Q: I'll be 62 years old in December. My husband died in 2002 at age 54. I'm working full time and earn about $60,000 a year. I was told I can collect half of my late husband's benefit and continue working with no penalty. I was also told it is a benefit that not many people know and that Social Security won't tell you about it unless you ask. Can you address this? --FJ via email
A: You don't say who told you this, but they told you wrong. Until you reach your full retirement age, widows' benefits are subject to an annual earnings test, just like retirement benefits.
It's true that you are old enough to file for a widow's benefit -- in fact, you can file as early as age 60.
The maximum widow's benefit is 100% of what your late husband would receive if he were alive. However, when you file for this benefit before reaching your full retirement age -- which in your case is 66 -- you receive less than the maximum benefit.
In 2009 and 2010, you forfeit $1 of benefit for every two dollars you earn above $14,160. The earnings cap applies as long as you're under your full retirement age. Once you reach full retirement age, your benefit isn't reduced regardless of the amount you earn.
If your estimated 2010 earnings are $60,000, the Social Security Administration would have to withhold $22,920 in benefits before paying you anything, says Linda Lauria, an agency spokeswoman in New York City. So unless your benefit is $2,000 a month, it wouldn't pay for you to apply for it at this time.
You were also told that people don't learn about these benefits unless they ask.
When dealing with any bureaucracy, it is always a good idea to ask what you're entitled to receive, and to keep asking until you're satisfied you've been fully informed.
But let's be clear about this: While it's true that sometimes Social Security staff make mistakes, just like everyone else, it certainly isn't true that the agency deliberately withholds information!
Please send your questions to Lynn@LynnBrennersFamilyFinance.com. I'm sorry I can't respond personally to every email. Questions are only addressed online.
What is the point of the earnings cap? Don't we want people working and paying into the system?
Posted by: Kevin | 01/20/2011 at 02:12 PM
So, if I earn about $40k a year, and will be 60 this year, is it worth it to apply for my late husband's benefits? -- A. C.
Posted by: A C Coble | 04/24/2011 at 10:48 PM