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Even if your unemployment checks have stopped, think twice about taking Social Security early

Social Security rules are complicated and change often. For the most recent “Ask Larry” columns, check out maximizemysocialsecurity.com/ask-larry.

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.

Barbara — Novato, Calif.: I am 61 now and will be 62 later this year. I lost my job two years ago and the unemployment benefits have run out. My husband is 60 and still working. We can get by on his salary, but we are thinking I should start collecting Social Security benefits when I turn 62 this fall. What is your advice?

Larry Kotlikoff: Bad idea. If you wait until 70, your retirement benefit will be 76 percent higher after inflation. And you can potentially get a full spousal benefit (half of your husband’s full retirement benefit) starting at full retirement age if your husband files for his retirement benefit at that point. If he does file, he can suspend his benefit at full retirement age and start it up again at age 70 at a 32 percent larger level.

Kathy Reynolds — Hilton Head, S.C.: I am 60 years old. I was married to my first husband from 1975 to 2001. He was a high-wage earner and I would get more Social Security benefits from that marriage. In 2010, I married my second husband. I am wondering what my options are for receiving Social Security. I am also wondering what age would optimize my benefits. My current husband is 70 years old. I probably have a life expectancy of at least 85 based on my minimal health issues, genetics and fitness plan. Can you advise me on what my options are and what is my best course of action regarding Social Security?

Larry Kotlikoff: Because you are remarried, you can’t receive spousal benefits based on your first husband’s earnings record. And because you remarried before age 60, you can’t receive survivor benefits based on your first husband’s earnings record when your first husband passes away.

So, unless you get divorced, your ex-husband is truly out of your Social Security picture unless you are caring for his children and they’re under 16 or disabled (provided that they became disabled before age 22). In this case, you could collect divorcée spousal benefits based on your ex’s work record or you could collect mother’s survivor benefits were he to pass away.

The way to maximize your lifetime benefits is likely to be to wait until your full retirement age and take just your spousal benefit at that point. Then, at age 70, file for your retirement benefit. Since you won’t have filed for your own retirement benefit when you file for your spousal benefit, you’ll receive a full spousal benefit. In other words, you’ll get half of your husband’s full retirement benefit (not half of what he’s now collecting — unless he started collecting at full retirement age).

Al — Natchez, Miss.: My son is 19 and a senior in high school. They say he can no longer receive benefits from his deceased dad because he turned 19 in November. He needs that check until May when school is out. They told me that I would be wasting my time with an appeal. Am I?

Larry Kotlikoff: They are correct. Child survivor benefits aren’t available to children over 19 unless they are disabled and became disabled prior to reaching age 22.

Bonnie — Oklahoma City, Okla.: I am 60 years old and on disability. My ex is 66 and not yet retired. He says if he dies I can collect his Social Security amount, which is higher than my disability. We were married 25 years. Is he correct?

Larry Kotlikoff: Your ex is correct, but you can also collect spousal benefits based on your ex’s earnings record. I recommend you read my column on disability benefits and consider following the proposed strategy of withdrawing your retirement benefit prior to reaching full retirement age, applying just for divorcée spousal benefits at full retirement age, and then starting your retirement benefit at 70, when it will be as high as it can be.

Carole — Daytona Beach, Fla.: I am 52, my husband is 60, and we both collect Social Security disability insurance. If we get divorced, can I collect money from his disability?

Larry Kotlikoff: If you have been married for 10 or more years, you can collect an excess spousal benefit starting at age 62, but it will be reduced because you are taking it before you reach full retirement age. If your husband dies before you get divorced, you can collect survivor benefits, which are available from age 50 onward. If your husband dies after you get divorced, you may still collect survivor benefits, again, assuming you were married for 10 or more years.

Mike — Chicago: I understand that Social Security payments are means-tested, so that for every dollar I earn (up to a certain level) outside of Social Security, I lose benefits. However, I also believe (wrongly?) this means-testing give-back (for non-Social Security income above a specified level) ends either at full retirement (for me, 67) or at 70 years of age. Is this true?

Larry Kotlikoff: Social Security benefits are earnings-tested, not means-tested. And the earnings test stops the second you reach full retirement age. Furthermore, any benefits you lose prior to reaching full retirement age due to the earnings test will be made up to you in terms of higher retirement benefits from full retirement age onward.

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