‘If I Marry My Girlfriend in Thailand, Can She Collect Survivor Benefits After I Die?’


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Today, Social Security expert Larry Kotlikoff answers reader’s questions covering issues from retirement, medicare and more

Anne: I am 65 and will turn 66 in December. I retired at 63 after being laid off. My husband is also retired and we basically live off of our Social Security — about $29,000 a year. I am doing a lot of contract work for my former employer and I know we will end up having to pay taxes and of course, FICA. My question deals with Social Security’s statement about cutting your benefit by $1 for every $2 you make over your limit. Do they make that cut in subsequent months during the next year? Also, I believe that since I am turning 66 this year, I can earn up to $30,000 without being penalized. Is that correct?

Larry Kotlikoff: This year you can earn up to $38,880 during the period before you reach your full retirement age and not lose any benefits due to the earnings test. And once you hit full retirement age, your earnings, even though they come within the same calendar year, are entirely exempt from the earnings test.

The larger point, however, is that you should not worry about losing benefits to the earnings test prior to reaching your full retirement age. Social Security will raise your benefit starting at full retirement age to make up for the benefits you lost due to the earnings test.

But here’s an alternative strategy for you to consider: Suspend your benefit at full retirement age — make sure to pay her medicare part B premium out of pocket — apply for your spousal benefit, and then restart your retirement benefit at 70, at which point it will be 32 percent higher than at your full retirement age.

Bob: I retired from the federal government and began drawing my annuity at age 51. I began taking my reduced Social Security retirement benefit at age 63. My wife will turn 66 in May. Would it be more beneficial for us if I suspend my retirement benefit until age 70 (after I begin paying for Medicare by check) and take my wife’s spousal benefit when she files next May?

Larry Kotlikoff: You have a few options to consider. We are just finalizing work on getting our software to incorporate the suspension option. It should be up and running soon in our $40 program.

But here are the two options that need to be considered. Option 1, which I often recommend (see Question 1, above): Your wife can take just her spousal benefit starting at full retirement age and then collect her highest possible retirement benefit starting at 70. It will be 32 percent higher than had she started taking her retirement benefit at full retirement age. And, her spousal benefit will equal half of your own full retirement benefit.

Your full retirement benefit, called your Primary Insurance Amount, may be based on the standard formula or on a formula modified due to the Windfall Elimination Provision. That’s if the pay you received from the federal government was not subject to Social Security payroll taxation.

Option 2: As in Option 1, your wife, upon reaching full retirement age, files for, but suspends the collection of, her retirement benefit and waits until 70 to start collecting her retirement benefit. The difference is that you apply for a spousal benefit based on her earnings record and also suspend your own retirement benefit until 70. But, as I always remind readers in an upper case shout — Make sure to pay your medicare part B premium out of pocket — If your employment with the federal government wasn’t covered by Social Security, your spousal benefit will be subject to the Government Pension Offset Provision.

Unfortunately, you can’t both collect spousal benefits at the same time. You could if you were divorced, but you’re not and you’d have to be divorced for two years before you’d be treated as divorced, so divorce and living in sin probably isn’t your best option.

Tracy: I am 30 and collect Social Security Disability Insurance. I also receive Medicare. A family member recently died and gave me their business in their will. If I keep the business, will I lose both my Social Security Disability Insurance benefits and Medicare?

Larry Kotlikoff: I don’t believe you would lose your Social Security Disability Benefit, but you’ll need to check with the Social Security office. You could lose Medicaid benefits, if you are covered by Medicaid, but, again, you need to check. Medicare is provided to the richest as well as the poorest people in the country, so I don’t think you would lose Medicare benefits. Also, I see nothing on Social Security’s website that suggests any wealth test for disabled workers with regards to Medicare eligibility. But call Social Security to check.

Rafael Valenzuela: If I retire at 62, can my wife (who never worked and is 58) receive any benefit? Or just when she reaches 62?

Larry Kotlikoff: She can collect a spousal benefit based on your earnings record when she reaches 62. The benefit will be reduced, however, because she is taking it prior to her full retirement age. If you wait until 70 to collect, you’ll get a roughly 76 percent higher benefit. At that point she’ll reach her full retirement age and will get the highest spousal benefit possible. If you have other assets to get by on and can follow this strategy, it will give you much greater resources over the rest of your life.

But I have a question for you, Rafael. Why retire at 62? Life is too long to start taking it easy at 62 if you are in good health, unless your job is truly odious. Your life expectancy at age 62 is about 82, assuming no improvements in longevity between now and then. Look at Paul. He’s 68 and just getting going.

Ken Ward: My first wife died at age 51, I have remarried. Can I collect spousal survivor benefits from my late wife’s Social Security when I reach retirement age?

Larry Kotlikoff: If you remarried after age 60, I believe the answer is yes. If you remarried before age 60, I believe the answer is no.

John Cathey: I’m planning to retire in a country in Southeast Asia. I’ve lived and worked overseas without paying Social Security for a while but have enough credits to collect when I retire. If I marry my girlfriend in, let’s say Thailand, can she collect survivor benefits after I kick?

Larry Kotlikoff: As far as I know the answer is no unless she is a U.S. citizen or a permanent Green Card holder. But triple check this with the Social Security office.

Bruce: Both my wife and I are 62. She took Social Security at 62, but I intend to work until at least 70 and make good money. Am I entitled to take a spousal benefit at either 62 or 66, and should I?

Larry Kotlikoff: She should consider repaying what she’s received immediately. Then, at full retirement age, one of you should file for and suspend taking your retirement benefit, which will permit the other of you to apply for just his/her spousal benefit. Under this strategy, both of you could collect your maximum retirement benefits at 70.

Jan: If I haven’t filed taxes in years do I have to file in order to collect my Social Security when I turn 70?

Larry Kotlikoff: No, if you have 40 quarters of coverage, you can start collecting Social Security retirement benefits as early as age 62. But they will be reduced. If you wait until 70, they can be as much as 76 percent higher, depending on your exact birthday.

Michele: I’m 64, never married, and am a retired school teacher. I have about 30 quarters of coverage from assorted work. Will I get any Social Security? What about Medicare benefits?

Larry: You’ll get Medicare starting at 65. You need 10 more quarters to collect from Social Security but your benefit will be calculated subject to the Windfall Elimination Provision and will probably be reduced.

Deb: My husband died at 47. He was still working at that time and not collecting Social Security. Am I entitled to collect on his Social Security starting when I am 60?

Larry: Yes, but you may want to wait until full retirement benefit because if you take your survivor benefit early, it will be permanently reduced.

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This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions.