Social Security Benefits for Spouses: Are You Leaving Money on the Table?  

Social Security Benefits for Spouses: Are You Leaving Money on the Table?  

At California Document Preparers, Living Trusts are an important part of our business. While we believe that everyone with assets and dependents should have a Living Trust—the reality is that many of our Trust clients are older. They may or may not be retired, but they’re thinking about estate planning and how they’re going to be spending the final years of their lives. This spawns a wide range of discussions about sometimes-controversial topics such as hospice, Medicare, Medi-Cal and long-term care insurance.

Retirement and quality of life issues center around economics and health

In all of these conversations, everyone is concerned about the quality of life issues in retirement—having good health and enough money to be able to travel, spend time with family and slow down to enjoy life. But there’s one economic benefit that many people are completely unaware of—the Social Security spousal benefit.

Jane Bryant Quinn, personal financial expert: Guide to Social Security spousal benefits

A recent article from personal financial expert Jane Bryant Quinn, whose excellent articles on personal finances regularly appear in the AARP magazine, prepared a guide to Social Security spousal benefits. While the guide is from the perspective of a wife filing on her husband’s earnings record, the same rules apply to either spouse.

  1. What is a spousal benefit? It’s a payment originally designed for women who left the workforce to raise children. You need ten years of work (40 quarters) to claim aretirement benefit of your own. If you worked fewer than ten year or 40 quarters (or not at all), or your earnings were very low, you qualify for a spousal benefit based on your husband’s earnings.
  2. How much is the spousal benefit? It depends on your age when you claim it. If you wait until your full retirement age (somewhere between 66 and 67), you’ll get half of what your husband could get at his own full retirement age. If you claim earlier, you’ll receive less.
  3. What if you worked 10-plus years and earned a Social Security retirement benefit of your own? Here’s where claiming gets tricky. If your husband has not retired, you can file for a benefit based on your personal earnings. When he finally quits work and goes onSocial Security, the spousal amount you can receive depends on your personal benefit’s size. If it’s higher than what you’d get as a spouse, you’ll continue to receive that same, higher amount, says Philip Moeller, coauthor ofGet What’s Yours: The Secrets to Maxing Out Your Social Security.

If your personal benefit is smaller, it will be topped up to the spousal level. If you file when your husband has already retired, Social Security will normally assume that you’re claiming your personal and your potential spousal benefit at the same time. You will receive the higher of the two. There’s an exception for people who were born on or before Jan. 1, 1954. If you put off your claim until full retirement age, you can file a “restricted application” for a benefit based on your spouse’s earnings, without also claiming the personal benefit you’re owed. At age 70, you can switch to your personal benefit, which will have grown at 8 percent per year plus the inflation rate.

  1. What if you’re divorced? You get the same benefits as a current spouse if your marriage lasted at least ten years and you are now single. Also, you can claim the spousal benefit even if your ex has not retired, provided that he is eligible for benefits and you have beendivorcedfor at least two years. If you’ve been working, however, you will probably find that sticking with your own benefit is the better deal.

In conclusion, and for more information

While there are special rules for those who are disabled or for retirees with children who are under 18, these rules apply for most people. If you need more information about spousal Social Security benefits, the agency’s website is very helpful. If you want to talk to someone, you can try calling 800.772.1213 and use the automated telephone services to get recorded information and conduct some business 24 hours a day.

A reality check: These are national numbers; they do not publish the numbers for local Social Security offices. These phone trees can be very frustrating, and the mailboxes often fill up early. A note from personal experience: I had to do something last winter that required my going into my local Social Security office. I put this off as long as I could, fearing it would be like a trip to the DMV. I was delighted when I went into the office, signed in, waited five minutes and met with an extremely knowledgeable, professional and gracious woman who solved my problem in fewer than ten minutes. I hope my experience was not an anomaly and that others will go to their Social Security offices and meet with problem solvers.

Are you putting off creating your Living Trust? Call California Document Preparers at one of our three Bay Area offices today to schedule an appointment. You can also jumpstart the process with our easy-to-use, secure online storefront–we’re still available by phone and email if you have questions. We’re helpful, compassionate and affordable.