Can I Collect Retirement And Social Security Benefits
Depending on your state, you may enjoy an alternate state pension program, while other territories will only have coverage under plans associated with Social Security. Those residing in states with alternate methods are eligible for dual payments, while those with alternate plans are not.
Teachers who may be most confused about the issue are:
If you fall into one of these two groups, you are eligible for benefits, but you must first qualify. This qualification is based on the receipt of earnings credits. For every $1,300 you earn, you receive one earnings credit, and you can get up to four a year.
Social Security requires 40 earnings credits to qualify, which takes ten years of work to be eligible. Completion of 40 full credits is required there are no partial benefits. For Social Security, its all or nothing.
Early Filing Penalties Reduce Your Monthly Income
Spousal benefits could be worth up to 50% of your husband or wife’s standard benefit . So if your spouse whose record you are claiming benefits on was eligible for a monthly payment of $1,500, you could receive up to $750 per month in spousal benefits.
The key thing to note, though, is that this is the maximum. You’ll end up with substantially less if you start spousal benefits before your full retirement age. That’s true regardless of how old your mate is. If the primary earner claims benefits at FRA but you start your checks when you’re just 62, early filing penalties could reduce your monthly Social Security check to as little as 32.5% of your partner’s standard benefit — down from 50%.
Before starting your checks early, make certain you’re aware of this major potential downside.
How Can A Nonworking Spouse Plan For Retirement
I’m 65 and my husband is 60. We’re trying to plan for retirement. My husband isn’t working and doesn’t have a retirement account. I’d like to keep working for a few more years. Here are my questions: Can I open an IRA for him? Can he receive Social Security benefits on my work record? And do I have to retire for him to be eligible?
These are three great questions, so thanks for asking. While each couple’s situation is different, there are ways to build retirement security for a nonworking spouse that every couple should be aware ofand take advantage of if they can. Let’s go in order.
#1: Yes, you can open and fund a spousal IRA
Usually you have to have earned income to open and fund an IRA, but not with a spousal IRA. If you’re married filing a joint tax return, you can contribute funds into two separate IRAsone for your nonworking spouse and one for youas long as you have enough earned income to cover both contributions.
Since youre both over age 50, you can currently contribute up to $7,000 into each account. You’d just have to have earned income of $14,000 or more to max out both contributions.
#2: Yes, your spouse can collect Social Security benefits on your work record
But before you proceed, there are some important rules and exceptions to think about.
#3: No you don’t have to retire, but timing is extra important
Here are some things to consider as you make your decision:
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How Social Security Spousal Benefits Are Calculated
The calculation for spousal benefits is fairly straightforward. If you wait until full retirement age, then your benefit will be 50% of the spouses benefit amount. However, starting your benefits early will reduce your monthly payment. Your benefit will be reduced by 0.7% for each month that you begin your benefits early, up to a 36-month reduction. So, if you start your benefits at age 62, then you will only receive 32.5% of your spouses primary insurance amount.
To calculate Social Security benefits for the primary beneficiary, you will need to perform a few different calculations. You could sign up for a My Social Security account at SSA.gov and use the estimator tools there. That is the easiest way. However, if you wish to calculate the amount on your own, here is what you need to do. First, you need to determine your average indexed monthly earnings over the highest 35 years of your work history. This means that you will need to take your 35 highest years of income, index them to current values using the Social Security index tables, and divide the sum by 420 to obtain the average monthly amount.
Strategy For Widowed Spouses
Widows and widowers may receive full benefits at their full retirement age or reduced benefits as early as age 60, as explained in sections above. Remarrying after age 60 will not affect your eligibility for survivors benefits. However, it may be more convenient for you to forego your widow or widower spousal benefits depending on your circumstances.
If your current spouse is also eligible for Social Security benefits and earns more than your former spouse, you may wish to apply for spousal benefits based on your new spouses record instead.
If you are collecting a survivors benefit, but also qualify for a benefit on your own, you may wish to collect a survivors benefit in the early years of retirement and leave your own Social Security benefits to accrue delayed retirement credits. Then, you can switch to your own retirement benefit as late as age 70.
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Social Security And Your Sers Pension
If you are a SERS retiree who also is eligible for a Social Security benefit, you may be affected by federal law regulating Social Security benefits. As a result, your Social Security benefit may be reduced by either the Government Pension Offset or the Windfall Elimination Provision .
Neither the GPO nor the WEP will reduce your SERS pension. They can affect only your Social Security benefit.
For more detailed information on the GPO and WEP and how they may affect your specific Social Security benefit, you should contact the Social Security Administration through your local office, by visiting the SSA website at www.ssa.gov, or by telephone at 800-772-1213. The following is provided only as general information.
What If You Are Divorced
If you were married to the same spouse for 10 years or longer and that person worked enough to qualify for Social Security, you can receive benefits on the ex-spouse’s record. That’s true even if they remarried.
If you remarry, you do not qualify for benefits from the first spouseunless the new marriage ends and you have been divorced for at least two years. If your spouse dies and you remarry after age 60, you can still collect survivor benefits.
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Claiming Early Or Late
Your spousal benefit is based upon your partner’s “normal” benefit amount. But the amount you receive will depend upon when you begin to claim it.
You can claim spousal benefits as early as age 62, but you won’t receive as much as if you wait until your own full retirement age. For example, if your full retirement age is 67 and you choose to claim spousal benefits at 62, you’d receive a benefit that’s equal to 32.5% of your spouse’s full benefit amount.
The amount increases with each year you delay. At your full retirement age you’d be eligible for the maximum, which is 50% of your spouse’s full benefit.
Notably, spousal benefits are not reduced if the spouse is caring for a child who qualifies under the age or disability rules. Spousal benefits can never exceed 50% of the other spouses full benefit. So, there is no incentive to file for spousal benefits later than your own full retirement age.
An ex-spouse may be eligible for spousal benefits even if the former spouse hasn’t retired yet.
How To Apply For Benefits As A Divorced Spouse
You can apply for benefits online by going to SSA.gov, or making an appointment at your local Social Security office. To apply for benefits on a former spouse’s work record, you will need to have that person’s Social Security number or date and place of birth and parents names.
When you apply for spousal benefits as a divorced spouse, Social Security will assume you are also applying for benefits on your own work record, and you’ll be eligible for the higher amount of the two. If your benefit is lower, Social Security will first pay you an amount based on your record, then make up the difference between that and what you’re eligible for on your ex-spouse’s record.
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How Much Can You Earn And Still Collect Survivor Benefits
While it can seem unfair to not be able to fully claim both your own and your survivor benefits, there are claiming strategies to maximize what you receive. This includes switching from one benefit to the other. See an example from one of our users directly below.
Making the right decision on how to maximize your own benefits depends on how much your own retirement benefit vs. survivor benefit would be, and how long you think you will be living and needing the money. It also depends on whether youre working.
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Strategy For Late Claimers
If one partner has little or no earnings history, the best strategy is for the wage earner to postpone applying for Social Security retirement benefits until age 70 to get the highest amount possible. Full retirement age is 66 for most baby boomers and 67 for everyone born in 1960 or later, but by delaying claiming benefits until age 70, the wage-earner will accrue delayed retirement credits that will increase the monthly payments by 8% for each year of delay.
Keep in mind that this won’t affect the spousal benefit amount. Spousal benefits differ from personal benefits when it comes to delaying payments. If you delay claiming for personal retirement benefits past full retirement age, the benefit increases over time, as explained above. However, that will have no impact on your spouse’s benefits, since they max out at full retirement age . In other words, there is no benefit for your spouse to delaying the spousal benefit claim past your full retirement age.
On the other hand, if both partners work, and their earnings are more or less equal, their individual Social Security benefits will each be greater than the spousal benefit, so the best strategy for both is to postpone applying for benefits until age 70.
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Chapter : How Much Will You Receive In Survivor Benefits
After the passing of the worker, Social Security pays a one-time death benefit of $255 which can be collected by the widow or child.
Then there is the monthly Social Security survivor benefit. That benefit is based on the Social Security benefit the worker was receiving .
The benefit can be up to 100% of what your spouse would have received at full retirement. If the benefit you would receive as a survivor is higher than the benefit you receive on your own, Social Security will pay you the higher of the two amounts, not the two combined. However, survivor benefits, unlike spousal benefits, dont have to be claimed at the same time as your own retirement benefits. You can, in many cases, receive one benefit for a time and then file for the other one later. This is a common strategy for widows to take to maximize their benefits.
Did you Know?
The earliest a widow or widower can apply for survivor benefits is age 60 .
Spousal Benefits For Divorced Spouses
If you’re divorced, you may be eligible for spousal benefits based on your ex-spouse’s work record. The rules are much the same, plus:
- Your marriage must have lasted for at least 10 years.
- You must currently be unmarried.
If your former spouse hasn’t filed for benefits yet, you can still file for spousal benefits if you have been divorced for at least two years.
If your ex-spouse is still living, in most cases you must be at least 62 years old and your spouse must be old enough to qualify for benefits.
If your ex-spouse has died, your benefits are similar to those of a widow or widower.
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How To Get A Social Security Card
Strategies For Maximizing Spousal Benefits
Every married couple has to figure out the best way to maximize their benefits depending on their own circumstances.
The three strategies below will help you make the most of your Social Security spousal benefits, depending on your circumstances. However, keep in mind that, regardless of your circumstances, the most a spouse can get is 50% of the amount that the higher-earning partner is entitled to at full retirement age.
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Why It Makes Sense For The Higher Earner To Wait Longer To Collect
David and Linda are married. David’s primary insurance amount at full retirement age is $1,600 Linda’s is $1,450. They both have an FRA of 67.
If they both wait until 68 to collect, which means their benefits will increase by 8%, David’s benefits will be $1,728 , and Linda’s will be $1,566 .
That extra $12 per month means an extra $144 per year, or $2,880 over 20 years.
In addition, the spouse who lives longer will continue to collect the higher payments.
These Are The Benefits If You Are Eligible
Lets set an example with teachers in Illinois, a state where the pension plan is independent. Mary retires and receives her Teachers Retirement System pension, but she also worked as an entrepreneur before becoming a teacher and collected the 40 credits requested by Social Security. Mary is eligible for both payments will she receive them?
Although it looks like she is, Mary will receive only a portion of the full amount Social Security says she is. The answer lies in the Windfall Elimination Provision , which does not allow a person to collect two full payments from the government. The amount Mary can receive will depend on a calculation set by Social Security you can also find out the amount with this calculator by clicking on this link https://www.ssa.gov/benefits/retirement/planner/anyPiaWepjs04.html.
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Maximizing Spousal Benefits For Divorced & Widowed Spouses
Now that most of the spousal benefit loopholes have been closed, there are not as many strategies for maximizing your spousal benefits. One of the biggest tips for maximizing your benefits now is to wait as long as possible to start your benefits. Starting benefits early will lead to lower payments while waiting until full retirement age will allow you to receive the highest benefit possible. Remember that waiting past full retirement age does not provide any value when it comes to spousal benefits or survivor benefits. Those benefits will not continue to grow past full retirement age, so there is no need to wait beyond that to start your benefits.
Another important thing to remember when it comes to widowed spouses is the fact that your deceased spouse did not need to reach retirement age for you to qualify for survivor benefits. Even if your spouse died before reaching retirement age or starting benefits, you might still be entitled to receive survivor benefits. Your spouse only needed to earn work credits for a minimum of ten years for you to qualify for a spousal benefit. So, this means that you might be entitled to a benefit even if your spouse passed away years before reaching retirement age.
Spousal Benefits For Widows And Widowers
A widow or widower can receive up to 100% of a spouse’s benefit amount. That’s if the survivor has reached full retirement age at the time of the application.
The payment is reduced to somewhere between 71% and 99% of the deceased’s entitlement if the widowed person is at least 60 but under full retirement age.
Disabled people can apply as early as age 50. The agency has a streamlined application process to avoid delays in the first payment.
You may be eligible for benefits even if your spouse died long before reaching retirement age. Every employee racks up annual Social Security “credits” for working. If your spouse earned credits for at least 10 years, a spousal benefit has been earned.
It’s important to note that it pays to hold off until you reach your “full” retirement age to maximize the amount you will receive.
Also, if you are receiving spousal benefits and your spouse dies, you need to notify Social Security. Your spousal benefit of 50% of your partner’s benefit will convert to a survivor benefit of 100%.
And do it promptly. It’s not usually retroactive.
How To Stop Social Security Check Payments
The SSA can not pay benefits for the month of a recipients death. That means if the person died in July, the check received in August must be returned. Find out how to return a check to the SSA.
If the payment is by direct deposit, notify the financial institution as soon as possible so it can return any payments received after death. For more about the requirement to return benefits for the month of a beneficiarys death, see the top of page 11 of this SSA publication.
Family members may be eligible for Social Security survivors benefits when a person getting benefits dies. Visit the SSA’s Survivors Benefits page to learn more.