A reader asks a question about the reduction of Social Security Spousal Benefits
Will my spouse’s Social Security benefits be reduced?
My spouse began collecting her Social Security benefits at age 64. I plan on retiring at 67, later in 2017. When I retire, I will begin collecting SS on my earnings. The plan is to have my wife switch from collecting on her earnings to collect half of mine because mine is greater. Will she be able to collect half of my benefit, or will her benefit be reduced because she started collecting early on her earnings?
Good question! It would seem relatively straightforward, but then again…we’re dealing with the Social Security Administration.
Here’s the short answer:
Your wife’s spousal benefit is actually comprised by two separate benefit payments. First, there is her own benefit. Second, she has the ‘spousal top off.’ She becomes eligible for her own benefit at age 62, and eligible for the spousal benefit when you file for your own benefits.
Here’s how it’s calculated.
Her FRA benefit is compared to 50% of your FRA benefit. If hers is less than that number, it is ‘topped off’ to bring the total up to 50% of yours. Since she filed early, her own benefit will be reduced. However, the spousal top off will not be reduced if you file for your own benefits at or after her full retirement age.
In order for her to receive a spousal benefit from your work record there is a trigger…you must file for your benefits. If you haven’t filed, she isn’t eligible to collect from your record. Once you file, she becomes eligible for a spousal benefit and her reduction for filing age is determined at her date of first eligibility. If she is full retirement age when you file (and she thus become eligible), there is no reduction.
The Social Security Administration LOVES to use acronyms. I’m sure you’ll agree if you’ve ever received a letter from them or spent much time on their website.
SS Acronyms like PIA, DIB, RIB & MOET probably makes sense to the people who use these terms every day, but for most of us…it’s gibberish. However, if you want to take control of your social security filing plan, you may need to familiarize yourself with some of these. Here they are alphabetically.
What’s one of the most generous benefits available to retirees? That’s easy. It’s Social Security spousal benefits! These benefits are some of the most important, too.
A recent Social Security report found that 2.3 million individuals received at least part of their benefit as a spouse of an entitled worker. Some of these spouses had benefits of their own, but were eligible to receive higher benefit because the spousal benefit amount was greater than their own benefit. Some of these individuals have never worked outside the home or paid Social Security tax. They have no benefit of their own and rely exclusively on the Social Security spousal benefit available under their spouse’s work record.
And it’s not just retirement income benefits. Eligible spouses also receive premium free Medicare benefits.
Let’s take a look at what it takes to qualify as well as what benefits you may receive as an eligible spouse.
A reader wants to know when he should file for Social Security in order to pay the least amount of retirement tax.
Should I retire at 66 years old and use my IRA for income before taking Social Security? My retirement income will come from my pension, RMD, Social Security and rental. I am a conservative investor. My RMD annual income at 4% will be the biggest piece of the pie. My gross retirement income will be more than my taxable income while employed. I don’t want to pay extra taxes. What should I do?
I don’t blame you for not wanting pay extra taxes! When viewed through a long term perspective, taxes in retirement may be one of your greatest single expenses. Although your tax advisor is the best resource for recommendations on an overall tax reduction plan, there is one strategy that is really easy and often overlooked…it could be as simple as structuring your income properly.
The other day I saw a startling headline. It read, “Obama Administration Finalizes Social Security Gun Ban.” The sub-headline read, “On Monday the Obama administration finalized a Social Security gun ban that could prevent ‘tens of thousands’ of law-abiding elderly citizens from purchasing guns for self-defense.”
It didn’t take much browsing to find more headlines that were equally disturbing:
Obama’s Secret Plan To Block Seniors On Social Security From Owning Guns on Breitbart
SPREAD THIS: Obama Makes Huge Move to BAN Social Security Recipients From Owning Guns on Conservative Tribune
Obama to Ban Thousands of Senior Citizens from Owning Firearms on GunOwners.org
With provocative headlines such as those, it’s no wonder that I’ve been fielding calls and emails from worried retirees. Will seniors really be forced to surrender their firearms before they can receive Social Security payments?
As with many sensational headlines, this headline contains enough truth to keep it from being a flat out lie. However, that’s not the same as being accurate. Not even close.
Social Security is more important for women than it is for men. Especially for women who have been divorced, widowed or remarried. In this video I’ll help you make sure you are getting the all the benefits that you are eligible to receive.
Finding out that your social security benefits are taxable catches a lot of people by surprise. After all, this is a benefit paid by tax that was collected from you. Now it’s taxed again? Yes.
According to the Social Security Administration 52% of families receiving social security benefits paid income tax on those benefits in 2015. So there’s a good chance that some of your benefits will be taxable. Here’s how you can figure it out two steps.
Note: Social Security earnings limits change each year. This article is written with 2017 numbers.
Many people are surprised by the Social Security income limits. At one of my first speaking engagements, a lady came up to me and told me her story. She was in a bridge club with several other women, and one day the topic turned to Social Security benefits. The consensus around the table was that filing at 62 was the smartest thing to do. This lady, trusting the advice of some of her closest friends, filed for benefits as soon as she turned 62.
She told me that she’d always wanted to buy a brand new Toyota Camry. She figured that now was the perfect time to buy this car. She was still working and her Social Security check would be extra income. So that’s exactly what she did: she bought the car, and took out a car loan to be paid with her Social Security benefits.
A few months later, she received a nasty letter from the Social Security Administration stating that she had been paid benefits that she was not eligible for. They asked her to pay the benefits back and informed her that she her benefits would be suspended due to her income. Now she had a new car, and a car loan, without the Social Security benefits to pay for it.
Social Security for Educators is the hottest topic that I speak on. At these speaking events I usually get asked a lot of questions. Many of them are similar from place to place, but there is always one question that is asked every time. Why? Why do they pick on educators with these crazy Social Security rules?
In this video I’ll go into the thinking that went into setting up these weird rules.
If you have an ex-spouse, you really need to understand the rules on Social Security and divorce.
Especially if you’re a woman!
Why? Because Social Security is much more important for most women than it is for men. That’s not just what I think, or based solely on observations after more than a decade of financial planning, that’s what the Social Security Administration says.