But Wait, What Social Security Benefit Can I Claim And When?

A Reference Guide for Social Security Benefits

Many people are not aware of the Social Security benefits they are entitled to. I understand why they don’t – it’s very confusing. Here’s a straightforward, easy-to-reference guide to the various benefits available to you that will enable you to make an informed and correct claiming strategy.

Let’s start with a holistic approach:

• You need 40 credits to qualify for benefits – basically 10 years of part-time work.
• Benefits do not begin automatically, and Social Security will not contact you – you’ll need to file.
• In most cases, the earliest you can file for benefits is age 62.
• Any time you claim benefits before your full retirement age – between 62 and your full retirement age – the benefit will always smaller than your Primary Insurance Amount.
• If you take Social Security benefits before your full retirement age, the annual earnings limitation comes into play. The annual earnings limitation for 2021 is $18,960. This means income from W-2 wages and/or self-employment income. It does not include dividends, interest, rental income, or capital gains income. If you earn more than $18,960, for every $2 over the limit, $1 will be withheld from your Social Security benefits. This limitation goes away when you reach your full retirement age.
• There is no reason to wait past 70 to claim benefits.
• Waiting to file past your full retirement age, which ranges from 66 to 67, and filing as late as 70 can increase your monthly benefit up to 32%.
• A married couple needs to look at their options considering their joint life expectancies, not individually.
• For a married couple if one spouse is born before 1/2/1954, that spouse has the option of filing a “restricted application” at their full retirement age assuming they have not filed for their own retirement benefit at that time. This allows that spouse who is eligible for their own retirement benefit, to collect spousal benefits only, while deferring their own retirement benefit and earning delayed retirement credits. This spouse will only be able to receive spousal benefits using the “restricted application” if the other spouse is receiving their own retirement benefit.
• You also should consider the IRMAA adjustment for Medicare premiums. The Income-Related Monthly Adjustment Amount is an amount you may pay in addition to your Part B or Part D premium if your income is above a certain level. To calculate the IRMMA adjustment, Medicare uses your modified adjusted gross income reported on your IRS personal income tax return from 2 years ago.

Let’s talk about your own retirement benefit:

• You are always paid your retirement benefit first if you have one.
• The earliest you can apply for benefits is age 62.
• It’s the only benefit that accrues “delayed retirement credits”.
• The Annual Earnings Limitation applies before full retirement age.
• The Windfall Elimination Provision may apply if you have another government pension.
• You can voluntarily suspend your own retirement benefit at our full retirement age.
• There is no reason to wait past 70 to file for benefits.

Spousal Benefits ­– only apply to your current spouse:

The MAXIMUM spousal benefit at your own full retirement age is equal to 50% of your spouse’s Primary Insurance Amount if they are collecting their own retirement benefit. If your own retirement benefit is greater than 50% of your spouse’s Primary Insurance amount, you will not receive a spousal benefit.

• Both you and your spouse must be at least age 62 to collect.
• You need to be married for at least one year.
• Your spouse must be receiving their retirement benefit for you to receive a spousal benefit.
• Spousal benefits are based on the other spouse’s earnings record.
• You must apply, the benefit will not begin automatically.
• Both spouses cannot receive spousal benefits at the same time.
• The annual earnings limitation applies before your full retirement age.
• The Windfall Elimination Provision may apply if you have another government pension.
• The Government Pension Offset may apply if you have another government pension.
• The family maximum rules apply.
• You can voluntarily suspend at full retirement age.
• Spousal benefits are at their maximum when you reach your full retirement age.
• There is no advantage to be gained by deferring collection of spousal benefits past your full retirement age.
• Lastly, ex-spousal benefits have no impact on current spousal benefits.

Spousal Benefits ­– in cases of divorce:

The MAXIMUM ex-spousal benefit is the same as the current spousal benefit described earlier.

• You need to be single (unmarried).
• Both you and your spouse must be at least age 62 to collect.
• You must have been married at least 10 years.  
• If divorced twice or more, and qualify, you can claim off the highest spouse.
• The ex-spousal benefit must be greater than your own retirement benefit.
• If your ex-spouse IS NOT receiving benefits, then you can claim ONLY if ex-spouse is eligible to claim.  
• If you are divorced less than 2 years, your ex- spouse must be receiving Social Security benefits, then you can claim benefits immediately   
• If you are divorced more than 2 years, your ex-spouse does not have to be receiving Social Security benefits for you to file for ex-spousal benefits.
• If you remarry, you cannot collect ex-spousal benefits.
• If your ex-spouse remarries, it has no impact on your ability to receive ex-spousal benefits.
• A divorced spouse can still receive ex-spousal benefits even if the ex-spouse voluntarily suspends their benefits.
• The annual earnings limitation applies if you file for benefits before your full retirement age.
• The Windfall Elimination Provision may apply if you have another government pension.
• The Government Pension Offset may apply if you have another government pension.
• The family maximum rules do not apply.

Children’s Benefits:

Benefits for children are one of the family benefits paid by the SSA. As with all family benefits, one spouse must be receiving benefits for another family member to qualify for benefits.

Children’s benefits are equal to 50% of a parent’s full retirement age benefit even if the parent filed for retirement benefits before full retirement age.

Children’s benefits are paid to the child’s representative for children who are unmarried, under age 18, or under 19 and still in high school. A child who is disabled, and the disability began before age 22 can receive benefits into adulthood.

“Child-in-Care” benefits are basically a spousal benefit paid to a spouse who has not reached the age of 62 and not yet eligible to file for benefits. You must have a child younger than 16 years old and your spouse must be receiving benefits. Child-in-care benefits are paid to current spouses who are not eligible for normal spousal benefits. The child-in-care provision that allows a current spouse under age 62 to collect this benefit is not applicable to a divorced spouse. A divorced spouse must be at least 62 years old to claim benefits on their ex-spouse’s record, including the child-in-care benefit. Single individuals are not eligible to receive “child-in-care benefits” as they do not have a spouse. You can only receive one “child-in-care” benefit no matter how many children you have that are under 16.

• There is no reduction in benefits for the age of the child.
• The child is subject to annual earnings limitation.
• The family maximum rules apply – 150% to 180% of workers Primary Insurance Amount.
• The parents own retirement benefit is not affected.

Survivor Benefits:

This benefit is paid to a spouse, ex-spouse (if married for 10 years) and young children.

• Any time there’s a survivor, you should always consider taking one of the two benefits as soon as possible.
• This benefit is considered separate from your own retirement benefit. Think of it as a separate pot of money apart from your Social Security benefits.                
• A survivor needs to be 60 and unmarried or age 50 if disabled to collect this benefit.
• The survivor needs to be married at least 9 months except if an accident.
• The deceased spouse does not need to be drawing Social Security.
• The deceased spouse does not need to have reached full retirement age.
• Fewer work credits are needed to qualify.
• The annual earnings limitation applies before full retirement age.
• The Windfall Elimination Provision does not apply.
• The Government Pension Offset may apply if you have another government pension.
• The family maximum rules apply.
• If you remarry before age 60, you cannot receive a survivor benefit.
• If you remarry after age 60, you will still be eligible for the survivor benefit.
• Eligible children under 16 or disabled can also receive a survivor benefit, worth up to 75% of the deceased’s benefit.
• Eligible widows can receive a child-in-care benefit worth up to 75% of the deceased’s benefit.
• There is NO advantage to waiting to start collecting survivor benefits after you reach full retirement age
• Ex-spouses can also take a survivor benefit if their ex has died first, and like any survivor benefit, it will be worth 100% of what the ex-spouse received. If you remarry after age 60, you will still be eligible for the survivor benefit.
• You can choose to claim a survivor benefit and switch to your own retirement benefit later.
• If your deceased spouse HAS NOT FILED for benefits and passed away BEFORE FULL RETIREMENT AGE, you are entitled to receive the deceased’s full retirement age benefit.
• If your deceased spouse HAS NOT FILED for benefits and passed away AFTER FULL RETIREMENT AGE, you are entitled to receive the deceased’s benefit as if they filed on the date of death.
• If your deceased spouse DID FILE for benefits BEFORE FULL RETIREMENT AGE, you are entitled to receive what your spouse was receiving or 82.5% of your deceased spouse’s full retirement age benefit.
• If your deceased spouse DID FILE for benefits ON OR AFTER FULL RETIREMENT AGE, you are entitled to receive what the deceased was receiving at the date of death.
• As always, this benefit is reduced if the survivor files before their full retirement age.

Retroactive Benefits – available to people who file after their full retirement age:

• Maximum amount is 6 months’ worth of benefits.
• Practically speaking, it pushes your retirement benefit filing date six months earlier.
• Creates a permanently lower retirement benefit and survivor benefit.
• You effectively trade an up-front lump sum of up to six months’ worth of benefits for a lower monthly benefit for the rest of your life.

I hope this helps you understand and makes a little clearer your Social Security filing options.