Best Social Security Claiming Strategies For Working Spouses?

By: Michelle Buonincontri, CFP®, CDFA

Q: My husband retired from the military after 30 years of service. He turned 72 November 24, 2018. He receives his Social Security check, a check from the Veterans Affairs, and he also receives multiple pensions. I still work but I don't make a lot of money. Am I entitled to early Social Security on his behalf?

A: There's some information we need to answer your question specifically, said Michelle Buonincontri, a certified financial planner with and founder of Being Mindful in Divorce.

For instance, you didn't mention your age and there are many nuances that apply around Social Security eligibility and benefits, said Buonincontri.

In general, however, there are two "retirement" benefits available to you as a "married working" person (depending on your age):

  1. A benefit based on your own earning record, called a retirement insurance benefit (RIB)

  2. A spousal benefit based on your husband's earning record, called a disability insurance benefit (DIB)

There are two other Social Security benefits known as Retroactivity for widow(er)'s insurance benefits (WIB) and Retroactivity for Disability Insurance Benefit (DIB), which are outside the scope of this question.

According to Buonincontri, the rule for a spousal Insurance benefit (SIB), states that if you are at least age 62 and your spouse is already receiving retirement benefits or disability insurance benefits (DIB), you can receive a spousal benefit of "up to" 50% of your spouse's eligible full retirement age (FRA) "base" Social Security benefit, or primary insurance amount (PIA) at their (FRA). A spousal benefit will not include any delayed retirement benefit credits (DRCs) your husband may be receiving or entitled to (See considerations below.)

"In your scenario, your husband is already receiving benefits and you would be 'deemed' to be applying for both a 'spousal benefit' (SIB) and your own 'retirement benefit' at the same time," said Buonincontri. "This means that Social Security will always pay your benefit first based on your earnings record, and then if your spousal benefit is higher, you will get a combination of funds equaling the higher amount of the spousal benefit."

Buonincontri gave this example: If your retirement benefit was $1,000, and your spousal benefit was $1500 (50% of your spouse's $3,000 based benefit), you would receive $1,500. This is $1,000 based on your record and a spousal benefit of $500

Note, however, had your spouse not already filed for benefits, you would not be deemed as filing for a spousal benefit (SIB) at this time - just a retirement benefit (RIB) of $1,000 based on your earning record, said Buonincontri. Then in the future when your spouse applied for benefits, the spousal benefit rules would apply and if that spousal amount was larger than your own benefit ($1,500 is greater than $1,000), your benefit would automatically be increased to ($1,500 in this example) to cover that additional money, she said.

Note too, said Buonincontri, this consideration that may reduce your benefit: If you begin receiving benefits at least age 62 and file before your FRA, your spousal benefit will be "permanently" reduced for each month you are filing early and your benefit will not increase when you reach your FRA; making your spousal benefit less than 50% of your spouse's full retirement "base" benefit or PIA. "Additionally, if your husband delayed receiving Social Security benefits past his FRA, for example to age 69 or 70, so that he would get a bigger check, you are not entitled to a spousal benefit based on his delayed retirement credits or DRCs, said Buonincontri. "So, his base benefit at his FRA will be less than what he is receiving and your percentage will be based on a lower amount, meaning a smaller benefit for you."

Buonincontri also issued a caution: Filing for early benefits "before" your FRA, will prevent you from utilizing claiming strategies that might allow you to switch between benefits. "For example, as a widow you could take a Widow Insurance Benefit (WIB) and later switch to your own retirement benefit or RIB in the future if that benefit was larger," she said. "You lose this option if you choose to receive a spousal benefit before your FRA."

  • At FRA - a spousal benefit cannot exceed 50% of your spouse's full retirement benefit

    • If you were born before Nov. 1, 1954, then after your FRA you can choose a "restrict and suspend" strategy, said Buonincontri. "This would allow you to file a restricted application to receive only a spousal benefit now and delay receiving a retirement benefit based on your own earnings record until a future date - maybe age 70, when you benefit is larger due to delayed retirement credits or DRCs," she said.

    • Unfortunately, due to Social Security changes that went into effect Nov. 2, 2015 - those born on or after Jan. 2, 1954 cannot file a "restricted" application to only receive spousal benefits, said Buonincontri. "Instead you will automatically be filing for 'all' benefits that you are eligible for and don't have the opportunity for your retirement benefit based on your earnings record to grow," she said.

Your spousal benefit may be reduced for other reasons as well, said Buonincontri. "For instance, you mentioned that you are working," she said. "The amount of Social Security benefit based on your spouse's earning record or PIA may be reduced if you are entitled to a pension from previous work, not covered by Social Security under the Government Pension Offset or GPO. Additionally, she said, your benefit can be reduced if you have a child eligible for benefits under your spouse's earning record as there is a "maximum amount" that can be paid to family members.

"As you can see this is complicated," said Buonincontri. "There are too many opportunities to make an uninformed decision and in turn not maximize your benefit," she said. "This decision is irreversible and applying online limits your options, as the restricted application option is not available."

Buonincontri's best advice: Make an appointment at your local Social Security office and explore all options at your age, any benefits of delaying and receiving at a different time, as well as inquiring and understanding if the "restrict and suspend/defer" option under a "restricted" application is available and makes sense for you.

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.

This article originally appeared as Ask Bob: Best Social Security Claiming Strategies For Working Spouses? on The Street.


Michelle Buonincontri Circle Headshot.png

Michelle Buonincontri is the Founder of Being Mindful in Divorce. She’s a divorced single mom, passionate about using her professional experience as a CFP® & CDFA™ and personal journey to support women in transition; creating confidence through education so they can make financial choices with peace of mind. Bringing together a background in investment management, tax prep and retirement planning, to provide Divorce planning (with singles or couples) and Financial Coaching services, financial literacy workshops and writings.

5 Retirement Assumptions You Can't Make Anymore

By: Michelle Buonincontri, CFP®, CDFA

We've all heard the adage "nothing can be certain, except death and taxes." This line of thought also applies to retirement, as society and financial markets change.

Here are a few assumptions many Americans used to be able to make about retirement, and why they can't rely on them anymore.

1. I’ll Be Married When I Retire

Times are changing. We have all heard the statistics that 50% of first marriages end in divorce, and the numbers are even higher for second and third marriages. "Gray" divorces — among couples 50 and up, or "Boomers" – have been on the rise, according to a study by the National Center for Family and Marriage Research at Bowling Green State University, with about one in every four divorces (25%) occurring to people over the age of 50.

Divorce can wreak havoc on the retirement plan of married couples, as assets now need to be divided. Typically, the "less monied" earning spouse has less saved for retirement (401(k), pension, annuities) and a lower Social Security benefit than their higher-earning spouse. With the retirement strategy no longer based on two incomes (even if only Social Security) as originally planned, income is cut in half or less, and expenses as a single person rise. Consequently, divorced couples face unanticipated financial constraints and decisions.

Retirement assets may not be split 50/50 – only the "marital" portion will be divided and they are not automatically split in a divorce — substantially reducing what you will receive after a divorce versus at widowhood. Get financially literate and know what you have ahead of time. Understand all the marital assets, as they all become "potential" retirement assets; even more esoteric employment benefits such as stock options, deferred compensation, bonuses, HSA accounts and the value of pensions (their future income stream). If these assets aren't explicitly accounted for, or you don't understand them, the success of your retirement plan may be been compromised and you could be out of luck – there is no "re-do" in divorce.

Divorce may be out of our control, just like an accident or illness, but it's important to plan for the things we can control – like saving more. Since divorce is forever, perhaps it may be prudent to run retirement projections if you were to divorce — treat it like a "long-term care event," even if you are not considering it — just to test the success rate of the modified scenario and understand the potential financial impact on your retirement plan.

Pensions and Social Security are an important part of your plan after divorce, as they are considered the "safer streams of income," and increase the likelihood of successfully meeting your needs in retirement. After divorce, you may still be eligible to collect larger spousal or survivor Social Security benefits using your spouse's higher earning record under certain circumstances; even if he/she is remarried. You can speak with a Financial Planning (FP) professional to test your plan as a "single" and to understand how to maximize your monthly Social Security benefit before filing for benefits. Most FP's have special software used to determine the best age and withdrawal strategy for you to begin collecting benefits based on your "individual" situation, something that the Social Security department cannot do as effectively.

2. My Assets ‘Conservatively’ Need to Last for 30 Years

As we live longer, a 30-year conservative assumption for retirement assets to last for an average 65-year-old becomes more the "norm," rather than the conservative assumption it was meant to be in 1994 when first introduced as part of the 4% safe withdrawal rule, according to Wade Pfau, economist and professor at The American College of Financial Services. At that time, a 30-year number was outside the "normal" lifespan for an adult.

According to the Social Security website, approximately 25% of 65-year-olds today will live past age 90, and 10% will live past age 95. These numbers are generally lower for an individual versus a married couple, but these statistics negate a "30-year time horizon" for a plan as a "conservative" assumption for how long assets need to last in a retirement plan. If you are retiring earlier, assets need to last longer, but as we live longer and heath costs in retirement increase (more on this in item #5 on this list), the chances of outliving our money increases. Although age 95 is now used as the common age for "last to live for couples," a more "conservative" number may have the last in a couple living until age 100 since 10% of individuals will live past age 95. Then you need to factor in "planned" years in retirement (as some retire earlier than 65), marital status, sex, personal and family health issues. You may get a more accurate number by working with a planner, and to get a better idea of whether your plan will be successful.

3. I Won’t Outlive My Money If I Have a Safe Annual 4% Withdrawal Rate

How cliché can I get? Well when science proves something out, it should be shouted from the rooftops beyond facial blueness. The 4% safe withdrawal rate rule was introduced in 1994 by financial adviser Bill Bengen. It has been used by planners to help retirees spend their retirement funds and suggests that if retirees withdraw 4% of their portfolio in their first year of retirement, and adjust that amount for inflation each year, they'll have a low risk of running out of money in 30 years. This rule is affected by several parameters such as; interest rates/income generation, how long folks live (longevity), asset allocation & income source types (stocks, bonds, guaranteed annuity stream, pension etc.).

However, several articles have been written challenging this 4% withdrawal assumption. Pfau wrote a research paper showing that this rule would not work when retiring in a market downturn or in a period with historically low interest rates.

In 1994, when this rule was introduced, portfolios were generally earning 8% annually, and these days we are looking at earnings more like 3-4%, with safe investment such as bonds not earning nearly what they did historically, and if interest rates did rise, folks would face a loss in bond values since prices fall when yields rise.

When interest rates are low, retirement savings are not earning the same income and people are spending principle, retirement savings becomes more dependent on market upside (if they are invested in stocks and bonds) to provide the earnings needed rather than stable rates of return. This makes retirement savings more susceptible to swings in the market when money is being withdrawn and that can have a dramatic impact of savings, which increases the risk that funds won't last through retirement.

Add the fact that we are living longer, and the money needs to last even longer — creating further risk in the original 4% withdrawal rule.

The bottom line is there is no easy answer.

4. A Home Is a Good Retirement Asset

A home is probably the largest and most valuable asset that consumers own, though it may not be as appreciable as you think it is. Owning a home is no guarantee of profit. In fact, even if you sell your home for more than you bought it, that doesn't mean you necessarily made a profit. You need to determine the inflation-adjusted dollar amount of what it would cost to buy that home in the future when you want to sell it.

Going backwards: For example, if you spent $800,000 in 2005 to buy your home, and wanted to sell it 10 years later in 2015, that same $800,000 in 2005 would cost you $974,111 in today's dollars due to inflation. So then you may think you need to sell that house for more than $974,111 to break even – but owning a home has related expenses that are much higher than renting. You need to also subtract any money you spent on upgrades and maintenance over the past 10 years, and 3-6% in sales commission, closing costs and moving costs to get a more accurate picture of your profit. Chances are you really didn't make very much on that asset you held for 10 years.

Additionally, the housing market is volatile, and if you don't sell at the height of market, you could be facing a flat market or prices declining for many years. The financial crisis taught us that the real estate market can be affected by things outside our control. This, and the fact that you can't sell unless there's a buyer with your price at the time you want to sell, makes real estate illiquid and creates undue risk in your retirement plan at a chosen time that you need cash flow.

Making a profit also depends on where you buy and when you sell and where you wind up living after the sale. You will need to spend money on a place to live, and unless you are planning to live in an area with a substantially lower cost of living, that "windfall" may not seem so big or last so long. (This free calculator can show you how much house you can afford.)

We cannot predict the market climate when you retire, so remember your home is a home, buy it with that intent, and plan on not needing it in retirement you will have a higher degree of certainty that you plan will work.

5. Spending Always Decreases in Retirement

Maybe, maybe not. Just as we were individuals while working, the same goes for retirement. Sure, certain expenses like clothing, transportation and other business expenses tend to go down, and maybe your house is paid off, but with 8-10 hours extra a day, socializing, entertainment and eating out can take up a bigger part of your retirement budget. Many retirees want to travel more in the early retirement years and believe these costs drop later, but those travel costs are most likely offset by rising medical costs. Medical expenses can even consume a larger portion of a post-retirement budget right away because health insurance costs may no longer be subsidized by employers. So you may need to pay out of pocket; if you are 65, Medicare part B premiums can be pretty high, depending on your income level.

As we live longer, the likelihood of increased medical expenses also increases with diseases such as Dementia & Alzheimer's. Seventy percent of individuals over 65 have a long-term care event at some point in their life, which is not covered by Medicare. According to the Employee Benefits Research Institute (EBRI), Medicare covered roughly 62% of an individual's medical expenses, and it may decrease in the future – increasing a retiree's share of health care costs. EBRI estimates that a 65-year-old couple should save between $241,000 and $326,000 to cover medical and drug costs (excluding long-term care) in addition to the amount required by a retirement plan to cover basic annual needs. Also, another EBRI study stated that 20% of retirees reported that, in addition to supporting the immediate household, they also provided financial support to relatives and friends.

Between high retirement lifestyle goals, rising health care costs, increased longevity and costs related to supporting family members in retirement, don't assume that expenses in retirement are always less. Instead, you need to take this all into consideration to help improve the success of your retirement plan.

This article originally appeared on Yahoo Finance.


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Michelle Buonincontri is the Founder of Being Mindful in Divorce. She’s a divorced single mom, passionate about using her professional experience as a CFP® & CDFA™ and personal journey to support women in transition; creating confidence through education so they can make financial choices with peace of mind. Bringing together a background in investment management, tax prep and retirement planning, to provide Divorce planning (with singles or couples) and Financial Coaching services, financial literacy workshops and writings.

Your indispensable guide to Social Security

By: Elliot Raphaelson

There is no question that Social Security issues are important to the American public. It is not unusual for me to receive more than 100 responses from readers when I write a Social Security-related column.

Regular readers know that I frequently reference Andy Landis as a source. He has just updated his book, "Social Security: The Inside Story" (www.andylandis.biz), which I consider an indispensable resource on the topic. His book is up-to-date, comprehensive, well-organized and easy to understand. He provides numerous helpful examples. In each chapter, he includes Social Security references so readers can read the associated regulations that were discussed.

The book provides a useful overview of Social Security and chapters on retirement benefits, family benefits, survivor benefits, disability benefits and Medicare. There are references to available calculators for estimating your benefits, hints on effective filing, and a very important chapter on maximizing your benefits.

The chapter on maximizing Social Security benefits is particularly useful. Landis discusses the advantages of postponing filing for benefits up to age 70, which increases your benefits by 8 percent for every year you wait past full retirement age (FRA). Another advantage in doing so is that widow/widowers might be entitled to a larger benefit if you choose this option. Filing for widow/widower benefits only does not preclude filing for benefits based on your work record at a later time.

The chapter also discusses restricted application for "spousal only" payments. This option allows you to file for your spousal benefit after you reach your FRA, and then to file for your benefits based on your work record up to age 70. Unfortunately, many Social Security representatives do not understand this option. When I have written about this option, I have been amazed at the number of readers who write complaining about the ignorance of many Social Security Administration representatives.

Note that this option is available only to individuals who were born before January 2, 1954. And to qualify, your spouse would have to have already filed for his/her benefits. You must not have received a reduced retirement benefit or spousal payment before.

It would make sense to use this option only if your payment at age 70 is higher than your spousal payment at FRA. If you meet these qualifications, it can be a valuable tool.

Many of the options and tools discussed in this book will help you make the right decisions. You cannot depend on advice from SSA representatives. Many financial planners are far from experts in Social Security as well. I recommend that it is in your best interests to become an expert in Social Security before it is time to apply for benefits. Making the right decision can provide you with hundreds of thousands of additional benefits.

Many divorced individuals do not understand their Social Security options. If your previous marriage lasted at least 10 years, and you either have not remarried or remarried after age 60, you may have benefits you are not aware of. You can't depend on the SSA to inform you. For example, many individuals believe that because their ex-spouse remarried, it affects their benefits. This is false; it has no impact.

If your ex predeceases you, it is possible that you are entitled to larger benefits than you previously were receiving. For example, assume your ex worked until age 70 and was receiving $2,000 per month in Social Security benefits, and he/she died. If you are single, or remarried after age 60, you are entitled to whichever is greater, your ex-spouse's benefit or the benefit you are now receiving.

Landis' book covers this and other topics in great detail.

If you have any relatives approaching retirement age, one of the best gifts you can provide is a copy of this book. It can make their retirement much more prosperous. Making the right Social Security choices is critical. Making the wrong choices is expensive and difficult to undo.


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A retired executive of Chase Manhattan bank, Elliot Raphaelson joined The Savings Game after decades of experience as an advisor, teacher and author in the field of personal finance. His writing has appeared in The New York Times, Town & Country, Vogue, Self, Savvy and Working Woman magazines. For ten years he has worked as a certified mediator and trainer in a Florida county court.

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Elliot Raphaelson

A retired executive of Chase Manhattan Bank, Elliot Raphaelson joined The Savings Game after decades of experience as an advisor, teacher and author in the field of personal finance. He has taught courses in personal financial planning at The New School for Social Research and at the Military Academy at West Point, as well conducting seminars for Chase, Dow Jones & Co. and other corporations.

Past publications include Planning Your Financial Future (Wiley, 1982), and his writing has appeared in The New York Times, Town & Country, Vogue, Self, Savvy and Working Woman magazines. For ten years he has worked as a certified mediator and trainer in a Florida county court, where he helps resolve personal financial problems of every description.