Questions, I get questions from readers - and plenty of them are about Social Security's valuable spousal and survivor benefits.
The recent decision by Congress to phase out the file-and-suspend and restricted claim loopholes under the Bipartisan Budget Act of 2015 (BBA) has stirred up even more interest in the topic. The decision has raised public awareness of the spousal and survivor features that remain, but the changes also have created confusion about the spousal and survivor benefits still in place. The BBA changes took full effect at the end of April, so let's review the basic rules of the road on spousal benefits.
Q: Under the new rules, how is my ability to claim a spousal benefit affected?
A: If you were born before Jan. 2, 1954, and have already reached full retirement age (FRA), you can choose to receive only the spouse's benefit and delay receiving your retirement benefit until a later date. If your birthday is Jan. 2, 1954, or later, the option to take only one benefit at full retirement age no longer exists as a result of the BBA provisions on Social Security. If you fall into the group that no longer qualifies to make a restricted claim of benefits, you will be effectively filing for all retirement or spousal benefits. Spousal benefits are reduced for those who file before their own FRA. For example, a spouse whose FRA is 66 could receive 35 percent of the worker's unreduced benefit at age 62. The amount of the benefit increases at later ages up to the maximum of 50 percent at the FRA.
Q: Can I file for spousal benefits if my spouse (the higher earner) isn't yet at the full retirement age? If so, how much will my spousal benefits be reduced?
A: Assuming your spouse has already filed for benefits and your full retirement benefit is less than 50 percent of your spouse's full benefit, you can file for the spouse's benefits even though your spouse is not yet at the FRA. The amount of reduction is based on your age at the time you claim the benefit.
Q: Can my wife start collecting based on my account at age 62 and then switch to her own account at age 66?
A: No, it's not possible to switch if she files on her own account before her full retirement age.
Q: If my wife (age 62) elects early retirement and collects Social Security on her own account, will her spousal benefit be reduced when I (currently age 64) retire at 66 and begin collecting benefits then?
A: Social Security will pay a person's own benefit first, before paying the spouse's benefit. Your wife will not receive the full spouse's rate because of her own benefit level, which is reduced as a result of filing early. The Social Security Administration will add the spousal benefit to her own benefit to arrive at her new, higher benefit amount.
Q: If my spouse has not worked full-time most of her life, can she qualify for Medicare at age 65, and does she get half of my Social Security?
A: If you are at least 62 years old, your wife becomes eligible at age 65 for Medicare based on your employment record. She could receive the free Part A hospitalization coverage, and pay for Part B medical coverage. She would be eligible to receive 50 percent of your Social Security benefit at her own FRA.
Q: Can my wife receive spousal benefits once I reach full retirement age, even though she will continue to work?
A: If your wife's full Social Security benefit is less than 50 percent of your full benefit, she may be eligible for spousal benefits on your record (assuming that you already have filed for benefits). If she continues to work and she is below FRA, her benefits will be subject to the Earnings Test. This is the formula that withholds benefits for people who have claimed benefits below their full retirement age (FRA) and still earn income from work. Although some people think of the earning test as a tax, the withheld amounts actually are added back into your benefit after you reach FRA.
Q: Is it still beneficial for married couples to coordinate filing strategies now that file-and-suspend is ending?
A: Absolutely! Couples will still be able to benefit by considering a range of options. Should one or the other spouse start benefits early, should both delay, or should both file early? Most often, couples will benefit if the higher-benefit spouse delays filing to earn delayed credits. You get about 8 percent less for every year you file early (starting at age 62), and the same increase for every year you wait until age 70 - the last year for which additional credits are available.
Q: Can I file for spousal or survivor benefits from a divorced spouse?
A: In many cases, yes. Social Security's rules require that you are currently single, had been married to your ex at least 10 years, are at least 62 years old (which is the minimum Social Security eligibility age), and are not already receiving a benefit greater than the divorced spouse's benefit. Your divorce must have been final for two years prior to filing. Eligibility for an ex's benefit is lost if you remarry, and you can't file for benefits on your new spouse's earning record until you've been married to that person for at least one year. Filing for a divorced spouse benefit is a completely private affair between you and the Social Security Administration. The Social Security Administration doesn't report to your spouse that you've inquired - or filed for benefits - on his or her record. You'll need to prove you were once married by visiting your local Social Security office with paperwork in hand. Be prepared to show a birth certificate, proof of citizenship, W-2 forms, or self-employment tax returns for the last year, your final divorce decree, and your marriage certificate. The same rules apply for Medicare eligibility.
Mark Miller is a journalist and author who focuses on retirement and aging. He is the author of "The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work and Living." Mark also edits and publishes RetirementRevised.com.
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