Q: I was married to my first husband for 16 years and then we got divorced. We owned a business that made a good amount of money, but my first husband got the business after we divorced. All Social Security was always paid into his account and I got goose eggs for 16 years. My first husband has at least 36 years in which he maxed out his average indexed monthly earnings or AIME.
I next married a programmer who eventually retired. Again, I had no income those years and all Social Security payments went into his account. He had a lot of good years but not 35 years of maximum AIME. We were married 19 years and divorced.
I will turn 70 in May 2023.
My first husband will be 70 in April 2024 and my second husband will be 70 in May 2022. Both husbands will start drawing their Social Security when they turn 70.
1) Is it in my best interest to wait until I am 70 to begin drawing my Social Security against husband number one?
2) After husband number two turns 70 in 2024, would I need to have Social Security reassess my base payments?
3) Is there an advantage to waiting for spousal benefits after full retirement age or is the 8% increase only attained by the primary earner, husband number one?
A: William Reichenstein, head of research at Social Security Solutions and professor emeritus at Baylor University, offered this answer:
She will turn full retirement age or FRA of 66 in May 2019. Actually, if she was born May 1, 1953 then she will "attain" age 66 in April 2019 and can file for full spousal benefits in April 2019.
But for this answer, we'll assume she was born between May 2 and May 30, 1953. Thus, I assume she will "attain" age 66 in May 2019 and can file for full spousal benefits in May 2019.
She should consider two strategies when deciding when to apply for spousal benefits.
First, apply in May 2019 and receive her full spousal benefit, which would be half of her first husband's primary insurance amount (that is, half of his FRA benefit). If her first husband's PIA is $2,800 then her spousal benefit in May 2019 would be $1,400 before the year-end cost-of-living-adjustment or COLA.
Second, apply in September 2018 and receive 94.44% of the $1,400. If she lives past September 2030 then her projected benefits - based on current promises of the Social Security system - will be higher if she delays applying for spousal benefits until May 2019. She is eligible for spousal benefits based on an ex-husband's earnings record if she has been divorced from that ex for at least two years and she is currently unmarried. Since her first ex has the higher lifetime earnings, she should file for spousal benefits based on his primary insurance amount. She qualifies now for spousal benefits based on her first husband's record because he is eligible to file for his retirement benefits even though he has not yet filed for these benefits. She would not get a higher spousal benefit if she delays filing for these benefits beyond her FRA of 66. So, she should file for spousal benefits by May 2019, if not sooner.
Separately, she is eligible for survivor benefits after the death of either ex-spouse. Her survivor benefits will be based on that deceased ex-spouse's benefit level, including the 32% delayed retirement credits for delaying his retirement benefits until age 70. For example, if her first husband's primary insurance amount is $2,800 then, if he delays his retirement benefits until age 70, he will receive $3,696 per month, ($2,800 x 1.32), before COLA adjustments. Her survivor benefits after this ex's death would be his benefit amount.
So, the answers to your questions are as follows.
Question one: She should apply for spousal benefits on or before attaining her FRA in May 2019. She will not receive higher spousal benefits by delaying this filing beyond her FRA. Since her first husband has the higher earnings history, she will receive a higher monthly benefit by applying for spousal benefits based on his earnings record.
Question two: No, her maximum spousal benefit is half of her first husband's PIA, and she is eligible for this amount at her FRA. Each ex-husband's retirement benefit will rise by 8% per year that he delays his benefits beyond his FRA. Should either husband predecease her then her survivor benefit based on this ex's earnings record will be considerably higher than her spousal benefit. So, she will want to inform the Social Security Administration about this ex's death.
Question three: There is no advantage to waiting beyond her FRA of 66 to apply for spousal benefits.
Q: I have been married to my second wife for more than 10 years. She has never been worked in the U.S. Can my current wife qualify for spousal benefits? If she wants to work, can she still claim? I should also note that I was married to my first wife for more than 10 years. She remarried about 10 years ago and has worked for about 20 years.
A: Your current wife has not worked in the U.S. and, thus, said Reichenstein, she will not receive Social Security retirement benefits, which would be benefits based on her earnings record.
Can your current qualify for spousal benefits? Since you have been married to your wife for at least one year, once she reaches age 62 and you have filed for your retirement benefits, then she can file for her spousal benefits, said Reichenstein. "If she files for spousal benefits at her full retirement age or FRA of 67 or later then she would receive her maximum spousal benefit, which would be half of your primary insurance amount. Your PIA is your benefit level if you begin your retirement benefits at your FRA. If she files for spousal benefits before attaining FRA, then her benefits level would be lower."
Reichenstein gave this example: Suppose your PIA is $2,000. Her maximum spousal benefit would be $1,000 before cost-of-living adjustments or COLA. She would receive this benefit amount 1) if she applies for spousal benefits at her FRA or later and 2) you have filed for your retirement benefits. Since her FRA is 67, if she applies for spousal benefits at 62, 63, 64, 65, or 66 (and after you have filed for your retirement benefits) then she would receive $650, $700, $750, $833, of $916 in monthly benefits before COLAs. She would not receive a higher spousal benefit if she delayed filing for spousal benefits until after her FRA. Your retirement benefit and her survivor benefit -- that is, her benefit if you predecease her -- would increase if you delay your filing for retirement benefits until after your FRA. Thus, she should file for her spousal benefits no later than the later of 1) her FRA and 2) the month you file for your retirement benefits.
Now would she still qualify for spousal benefits if she begins working? If you have filed for your retirement benefits and you are currently younger than your FRA then your earned income - that is, salary, wages, etc. - could affect your retirement benefits and her spousal benefits, said Reichenstein. "If you are currently at least FRA and she begins working and is younger than her FRA then her earned income could affect her spousal benefits," he said. "Once she reaches her FRA, there would be no impact on her Social Security benefits."
Although not asked, Reichenstein noted that neither your retirement benefits nor your current wife's spousal benefits would be affected by your ex-wife's ability to tap spousal benefits based on your earnings record.
Got questions about the new tax law, Social Security, Medicare, retirement, investments, or money in general? Want to be considered for a Money Makeover? Email Robert.Powell@TheStreet.com. Kim McSheridan assisted with this report.
Q: I was married to my first husband for 16 years and then we got divorced. We owned a business that made a good amount of money, but my first husband got the business after we divorced. All Social Security was always paid into his account and I got goose eggs for 16 years. My first husband has at least 36 years in which he maxed out his average indexed monthly earnings or AIME.Subscribe for full article
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