David Kennon, Kennon Financial
A few weeks ago I published an article answering common questions about social security. I received a lot of positive feedback and a lot of additional questions; many of which have to do with spousal benefits.
This week I am going to touch on how marriage, divorce, widow/widower, and children’s benefits work.
Disclosure: There are hundreds of different social security scenarios. Your age, benefit amount, year of birth, and several other factors all determine the best strategy. If you’d like to learn more, I encourage you to join me for one of my upcoming Social Security Benefits Workshops.
As long as you have been married for one year, you are able to collect half of your spouse’s benefit if it is more than all of yours. You cannot collect half of your spouse’s benefit unless they have already filed for their own benefit.
So, for example, Mrs. Smith starts her social security at 66 and receives $500 per month. Two years later her husband applies for his benefits of $2000 per month. As soon as he files, Mrs. Smith’s benefit would increase up to a total of $1000 per month.
Pretty simple, right? It gets a little more complicated from here, but don’t worry — we’ll go through each scenario together step-by-step.
Restricted Spousal Benefits
This was the best-kept secret and most powerful strategy available to social security recipients. Unfortunately, the government changed the rules a couple of years ago, and now only certain people are eligible to file for this kind of benefit. You must be have been born in 1953 or earlier, and you have to wait until your age 66 to apply.
A restricted spousal benefit allows you to begin to receive half of your spouses benefit, while your own benefit continues to grow by 8% per year. (Remember that everyone’s benefit grows by about 8% per year, every year you wait past 62.) Your spouse must have applied for their own social security first in order to use this strategy.
Let’s say Mrs. Smith turns 66 and is eligible for $1000 per month from her own social security. Mr. Smith is getting $1800 per month. Mrs. Smith can start getting $900 per month, half of her husband’s, and when she turns 70 she can switch back to her own benefit, which has grown to $1320.
It’s one of the toughest subjects I deal with. Nobody likes to talk about death or the loss of their spouse. But understanding survivor benefits can help you and your spouse have more peace of mind should the worst happen.
You are able to get a survivor’s benefit at age 60. Normally you can’t get any social security until age 62. If you are married and your spouse passes away, you are entitled to their social security check (if they were receiving more than you).
If Mrs. Smith was collecting $1000 per month and Mr. Smith was collecting $2000 per month, Mrs. Smith would start getting $2000, if her husband were to die. If Mrs. Smith died, Mr. Smith would continue to get his $2000 and her $1000 would stop.
But spousal benefits planning doesn’t end there. In my experience, most widows and widowers lose out on significant benefits simply because they do not know all their options.
I find that fact very troubling. At a time when money should be the last thing on a person’s mind, many retirees don’t know they could be in a better position. A little knowledge and a little planning can help.
You can collect a survivor benefit while your own benefit continues to grow until age 70.
So if Mr. Smith dies at age 66 and he was receiving $1500 in benefits, and if Mrs. Smith hasn’t started her own benefits yet, she has the option of getting $1500 per month and letting her own benefit grow by 8% in the background. At age 70, she switches back to her own social security, which has been maximized.
In certain situations, it makes sense to take your own benefit at 62 and switch to the survivor benefit at age 66.
Register for my free Social Security Benefits Workshop and learn more about the over 1300 claiming strategies for couples.
Did you know you could still collect spousal benefits, even if you’re divorced? As long as you were married for ten years or more, and you are not currently remarried, all of the above benefits still apply to you.
You can collect half of your ex-spouse’s benefit if it is more than all of yours. You can apply for a restricted spousal application and collect half of his benefit while your own grows. You can even collect a survivor benefit if your ex-spouse passes away.
One difference between divorced and married situations is that your ex-spouse does not need to be collecting benefits for you to utilize these strategies. Your ex-spouse must be at least 62, but it doesn’t matter whether they are collecting or not.
Legal Guardian Benefits
Many retirees get a special surprise when they apply for social security and are the legal guardians of a child. If you are the legal guardian of a child and apply for social security, you and the child will receive benefits.
The following rules apply if:
- you adopted a child
- you became legal guardians of a grandchild
- you have a young child in your 60’s
- your child has been deemed by the courts to be an “adult disabled child”
Children (or grandchildren) are generally eligible to receive an amount equal to 50% of your full retirement age benefit.
So if Mr. and Mrs. Smith are the legal guardians of their infant grandchild at age 66, and Mr. Smith is getting $2000 per month in benefits, the baby will begin to get $1000 per month until age 18.
If your child is a disabled adult, they will get a benefits check up to 50% of your full retirement benefit as long as you are alive. If you die, the child or disabled adult will begin to receive 100% of your benefit.
As you can see, social security is not as simple as picking an age. Subscribe to the blog or contact our office for a free consultation if you have questions.