Lynn Brenner's Family Finance

Fred and Ethel and Francine: A Social Security Story

Q: A man and woman, married, are retired, both collecting Social Security retirement benefits. She dies, and he begins collecting on her Social Security, which is higher. Eight years later, the man meets a new woman. 

Evaluating the good and bad of getting married: Will the new woman, as the widowed man’s new spouse, be able to collect on his current Social Security benefit at his death (which is a survivor benefit from the first wife)? Or will the new woman as the widowed man’s new spouse be required to collect on his own Social Security?

Assume the new woman/wife has a smaller SS benefit on her own record than the widowed husband’s benefit on his own record, and less than his current survivor benefit from his deceased wife. --PB via email

 A:  For goodness sake, let's give these people names!!

Fred and Ethel are a retired couple, both collecting Social Security. Ethel dies, and Fred later meets Francine. Okay?

You haven’t given me any of their ages. That’s a huge omission, since age is a crucial factor in answering any question about Social Security.

I’m going to assume they all started collecting Social Security at their full retirement ages. Bear in mind that if they'd filed for benefits earlier, it would affect all the numbers. Also, please remember that all the benefit amounts I cite in this story are steadily adjusted for inflation as the years go by. I’m just sticking with the original numbers for simplicity’s sake.

Okay, here goes.

After Ethel's death, you stipulate that Fred begins collecting her Social Security, 'which is higher' than his own. The benefit based on your own work record is called your PIA (or ‘primary insurance amount’). Let's say Fred’s PIA was $1,800 a month and Ethel's PIA was $2,000 a month. His widower's benefit is the higher of the two amounts: $2,000 a month. (From the government's viewpoint, $1,800 of this widower’s benefit  comes from his PIA and $200 from Ethel’s PIA.)

Eight years later, Fred meets Francine, whose Social Security benefit is $400 a month.

Fred and Francine weigh the pros and cons of marrying, including (but let’s hope not exclusively) how tying the knot would affect their respective Social Security benefits.

Since Fred is remarrying when he’s over 60, he won’t lose his $2,000 widower’s benefit.

What's more, after they’ve been married for nine months, Francine can collect a spousal benefit based on Fred’s PIA. (In case you've forgotten, that's $1,800 a month.) She gets the larger of two amounts: her own PIA or 50% of Fred's PIA. Since her PIA is only $400 a month, she’ll now receive $900.

So they get married. Fred’s still collecting $2,000 a month ($1,800 of his PIA plus $200 of the late Ethel’s PIA) and soon Francine’s collecting $900 a month ($400 of her own PIA plus $500 of Fred’s PIA.) 

Then Fred dies, leaving Francine eligible to collect as his widow.

As a widow, Francine is eligible to collect 100% of Fred’s PIA ($1,800 a month). And the answer to your question is ... (drumroll, please):

No, as a widow, Francine cannot collect the late Fred’s $2,000 survivor benefit from his marriage to Ethel. That benefit is only available to Ethel's surviving spouse.

Please send your questions to [email protected].  I'm sorry I can't respond personally to every email. Questions are only addressed online.

(c) Lynn Brenner, All Rights Reserved.

Can Widow Claim Social Security After Tragically Brief Marriage?

Q: I married my late husband one month after he was diagnosed with stage IV metastatic pancreatic cancer. He was 56 and I was 54. We had been planning a wedding, and it really meant a lot to both of us to be married, knowing his time was limited. We were focused on his illness and treatments, and taking care of his mother who just had a stroke, and did not fully investigate the financial consequences.

We married in December 2004. He died a few months later in April, 2005. Since we were only married a short time, I was told I am ineligible for widow’s benefits. We had lived together for six years before we married but didn't qualify for common law marriage status. Since he wasn’t incapacitated over 6 months, he didn't qualify for Social Security disability benefits either. He was self-employed and didn’t have disability insurance; and the life insurance policy he had applied for in good faith was rescinded when his illness was diagnosed just before signing the policy.

I lost my job shortly after he died. My previous, ex-husband is 65, but I am told I don’t qualify for his benefit either, as I remarried! I can only find part-time work, and at 62, I don’t have enough to retire on. I am juggling 3 part-time jobs, and not bringing in enough to cover all my expenses, let alone save for retirement. I really need the widow’s benefits until I reach full retirement so I can save for the future and live modestly now. Any ideas?

 A:  Yes. Based on what you say, there's a good chance that you do qualify for a Social Security benefit based on your 65 year old ex-husband's work record.

It's true that you cannot claim benefits based on a former spouse's record if you are currently married to someone else. But you aren't currently married.

A 62 year-old unmarried woman with two deceased spouses, or two living ex-spouses over age 62, or a deceased spouse and a living 62 year old ex-spouse is eligible to claim a Social Security benefit based on the record of either former husband. (The rules are unisex; they apply for men, too.)

Your eligibility to claim a benefit from your first marriage depends on its duration. If it lasted for at least ten years, you qualify.

Here are the basic Social Security rules on how long you must have been married before you can claim benefits based on your spouse's record:

1. Your marriage must have lasted at least nine months to qualify you for a widow's benefit. There are exceptions, but unfortunately they don't apply to you. This rule is waived if your spouse was expected to live for at least nine months at the time of your marriage and he died accidentally or while serving on active duty as a member of a uniformed service.

2. The marriage must have lasted at least one year for you to collect a spousal benefit during your husband's lifetime.

3. It must have lasted at least ten years to qualify you for a benefit based on a former husband's work record, during his lifetime or after his death.

Your ex-husband is still alive. So if you do qualify for Social Security based on his record, it will be a spousal benefit, not a survivor benefit.

Assuming you're eligible, the maximum spousal benefit would be 50% of the amount your ex-husband is entitled to receive at his full retirement age.

But you must be 66 years old to get the maximum. (The determining factor is your age, not his.)  At 62 you can only claim 35% of the amount he gets at full retirement age; and the discount is permanent.

Moreover, at 62 you'll automatically be applying both for your own benefit (also permanently discounted because you're under 66) and for the spousal benefit based on his record. You'll get the larger of the two amounts.

Finally, until you turn 66, you'll be subject to the annual earnings cap I wrote about in my last post. The Social Security Administration will withhold $1 of benefit for each $2 you earn above $14,160 a year.

All of which is to say that this may prove a more slender financial lifeline than you really need. But a slender lifeline is better than none.

Please send your questions to [email protected].  I'm sorry I can't respond personally to every email. Questions are only addressed online.

(c) Lynn Brenner, All Rights Reserved.

A Widow Has More Than One Social Security Option

Q: I’m confused about when to ask for Social Security benefits. I’m a widow, and will soon be 62. My husband died at the age of 54. He would have been 62 in November 2011.  Thanks to your article, I think I can ask for reduced benefits from his Social Security. When do I do this -- after his 62^nd birthday, or a month ahead of time? I am working, making $36,000 a year, and barely able to pay my mortgage. Will I need to pay taxes on his benefits?

 

A: Your husband’s birth date, and the age at which he died, are irrelevant to the Social Security benefit you can claim as his widow. Your own age is what counts.

You have several options available to you. Call the Social Security Administration and make an appointment at one of its local offices. They’ll explain your choices and crunch the numbers to help you decide which one makes the most financial sense.

You are indeed entitled to a widow’s benefit based on your late husband’s Social Security – and you don’t have to wait until you turn 62 to claim it. Most people can claim a widow or widower’s benefit at 60, and some can obtain it even earlier. (A widow or widower who is raising minor children receives a survivor's benefit regardless of age.  A surviving spouse who’s disabled can claim it at 50.)

But you’re right that if you file for it at 62, the amount you get will be reduced. And the reduction is permanent – i.e., you’ll always receive a smaller benefit than if you had delayed your application.

If you’re still working, there’s another drawback to filing for a Social Security benefit before your full retirement age: You may forfeit some of your benefit, depending on your salary. Social Security withholds $1 of benefit for each $2 you earn over $14,160 a year. After you reach full retirement age – in your case, age 66 -- you get your entire benefit regardless of how much you earn.

Here’s a rundown of the trade-offs you’ll want to consider:

To get the maximum widow's benefit -- 100% of what your late husband would have been entitled to at his full retirement age – you must postpone your application until you’re 66 years old. If you apply at 62, you receive about 80% of that amount.

You currently earn $36,000 a year -- $21,840 over the annual $14,160 limit. Let’s assume your reduced benefit at age 62 is $1,500 a month, or $18,000 a year. In this hypothetical example, Social Security would withhold $10,920 of your widow's benefit. You'd receive $7,080 a year, and it would arrive in the last five months of the year.  (Do you ever get back the amount that was withheld? Yes, in a way -- after you reach full retirement age. But that’s a subject for a future post.)

Clearly, you have to know the actual dollars involved to figure out whether taking a discounted widow's benefit at 62 makes sense for you.

And that’s not your only decision.

As a widow or widower, you have an option that's unavailable to people with living spouses until after they turn 66:  At 62, you can apply for your survivor’s benefit or for the Social Security benefit based on your own work record -- and switch from one to the other at a future date, as this earlier post explains. Again, the best choice depends on the actual dollars involved.

As for your question about taxes, take a look at my earlier post about how to determine if your Social Security benefit is taxable.

Please send your questions to [email protected].  I'm sorry I can't respond personally to every email. Questions are only addressed online.

(c) Lynn Brenner, All Rights Reserved.