Personal Finance: Answers to Reader Social Security Questions

Wednesday, December 10, 2014

Joe Alfonso, GoLocalPDX Contributor

I welcome reader questions and will post responses in periodic columns. Here are some recent questions and my answers.

Q: I am 65 and started collecting Social Security at 62. My spouse is 66 and started collecting at 62. Currently my benefit is $1,048/month. My spouse's benefit is $350/month. If we change filing, and my spouse collects half of my benefit, would that amount be half of my current benefit of $1,048 or half of my age 66 benefit?

A: Unfortunately, because you both began benefits early you cannot now claim a spousal benefit. The file and suspend strategy is only an option for those who originally file at or after their full retirement age (FRA).

Social Security pays you your own retirement benefit first if you claim early. It then reduces that benefit because it is being taken before FRA. Then, if your own benefit (before reduction) is less than half of your spouse’s FRA benefit, Social Security will pay a reduced spousal benefit on top of the reduced retirement benefit.

If your own retirement benefit before reduction was greater than half of your husband’s, then Social Security only pays you your own reduced benefit and you cannot ever claim a spousal benefit.

Your only option once you achieve FRA (in one year) is to suspend your retirement so that it can recover somewhat due to the 8%/year credit for delaying up to age 70. Since you filed early, however, neither of you have the ability to take a spousal benefit while in suspension.

Q: I took Social Security a year ago at 62 and am now considering paying it back so I can "restart" and file at 66 or 70. I'm approaching the deadline Social Security set for repayment, except I'm confused about whether that deadline is the date of eligibility (my DOB) or when I received the first check (2/14)? Also, after I file to restart, how long do I have to repay the benefits?

A: The date the 12 month clock started is the effective start date for your benefits. Make sure you are not late as once the window has passed it is closed shut (though you can suspend at FRA).

You need to repay all benefits at the time SSA approves your request to stop. You cannot wait until you start receiving benefits in the future.

You should send your application to stop benefits to SSA soon as it seems you are running out of time and in danger of missing the window.

Click here for more information.

Q: I am a 56 year old woman. My husband of nine years died in 2007. When will I be eligible to receive survivor benefits? Will I be eligible for survivor benefits if I remarry?

A: The earliest you will be entitled to a survivor benefit is age 60, but it will be reduced for claiming before FRA. If your own benefit is lower than your deceased husband’s, it is important to try to delay claiming a survivor benefit until FRA. You can begin taking your own lower benefit starting at age 62. Even though it will be reduced as well, since you will switch to the higher survivor benefit in a little over 4 years, the breakeven is relatively short.

Note that if you remarry before age 60, you are no longer entitled to survivor benefits on your deceased spouse but of course you will qualify for potential survivor benefits with a new spouse. Remarriage any time after age 60 is fine.

In any case, you should contact the SSA and ask them for an estimate of what your survivor benefit would be at age 60 and at FRA. This should be helpful to you in decision making.

Thanks again for your questions. Please keep them coming.

Readers with questions on personal finance and Social Security can email Joe Alfonso at [email protected].

Joe Alfonso, CFP®, ChFC, EA regularly writes on financial topics and is an expert on Social Security planning. He is founder of the Fee-Only financial planning firm Aegis Financial Advisory in Lake Oswego, Ore., and is the principal advisor for the firm. Joe is a CERTIFIED FINANCIAL PLANNER™ professional and an Enrolled Agent, admitted to practice before the IRS to represent taxpayers at all administrative levels for audits, collections, and appeals. He is a member of The National Association of Personal Financial Advisors (NAPFA).