Texas Estate Planning

What's the Difference Between Medicaid, Medicare, SSI, and SSDI?

If you need assistance paying for long-term care, then you need to look into Medicaid, not Medicare. But if you need health insurance, then it’s a Medicare application you’ll be submitting. And although SSI (Supplemental Security Income) refers to a specific type of program, it’s only a one letter difference from SSDI (Social Security Disability Insurance) which is a completely different benefit program for people with various types of disabilities. 

And when you look into the details of each program, it only gets more complex. So let’s break it down…

There are over one-hundred programs administered under the umbrella of Medicaid out there to help you receive the appropriate health care, insurance, and assistance that you deserve. Because of the sheer number of programs, it can be difficult to find the one best-suited for your needs. Each program has different requirements, guidelines, and limitations. 

Each program is guided by laws that change each year, if not more often, and vary from state to state, depending on the program. It can be quite helpful to get counsel from a licensed attorney in your area who stays up to date on the laws that specifically deal with the program you are applying to. The Attorneys at our Firm stay up to date through consistent continued learning experiences offered specifically for this purpose, and they ensure that every member of the team is made aware of updates and changes in the law so that we can better serve the needs of our community. 

To help you in your search for the program that best fits you and your family’s needs, here is a very quick rundown of 4 common programs that are easy to confuse: 

 

1. Medicaid: 
   • Health coverage (which is legal entitlement to payment or reimbursement for your health care costs)
   • Funded and administered jointly by the state and federal governments. This means that each state has different laws regarding Medicaid.
   • Income and asset limit 
   • Available to low-income: 
     1. Adults
     2. Children
     3. Pregnant women
     4. Elderly adults 
     5. People with disabilities 
   • Can be used for: 
     1. Long-term care 
     2. Inpatient and outpatient hospital services
     3. Physician services
     4. Lab and x-ray services
     5. Home health services 
2. Medicare: 
   • Health insurance 
   • Administered by the federal government 
   • Eligibility is based on: 
     1. Age (65 or older) 
     2. Certain younger people with disabilities 
     3. People with End-Stage Renal Disease 
   • There are various Medicare plans based on your eligibility and needs. 
3. SSI (Supplemental Security Income): 
   • Supplemental monthly income 
   • Eligibility is based on:
     1.  income and asset limits 
     2. disability
     3. Age 
        • Adults: 65+, or blind, or have a disability 
        • Children: under 18 and have physical or mental condition(s) that very seriously limits their daily activities for a period of 12 months
4. SSDI (Social Security Disability Insurance): 
   1. Supplemental monthly income 
   2. Means-tested based on disability and recent work history 
      1. Includes income and asset limits 
   3. Same medical requirements as SSI 

 

Hopefully that helps give you a better picture of where to start in your search for the programs that you or your loved ones might need. Remember that each state has their own set of laws regarding benefit programs and a licensed attorney with an understanding of these programs can be a helpful resource in navigating the application process. 

Ard Law Firm, PLLC is located in the Greater Houston Area, off I-45 south on the way to Galveston, but is able to serve all of Texas. Over the last decade, we’ve focused on Medicaid to help people transition into long-term care without large financial burdens.

We work with our clients to get their information together in order to apply for the benefits they deserve, and if obstacles come up along the way we work together to overcome them. Whether that means drafting legal documents, conducting research, or even arguing appeals, we walk with you on your journey, every step of the way.

What Factors Impact Social Security Check?

The amount of your Social Security retirement check and how much can you keep are the subjects of Money Talks News’ recent article entitled “9 Factors That Impact the Size of Your Social Security Check.” It examines the deciding factors behind the size of your check and how much goes into your pocket.

1. Your work history. As far as Social Security, your retirement age isn’t when you quit work but when you start taking Social Security benefits. To calculate the size of your monthly benefit check, the Social Security Administration (SSA) uses a formula that takes into account your 35 highest-earning years and when you start receiving Social Security benefits.
2. Your earning history. The size of your Social Security checks also depends on the amount you earned in each of those 35 top-earning years. The formula measures earnings, not work. If you don’t have 35 years’ worth of earnings, Social Security assigns a $0 value for each non-earning year. The $0 years lower your benefit amount. However, working more than 35 years can’t hurt this calculation. In fact, you can grow your monthly retirement check if: (i) you add earning years to replace zero-earning years; and (ii) you replace lower-income years with higher-earning years.
3. When you were born. The year of your birth determines your “full retirement age,” which is a benchmark for your benefits set by the Social Security Administration. For those born between 1943 and 1954, full retirement age is 66. If you were born in 1960 or later, your full retirement age is 67.
4. Your age when you claim. Social Security allows retirees to claim benefits and receive retirement checks as soon as 62. However, you can’t earn the full amount you are due at that time. You have to wait until your full retirement age. Claiming sooner permanently lowers your monthly benefit amount. If you wait even longer than your full retirement age, you can increase your Social Security benefit, which is also permanent. You increase your monthly benefit for each month you delay claiming until 70. The most your monthly benefit can grow is 8%. You’ll get that by waiting for your 70th birthday before claiming benefits. The increases stop at that age.
5. A spouse who worked. There’s a “spousal benefit.” If your spouse earned more than you (and is receiving benefits), you might be eligible for a higher payout. It’s up to half of your spouse’s “primary insurance amount,” depending on what age she or he claimed Social Security. Usually, you must be at least 62 to do this. The benefit increases if you delay claiming until your full retirement age.
6. The state of the economy. Once you’re getting Social Security, your monthly benefit is typically fixed. However, inflation affects those on fixed incomes. As a result, Social Security law tries to compensate with automatic cost-of-living (COLA) adjustments (a boost to the monthly benefit). These are based on the national rate of inflation.
7. Whether you keep working. This is an exception to the rule of thumb that Social Security payments are fixed after you claim benefits. Working after you start collecting benefits can increase your Social Security payment. Your benefit formula is recalculated once a year to include your new earnings, and if your latest year of earnings is one of your highest years, the SSA recalculates your benefit and pays you any increase due. With each year of higher earnings, Social Security replaces a lower-earning year in the formula. However, if you’re younger than full retirement age, you could end up temporarily lowering your benefit if you earn too much at work. When you reach your full retirement age, the penalty stops, and your benefit amount is adjusted to compensate you for the period benefits were withheld.
8. Whether you have other income. If your income is under $25,000 for a single filer or under $32,000 for a couple filing jointly, you don’t pay federal income tax on your benefit checks. If not, your benefit is taxed on up to 50% or 85% of the total amount.
9. Your location. If you live in one of the 12 states that tax Social Security benefits, you may also owe state income tax on your benefit check.

Reference: Money Talks News (Sep. 19, 2022) “9 Factors That Impact the Size of Your Social Security Check”

What’s the Limit for Earning with Social Security?

Money Talks News’ recent article entitled “How Much Can I Earn Before Hurting My Social Security?” says there’s a key difference between retiring and claiming benefits. They don’t have to be done at the same time. They are two separate decisions.

If you can wait to claim beyond your full retirement age, you can really increase monthly benefits. Therefore, if you wait until age 70 to claim, your benefit will be 32% higher than the benefit you’d get if you claim at full retirement age.

Of course, the amount of flexibility you have in delaying claiming depends on what financial resources you have to tide you over until deciding to claim. If you have enough savings, you should think about how low interest rates are today and how little return you get in a savings account. As a result, spending savings now so you can claim benefits later, can lead to much higher benefit income from Social Security in the future.

However, if you don’t have sufficient savings, you’re probably not going to be able to delay claiming, unless you keep working. Therefore, then you should understand the impact continuing to work has on your Social Security benefits.

Continuing to work may increase your future benefits. This will happen if your present income that is subject to Social Security taxes is higher than your income in the past. Your benefits are based on your highest 35 years of earnings, adjusted for inflation. You might also be subject to the earnings test. If you’re not yet at full retirement age, Social Security might reduce your present benefit based on how much you earn.

Benefits lost because of the earnings test will increase benefits at full retirement age, so they aren’t really “lost.” However, the earnings test doesn’t apply once you reach full retirement age.

Therefore, continuing to work will not only bring in more income, but can possibly increase the baseline calculation of your benefits.

If, in addition, working lets you wait to claim your benefits, it could significantly increase the Social Security payments you receive for the rest of your life.

Reference: Money Talks News (Nov. 18), 2021) “How Much Can I Earn Before Hurting My Social Security?”

Social Security Retirement Age Changing and What Does that Mean to Payment?

US News’ recent article entitled “The Social Security Retirement Age Increases in 2022” examines the way in which the Social Security retirement age is changing, and what this means for your retirement payments.

The full retirement age (FRA) was 65 for those born in 1937 or earlier. Those born between 1943 and 1954 have a full retirement age of 66. The full retirement age further increases in two-month chunks each year to 66 and 10 months for those born in 1959. That is up from 66 and eight months for those with a birth year of 1958. The FRA for those who turn age 62 in 2022, born in 1960, is now 67. The full retirement age will remain age 67 for everyone born in 1960 or later.

Workers who are eligible for Social Security can being receiving payments at age 62, regardless of their full retirement age. However, the benefit reduction for early claiming is more for those who have an older retirement age. You get less if you start early or more if you delay until later. Every month you delay Social Security up to age 70 gets you a higher monthly payment for life.

For a worker eligible for a $1,000 monthly Social Security benefit at his full retirement age, claiming at age 62 will reduce his monthly payment to $750 if his birth year is 1954 and $700 if he was born in 1960.

Social Security's annual cost-of-living adjustments will be also applied to these reduced payments, resulting in a smaller dollar value of the inflation adjustments.

You can up your monthly payments by delaying claiming Social Security after your FRA age up until age 70. However, those with an older retirement age have fewer months to delay claiming Social Security and less of an opportunity to earn delayed retirement credits. If a person files at age 70, with a full retirement age of 66, it means they waited 48 months beyond full retirement age, so they would get 132% of their primary insurance amount. However, if they file at 70 with a full retirement age of 66 and six months, that means they waited 42 months beyond full retirement age, so they would only get 128% of their primary insurance amount.

Your age when you start to claim Social Security significantly impacts the amount you will receive throughout retirement. Whatever your birth year, there are ways to boost your monthly Social Security payments. You can delay claiming, continue to work and coordinate benefits with a spouse.

Reference: US News (Jan. 24, 2022) “The Social Security Retirement Age Increases in 2022”

What Do People Get Wrong About Social Security?

Social Security is a major source of income for many retirees. However, people frequently misunderstand even basic concepts behind this government program. That was the finding of a survey by the Nationwide Retirement Institute of about 2,000 Americans, age 25 and older.

Money Talks News’ recent article entitled “6 Things Many Americans Get Wrong About Social Security” looks at a few of the things that many people mistake about Social Security.

Maximum benefits. About 54% of Americans who aren’t already getting Social Security benefits say they know how to optimize those benefits. That confidence may be unfounded. In fact, only 6% could name all the factors that go into determining a person’s maximum benefit. The IRS says those factors are:

• Your lifetime earnings, indexed to account for changes in average incomes over time;
• When you start claiming Social Security, whether it’s early, at full retirement age, or deferred;
• Cost-of-living adjustments that begin at age 62, regardless of whether you are receiving benefits; and
• Whether you have a pension from certain government jobs.

Spousal and child benefits. These are valuable provisions of the program, but 30% of Americans don’t know that they exist. There are several situations when spouses and dependents can claim benefits from a person’s Social Security record.

Inflation protection. Inflation drives up the cost of goods and services over time, and Social Security has built-in inflation protection in its annual cost-of-living adjustments. These are known as COLAs. These annual bumps are tied to the federal Consumer Price Index for Urban Wage Earners and Clerical Workers. In 2021, Social Security beneficiaries received a 1.3% increase in benefits. The COLA for 2022 is 5.9%, the largest increase in 10 years. The survey found that 37% of Americans don’t know that the Social Security program provides inflation protection.

Eligibility age. The age at which you’re eligible to get your full retirement benefits from Social Security depends on when you were born. Roughly 39% of respondents survey didn’t know that answer. Everyone eligible for Social Security can start claiming benefits at age 62, but if you do, your monthly payments could be reduced by as much as 30%. To receive your full amount, you’ll need to wait for your full retirement age, which is based on your birth year:

• 1943-1954: Your full retirement age is 66;
• 1955: 66 and 2 months;
• 1956: 66 and 4 months;
• 1957: 66 and 6 months;
• 1958: 66 and 8 months;
• 1959: 66 and 10 months; and
• 1960 and later: your full retirement age is 67.

No adjustments after early payments. Almost half (45%) of those surveyed think that if they claim Social Security benefits early, their monthly payments will receive a boost when they reach full retirement age. Nope. If you start benefits before your full retirement age, you’ll have a lower base amount for your monthly checks than if you had waited. That’s usually permanent, but if you continue to work, you may increase it. Regardless of your age when you claim benefits, you will receive annual COLA increases.

Payment amount. It’s difficult to properly plan for retirement if you don’t know how much money you’ll have. Even so, more than half of those polled who are not already receiving benefits (51%) don’t have a clear understanding of how much their Social Security payments will be.

Reference:  Money Talks News (Nov. 4, 2021) “6 Things Many Americans Get Wrong About Social Security”

What are the Scariest Statistics for Retirement?

Think Advisor’s recent article entitled “11 Scariest Retirement Statistics: 2020” says that there is a lack of preparation, savings difficulty and general uncertainty that American retirees are facing. Here are those scary stats:
1. Just a quarter of Americans are on a trajectory to maintain their lifestyles in retirement. The other 75% will need to work longer, move to lower-cost housing and cut spending to maintain their standard of living, largely due to the coronavirus downturn.
2. The Social Security trust funds would be empty by 2023, without the payroll tax. While President Trump let employers temporarily defer the employee portion of payroll taxes, he said the deferred taxes could later be forgiven, or the cut made permanent. When he signed the order, he vowed to “terminate the tax,” if reelected. Republican lawmakers subsequently debuted a plan to fund any shortfalls from the Treasury.
3. Social Security benefits will be decreased by 21% if the trust fund runs out. Congress will have to intercede, or it could happen 10 years from now, if not sooner.
4. Those born in 1960 will have a big problem because of the complicated formula the Social Security Administration uses to calculate benefits. Pre-retirees born in 1960 will see a nearly 15% cut to their lifetime benefits from Social Security when it’s time to collect. If the pandemic suppresses the economy into 2022, those cuts will impact more pre-retirees. The impact to their Social Security benefits will also be permanent.
5. The 2021 Social Security cost of living adjustment, or COLA, will be just 1.3%. Retirees should note that rising health care costs and a potential 6% increase in Medicare Part B premiums may absorb that benefit increase.
6. More than 50% of Americans think the economy is worse now than in 2008, with 51% of Americans seeing the COVID slowdown as worse than the 2008 recession. A survey from Edelman Financial Engines also found that 26% had withdrawn money from retirement or savings for living expenses.
7. About 60% of retirement savers have fallen behind, according to a TIAA study. Among these, 30% said it was directly due to the pandemic.
8. Internet searches for “move out of the U.S.” have increased 16 times. International Living magazine says it had seen the jump in search traffic around the phrase since May. A total of 20% of respondents in a survey it conducted also said they wanted to move due to the pandemic. However, just 45% cited a desire to save money.
9. Approximately 42% of investors sold stock, and most of them (88%) of them regretted it. In response to the drop in stocks in mid-March last year, 42% of investors in a survey by MagnifyMoney sold at least one stock and 24% sold all their holdings. About 69% of those who sold stock at the start of the pandemic greatly regretted it, and 19% said they were somewhat regretful.
10. Roughly 80% of older Americans don’t understand retirement planning and don’t know the basics of how to successfully plan for a financially secure retirement, according to a study by The American College of Financial Services. The survey also found only 30% of respondents had a plan in place to fund long-term care needs, and just one in four actually had long-term care insurance.
11. About 3 million workers may have been driven into early retirement due to the pandemic. From March to August of 2020, 2.8 million older workers might have been pushed out of their jobs prematurely, with economic turmoil and poor health making it hard for them to resume their careers elsewhere, according to by the Schwartz Center for Economic Policy Analysis at the New School. The report found that 38% of unemployed older adults stopped looking for work and left the workforce, and an additional 1.1 million were expected to do likewise.
Reference: Think Advisor (Oct. 30, 2020) “11 Scariest Retirement Statistics: 2020”

How to Prevent The Top Six Retirement Planning Mistakes

One of the biggest mistakes people make with their retirement, is not realizing what they don’t know, says the Chicago Sun-Times in the article “The 6 biggest retirement mistakes—and how you can avoid them.” By misunderstanding how Social Security works, underestimating life expectancies or failing to plan for big expenses, like long-term care or taxes, people put themselves and their families in financial binds.

These are not the people who make an effort to educate themselves. They are sure they know what’s what—until they realize they don’t. Most people don’t seek out objective advice before they retire. They wing it, hoping things will work out. Often, they don’t.

Retirement is complicated. Here are the top six most common mistakes:

Expecting to die young. If you die young, you have fewer worries about retirement funds. Live a long life and you could easily outlive your retirement savings. One smart move is to wait to collect Social Security as long as possible. Each year you put it off from age 62 to 70, increases your benefit by 7-8 percent.

Ignoring your spouse’s needs. One of you will die first. When that happens, one of your Social Security checks goes away. The survivor will need to get by on only one check. This is why it is vital to maximize the survivor benefit, by having the higher earner delay filing for Social Security as long as possible.  Married people who receive a pension, should consider a “joint and survivor” option that lets payments continue for both lives.

Bringing debt into retirement If you’re rich, debt may not be a big deal. You have plenty of income to make payments. Your investments may be earning more than you are paying in interest payments. However, if you are not rich, are you pulling too much from your savings to pay down the debt? This would increase the chances you’ll run out of money. If you take big withdrawals from retirement accounts, it could push you into a higher tax bracket and increase your Medicare premium. Try to get rid of your debt before retiring. However, be careful about tapping retirement accounts to pay off big debts, like a home mortgage.

Neglecting to plan for long-term care. Someone turning 65 today has a 70 percent chance of needing help with daily living tasks, like bathing, eating or dressing. Family and friends may be willing to help, but about half will need long-term care, at a cost of $250,000 a year or more. Long-term care insurance is the most obvious solution. However, if you didn’t purchase it when you were healthy, you may need to earmark certain investments, or consider tapping your home equity to pay for this cost.

Thinking you’ll just keep working. About half of retirees report leaving the workforce earlier than they had planned. Most retire because they lose their jobs and cannot find a replacement job or can’t find one at the same income level as their previous job. Others retire because of ill health or the need to stop working to care for a loved one. Working longer can help you make up for not saving enough, but don’t count on it.

Putting off retirement too long. Consider time, health and energy as finite resources. Spend the time and money to speak with professionals, including an estate planning attorney and a financial advisor, to determine when you can retire, prepare an estate plan and enjoy retirement.

Reference: Chicago Sun-Times (September 23, 2019) “The 6 biggest retirement mistakes—and how you can avoid them.”

Can You Get More from Social Security?

Social Security is a complicated program for many Americans, who struggle to figure out what benefits they are eligible for and when they should apply for benefits. However, just because the system is complex, doesn’t mean you can figure it out. This article from The San Diego Union-Tribune titled “17 ways to get more from Social Security” can help.

Right now, now matter how far away your retirement date is, go to the agency’s website and create a “my Social Security” account. Make sure that all of the information about you, your earnings and the amount of money you have already paid into Social Security is correct.

Put in your 35 years of working. Your payments are based on your highest 35 years of income, so don’t skip out. Years with zero income will have a big impact on the average earnings calculation.

Work longer and delay your claim. If you can hold off on claiming Social Security, you‘ll be rewarded with a bigger monthly benefit. Yes, you can begin taking benefits as early as age 62, but your benefit will be reduced for the rest of your life. Every year you work beyond your full retirement, increases your benefit by 8% until you reach 70. Still working in your 60s and making good money? Keep working and bank more high-earnings years.

Alternatively, apply as early as you can. If your health is not great, start collecting benefits at age 62. True, you won’t receive as much money as you would if you held off, but you may get more money overall than if you waited for bigger benefits.

Don’t let the feds get your Social Security benefits. Here’s one of those big complications. You could lose a portion of your benefits to federal income tax. If you and your spouse file taxes jointly, up to 85% of your benefits could be taxable. However, that’s only if your adjusted gross income plus your nontaxable interest plus HALF of your combined Social Security benefits equals $44,000 or more. How do you avoid that tax trap? Work less in retirement or do more planning in advance. One tactic is to roll savings into a Roth IRA, because Roth withdrawals don’t usually count towards your taxable income.

Move to another state, if your state taxes Social Security.  Look before you leap: some of the states that tax benefits may be more tax friendly than others.

Take advantage of spousal benefits. If your life partner has earned more than you, you can receive a benefit based on your own earnings or one that’s equal to 50% of your spouse’s benefits. Your spouse’s benefits won’t be impacted.

Divorced? If your marriage lasted more than ten years and you have not remarried, you can get Social Security benefits based on a former spouse’s earnings. Delay your divorce, if you can, to reach that ten year mark. If possible, push the finalization of the divorce back, if you are near the end of the process.

Talk with your spouse about their benefits and timing. If your spouse has similar income and your spouse is ready to retire at full retirement age, you could collect a spousal benefit while continuing to work past full retirement age yourself. The rules changed November 2015, but you may still qualify if you were born before January 2, 1954.

For surviving spouses and exes. If your spouse or your ex has died, you can collect their benefit amount if it’s greater than your own. You can do this starting at age 60. There is no need to wait until your full retirement age. However, you should be careful, since the amount is based on age, marital status, remarriage and other factors.

A second chance. If you took benefits at age 62, and then found a job, you can pay the money back to collect a larger benefit later. You can only do this once, and you only have 12 months in which to do it.

Unemployed? If you’re laid off and collecting unemployment, you might be able to collect unemployment and Social Security at the same time. Check your state’s rules—there may be a “claw back” provision to unemployment.

Don’t earn too much in retirement. Younger than full retirement age, Social Security cuts $1 from benefits for every $2 you earn over $17,640. Are you older than full retirement age? Benefits shrink by $1 for every $3 earned above $46,920.

Get a second or third opinion. Social Security can be complicated, and you don’t want to make an expensive mistake. Talk with your estate planning attorney to get their input about your situation, while you are having your estate plan created or reviewed.

Reference: The San Diego Union-Tribune (September 16, 2019) “17 ways to get more from Social Security”

Social Security Scams Continuing to Steal From Victims

Con artists are always developing new scams, and while Social Security is their primary bait right now, don’t be surprised if they switch to a new tactic. One critical thing to be aware of: Social Security will send you a letter, if there is any kind of problem with your account, says Forbes in the article “Beat The Latest Scams to Steal Your Identity and Social Security Benefits.” You will never get a phone call from Social Security demanding that you purchase gift cards.

Not so long ago, scammers were telling their victims that they were from the IRS and needed immediate payment. That scam, which was traced to call centers in India, is now greatly reduced and many of the perpetrators have been arrested.

However, every time one scam gets shut down, two others spring up to take its place.

The Social Security scam is hitting cities and towns nationwide. The caller says that the person’s Social Security number has been suspended due to fraudulent activity involving the number. The scammer says that the person being called must take immediate action to have their number reinstated.

Sometimes the caller is belligerent and nasty. Other times, a softer tone is taken, and the caller says they need only to confirm the person’s Social Security number, because the computers are down and their help is needed, so the account is not suspended. Another scam comes in via email, requesting that the person click on a link and follow the instructions to provide their Social Security number.

Regardless of the form of contact or the approach, the scammer’s goal is to get your Social Security number, other personal information and gift card numbers that are swiftly transformed into cash.

The Social Security Administration and the Federal Trade Commission have both advised that neither organization will call or email people under either of these circumstances. If Social Security finds a problem, you’ll receive a letter.

Social Security does send emails from time to time to remind people to review their benefits statements and check to make sure their earnings history is correct. These emails only arrive, if you have established a “my Social Security” account on the government website.

To be safe, don’t click on any links from any emails about Social Security. The email address, just like the caller ID on your phone, could be spoofed. To check your earnings history, go to the Social Security website on your own computer. You can also call the local Social Security office, or the national 800-number.

Another scam can occur, if spammers do get your Social Security number, which sadly is available for sale online. They will open your “my Social Security” account in your name and change the address and the financial account where benefits are deposited. If you aren’t already receiving benefits, they apply for your benefits and have them directed into the scammer’s accounts. It’s best to open up a “my Social Security” account of your own, even if you don’t plan on collecting benefits for several years.

On that account, you’ll be able to check your benefits, earnings history, and see if anyone else has applied for benefits in your name or tried to change the financial account where your benefits are deposited. It’s a good idea to log into your account every few months to see if there’s been any activity, especially if you are at least 62 and don’t plan on applying for benefits for a while.

Reference: Forbes (August 14, 2019) “Beat The Latest Scams to Steal Your Identity and Social Security Benefits.”

The Secret to Spousal Benefits for Social Security

Whether you are married now or were married in the past, it’s likely that you are eligible for Social Security spousal benefits, as reported in the article “How to Maximize Social Security With Spousal Benefits” from U.S. News & World Report. Spouses who devote their lives to raising families and performing other tasks that are of value to society are entitled to a spousal benefit, based on their spouse’s primary insurance benefits. If you decide to take spousal benefits, the amount you receive will be determined by a few factors, including your spouse’s full benefit, when you begin payments and your own work history.

Here’s what you can expect when applying for Social Security spousal benefits:

• You may receive up to 50% of your spouse’s Social Security benefit,
• You can apply for benefits if you have been married for at least one year.
• If you have been divorced for at least two years, you can apply if the marriage lasted ten or more years.

You should be aware that if you start taking benefits early, it’s likely that your own benefits will be smaller than if you took them later. If you have a work history of your own, you’ll either receive your own benefit or your spousal benefit, whichever is greater.

Want to maximize your spousal Social Security benefits? Start by learning what your benefit would be, and then look at the timing. When you decide to claim will have an impact on your benefits. You’ll need to have been married for at least one year before applying. You also need to be at least 62 years old.

Your spouse must also have started to apply for benefits for you to claim spousal benefits.

If you have been divorced, you must have been married to your ex for at least ten years to be eligible for a spousal benefit through your ex’s Social Security. What’s more, you will have to have been divorced for at least two years, and still be unmarried. If you are considering divorce, are near retirement and are planning on a spousal benefit, it’s a good idea to consider electing your spousal benefits before the divorce is finalized.

If there have been multiple marriages and divorces, you can choose to take the highest spousal benefit, if the other requirements have been met. Make sure to save your ex’s Social Security numbers and their dates of birth, just to make the enrollment process easier.

If you have a work history of your own, you may be eligible for a personal benefit. If this is the case, you can receive your own benefit if it is greater than the spousal benefit. Let’s say you are eligible for $1,000 as a personal benefit and $500 for a spousal benefit. The Social Security Administration will send you the higher amount of $1,000.

There’s plenty of information about spousal Social Security benefits on the Social Security Administration’s website or at your local SSA office.

Your spousal benefit will be 50% of your spouse’s benefit at their full retirement age. In 2019, the full retirement age is 66 and will rise soon to 67.

Therefore, if you are married and your spouse is collecting $2,000 a month, your spousal benefit would be $1,000, if you wait to start payments at your own full retirement age.

Note that spousal benefits do not grow until age 70, like personal benefits. Instead, they max out at full retirement age. A a result, there’s no benefit to delaying a spousal benefit claim past your full retirement age.

Should you need to collect spousal benefits before your full retirement age, expect to receive a lower amount. Filing early for spousal benefits reduces your income forever, but many people file because they need the income.

Reference: U.S. News & World Report (July 10, 2019) “How to Maximize Social Security With Spousal Benefits”