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The Journey: Understanding the new Social Security claiming rules

McClathcy-Tribune Information Services

December 28, 2015


Q. I am 66, retired, and have not filed for Social Security. My monthly benefit will be about $2,100. My wife is 64, filed for Social Security on her own record in November, and has a primary insurance amount of $2,080, but a reduced benefit for filing early of $1,837. She is still working, however, and her benefits are being withheld because of her work earnings. I intend to file a restricted application for spousal benefits on her record as soon as possible, then switch to my own benefits at age 70. To receive spousal benefits, do I have to wait until her benefits are no longer being withheld? Do the new rules affect me? If I am already eligible, can I get retroactive benefits? Will my wifeís reduced benefit increase above the $1,837 as a result of the withholding because of her earnings?

A. Letís start with that last question first. When someoneís benefits are suspended or reduced due to earnings from work, they are worked back into the calculation of benefits after the person reaches full retirement age. For people younger than full retirement age for all of 2015, Social Security deducts $1 in benefits for each $2 earned above $15,760. So at full retirement age, she generally would receive a higher amount, reflecting those previously forfeited dollars.

As for your claiming strategy as a couple, you donít need to wait for your wifeís benefits to restart to file a restricted application to get your spousal benefits based on her work record, said Wei-Yin Hu, vice president, financial research, for Financial Engines, an investment advice provider that offers a free online Social Security planning calculator at www.corp.financialengines.com/individuals/retirement-readiness.html.

Because you will be older than 62 at the end of 2015, you are still eligible for filing a restricted application, Hu said. As part of the October federal budget deal, Congress is taking away this option for those younger than 62.

As for retroactive spousal benefits, the rules on that can be complex depending on your overall claiming strategy, so consult with an adviser and your local Social Security office about your individual situation, Hu said.

Q. My wife and I have been separated for over 10 years. I am 72 and receiving my full Social Security retirement monthly payments of about $2,000. She is 56 and receiving a Social Security disability payment of about $800 a month. Should we divorce, will she be able to receive a payment of half of my benefit at her current age?

A. The disability benefit she receives now is based on her own work record, but when she turns 62 it will essentially become a retiree benefit, at which point she could also be eligible for a spousal benefit based on your work record, whether or not you are divorced. A spousal benefit is generally half of the retired workerís benefit, but it is reduced if claimed before full retirement age. Of course, the two benefits are blended, with the recipient receiving a combined payment equal to the higher benefit. Some financial experts, including Hu, believe a clarification is needed regarding divorced spouses in the new Social Security restrictions to ensure that divorced spouses can collect benefits if their ex-spouses are suspending their own benefits past full retirement age.

Q. I receive Social Security disability. I was born in 1951. My benefit is more than half of my wifeís and I will be full retirement age in 16 months. At that time, I will start receiving regular Social Security. Can I then get a spousal benefit?

A. Because your benefit is more than half of your wifeís, that suggests you would get your own benefit, not a spousal benefit, Hu said.