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Ask Larry: Has My Social Security Office Given Me Bad Advice?

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

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

Penny — St. Paul, Minn.: I was divorced in January 2011 at the age of 65. When I applied for Social Security at 66, I learned I couldn’t claim the amount equal to half of my ex’s Social Security until we had been divorced for two years. This seems unfair. What is the reasoning? Then, when I applied after two years, Social Security gave me six months worth since I am now 67. What’s that about?

Larry Kotlikoff: Gee, Penny, you may have been one of the far too many people who email me about receiving bad advice from their local Social Security office. If you were married for 10 years before you got divorced, then you are eligible to collect spousal benefits as long as A., your ex is at least age 62, and B., you are age 62 or older.

If you had not applied for your own retirement benefit prior to age 66, you should have been able to collect a spousal benefit equal to half of your ex’s full retirement benefit had you applied just for your spousal benefit at that point and decided to hold off until, say 70, to collect your own retirement benefit.

My guess — but it’s only a guess — is that when you went in at age 67, the Social Security Administration gave you six months of back benefits realizing that they had misinformed you. I believe they have discretion to go back that number of months. It’s absolutely terrible that we have people like you being mistreated by a system that only a handful of people in this country really understand after an incredibly tortuous learning process.

Batya Avraham — Safed, Israel: I was married for 25 years but am now divorced. Can I draw off of my ex-husband’s Social Security even though he is 57 and I am 67? I was told I have only 28 credits and need 40 to collect. I get nothing.

Larry Kotlikoff: You have to wait until he is 62. Then you can collect a spousal benefit equal to half of his full retirement benefit.

Annie Stewart — Akron, Ohio: How long after my 60th birthday do I wait as a savior [sic] to collect Social Security?

Larry Kotlikoff: I presume you mean you are a “survivor” and Social Security is the “savior.” The answer: You can start collecting reduced survivor benefits at age 60. If you can go into the Social Security office a month or two in advance, you should collect your first check in the month after you hit your 60th birthday.

If you do this, you should probably wait until full retirement age or, indeed, age 70 to apply for your own retirement benefit. But, this may be a bad strategy relative to A., taking your retirement benefit as early as 62 and waiting until full retirement age to collect an unreduced survivor benefit, and B., taking your unreduced survivor benefit starting at full retirement age and starting your own retirement benefit at 70.

You need to compare these options.

Ann Watson — Sausalito, Calif.: I am 62. My ex-husband died at age 43, not long after we divorced, after 17 years of marriage. You seem to indicate I can’t pull from his Social Security until I am 66, and only if my full benefit, which I want to take at 70, is half or less of his. That’s not the case. I was the higher earner and have worked longer. So can I get anything? Do I have to wait until 66? And is it a survivor benefit or half of his retirement benefit? Many thanks.

Larry Kotlikoff: Ann, let me suggest that I don’t think I suggested what you suggest I suggested. I suggest you either A., apply just for your survivor benefit either starting immediately or when you reach full retirement age and then at age 70 apply for your retirement benefit or, B., apply for your own retirement benefit now and then take your survivor benefit at full retirement age, which is 66 for you.

Though you worked longer, your full retirement benefit at age 66, even augmented by the Delayed Retirement Credit, may be lower than the survivor benefit on your ex-husband’s earnings record because the benefit formula for survivor benefits is different from that for retirement benefits. It adjusts for the fact that descendants may have shorter earnings histories because of premature death. If your full benefit is more than half of his, the first strategy may be best.

Paula Wershiner — Santa Rosa, Calif.: I am taking care of my 93-year-old father, who has been diagnosed with cancer and will pass away this year. I get paid for taking care of him and will collect unemployment after he passes away. I plan to collect on my Social Security benefits when I reach age 64 in June. I’ll collect on my ex’s when I reach 66. Will unemployment funds received be subject to the Social Security earnings test?

Larry Kotlikoff: Your unemployment benefits will not be subject to the earnings test. See the Social Security Administration’s website.

You may be making a mistake, however, by collecting your own retirement benefit at 64 and then collecting a spousal benefit at 66. By doing so, you will end up getting your own reduced retirement benefit plus your excess spousal benefit. The sum of these two will be less than half of your ex’s full retirement benefit.

It may be better to wait until full retirement age to collect just your spousal benefit. It will then be half of your ex’s full retirement benefit. Then, as I so often advise, you can apply for your own retirement benefit at 70, when it will be as large as possible. Determining which strategy is best depends on how much you earned and when you earned it — given the system’s wage indexing — compared to your ex.

Robert Sandridge — Belle Fourche, S.D.: How much does my spouse get in addition to my Social Security check if we remarry? We had been married over 18 years when we divorced. She is 71, and I’m 82. Thanks.

Larry Kotlikoff: Your ex-spouse won’t get anything more if you remarry. Her spousal divorcee benefits are the same as her spousal benefit would be were you to remarry. But if you are thinking of remarrying her to help her, you are probably still in love, so allow me a little non-economic advice here: marry her for love, not money. Love is much more valuable.

Gloria — Purcell, Okla.: I am 59 and divorced. Should I retire at 65?

Larry Kotlikoff: No, work until you drop. Retirement is boring, and you could live to 100. See Paul Solman’s NewsHour story on Vita Needle, where the average age of the company’s workers is 74.

But once you hit full retirement age, make sure you collect your spousal benefits based on your ex’s earnings record. And it may behoove you to wait until 70 to collect your own retirement benefit.

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

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