’t prepared to ask the right question. Although you did answer my question, I’m not sure that I completely understand the answer.
I’m an 80-year-old woman and took an early Social Security retirement at age 62. I am divorced and have never been married longer than seven years.
I have met a nice gentleman and feel we would be happy and good companions. I would like to be married and just need to understand what I am about to do. Upon marriage will I still receive my own Social Security check or will that $624 go away? I think you said if my future husband’s earnings were greater than mine, I could receive a spousal benefit and would no longer receive the $624 Social Security that are from my earnings. I would have a larger one as his earning were far greater. If I survived him I would then get his full Social Security check that he was receiving prior to his demise. I think that only happens if we are married at least nine months prior to his passing.
MORE FROM MAKING SEN$E
I was worried I didn’t clearly state my concerns. I did sense you were feeling it was a positive choice and a great opportunity to enjoy the next chapter in my life’s adventure!
I so appreciated your speaking with me. I’m delighted with the book as the humor adds so much comic relief to a very confusing and serious subject, and the lighthearted manner is so appealing and cracked me up… many thanks.
Larry Kotlikoff: After you are married for one year, you can apply for a spousal benefit on your husband’s work record. You’ll continue to get your $624 per month. But you will also likely get what’s called an excess spousal benefit. If your husband passes away after you have been married for nine months, you’ll get your $624 per month plus your excess widow’s benefit, which, together, will equal essentially the retirement benefit he now collects each month. So, YES, get married!
Selma: My husband turns 66 in February. I saw that Medicare premiums are expected to rise 52 percent next year unless you qualify under the “hold harmless” provision of Social Security. We were planning to file and suspend and realize that the monthly increase in benefits would more than offset the premium increase, but wondered if it would be possible to file now (to be effective in November 2015) and then suspend as soon as my husband turns 66 in February. Would this be a viable strategy to lock us in under the “hold harmless” provision, but allow us to grow his benefits until age 70?
Thank you for all your good work and helpfulness.
GOT SOCIAL SECURITY QUESTIONS?
Larry Kotlikoff: Thanks for your question. To be eligible for the premium freeze, a person must be entitled to both monthly benefits and Part B of Medicare (also known as Medicare Supplementary Medical Insurance or SMI) no later than November of the year before the increase. Your adjusted gross income must also be below the level that results in higher premiums, which is a $170,000 per year for a married couple. Also, your earned income must also be low enough so as not to be entirely wiped out by the earnings test and to actually permit payment of benefits for at least November and December.
So if your husband isn’t earning too much such that he’ll lose all his benefits under the earnings test, and if he is either already entitled to SMI or eligible to sign up for it effective no later than November 2015, and if your adjusted gross income is below $170,000, then this strategy would work. You didn’t mention your own age, but you would also need to meet all of the same requirements in order for the freeze to apply to your SMI premiums.
You should also be aware that the “hold harmless” provision, which keeps low- and moderate-income people who are already receiving Social Security benefits from experiencing Medicare Part B premiums from rising by more than their Social Security’s COLA (cost of living adjustment), is not a permanent benefit for those in this boat. Whatever Medicare Part B premium increases weren’t applied in the past due to the “hold harmless” provision will be applied in the future to the extent the cost of living adjustment is large enough. Consequently, people who are “held harmless” this year will see much smaller Social Security benefit check increases in future years as Medicare takes out not just the new Medicare Part B premium, but also what’s needed to recoup the premium increases in the past, which weren’t yet applied.
Charles – Fair Oaks, Calif.: I heard your piece on claiming and suspending spousal benefits. My wife and I are 62. She has significantly higher earnings than I over the last 40 years. Which spouse should claim and suspend spousal benefits and at what age, 62 or 66? We both have much more earnings potential before we retire. She owns her own C Corporation, and I am employed by same. Thanks in advance for helping out.
Larry Kotlikoff: You can’t suspend spousal benefits, only retirement benefits and only at full retirement age. What you two should do, if you have a pretty high maximum age of life is: a) have your wife file for and suspend her own retirement benefit at full retirement age; b) have your wife wait until 70 to restart her retirement benefit; c) file just for your spousal benefit when you reach full retirement age; and d) file for your own retirement benefit at 70.
Michele – Phoenix, Ariz.: I’m 62 years old. If my primary insurance amount at full retirement age (66) is more than half of my ex’s, can I still collect on his record for four years and allow my benefit to grow until age 70? I so appreciate your book, but I am still unclear on this point.
Larry Kotlikoff: When you reach full retirement age at 66, you can file just for your divorcee spousal benefit on your ex’s work record. Then you can let your own retirement benefit grow through age 70. If your own retirement benefit at 70 exceeds your spousal benefit, you’ll get your own retirement benefit from 70 onward.
Bob – El Paso, Texas: I’m 67 and am starting my Social Security. I get dinged pretty hard because I have 20 years with Teachers Retirement System of Texas in addition to my 20 years of paying Federal Insurance Contributions Act (FICA) taxes prior to teaching. My spouse is looking at her full retirement age in June, but she is thinking about continuing to work and drawing a spousal benefits until age 70. Social Security said she will also get a reduced amount of spousal benefits due to my retirement from Teachers Retirement System of Texas. Isn’t Social Security double dinging us? Reading the rules, her benefits should rest on her record with Social Security, not my records with both Social Security and Teachers Retirement System of Texas.
Larry Kotlikoff: You, but not your wife, will be subject to both the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) Provision. But your wife’s spousal benefit that she receives from your covered earnings record will be based on your full retirement benefit, which is impacted by the WEP.
So in this sense you are being dinged twice. This double dinging, however, doesn’t occur with respect to widows benefits. So were you to pass away, Social Security would calculate your wife’s widows benefit based on a retirement benefit that isn’t impacted by the WEP.
Phyllis – Lubbock, Texas: I am the 62-year-old wife of a 64-year-old man, and I am the high earner. We are both in reasonably good health and have concerns about how to maximize our Social Security income. He is ready to retire but doesn’t have to if it makes more sense to wait. What would you advise? I’m confused about spousal benefits since I don’t think he can claim spousal benefits while I am still working, but then again, I’m not sure about anything with Social Security.
Larry Kotlikoff: You have two options. The first is to have your husband file and suspend his own retirement benefit when you reach full retirement age (66). He’d then reinstate his retirement benefit at 70. You’d file just for a spousal benefit when you reach full retirement age and start you own retirement benefit at 70. Or you could file for your own retirement benefit now or sometime before reaching full retirement age, and thereby permit your husband to collect a full spousal benefit on your work record. He’d then wait until he turns 70 to collect his own benefit. However, if you continue working, the Social Security earnings test may cause both you and your husband to lose some or all of your benefits until you reach age 66. If you do start your benefit early to let your husband collect a full spousal benefit based on your work record, you can suspend it upon reaching full retirement age and start it up again at 70 at a 32 percent higher level on an inflation adjusted basis.