Last Week’s Question of the Week: At what age are you required to take RMD’s from your ROTH IRA’s? ANSWER: You are not required to take RMD’s from Roth IRAs at any age.
HOST: So, today you are talking about the idea of collecting Social Security based on your spouse’s benefit vs. your own benefit?
KLAAS FINANCIAL: Yes, so for those who have earned enough credits to collect a social security benefit on their own record ( 40 credits over 10 years, $1320 per credit in 2018), you can simply collect at age 62, a partial amount, or your full amount at age 66/67 depending on your age.
But, if you have not worked, or paid Social Security tax, or you do not have enough Social Security credits to qualify for your own Social Security benefits, you may be able to receive spouse’s benefits.
To qualify for spouse’s benefits, you must be:
- At least 62 years of age; or
- Any age and caring for a child entitled to receive benefits on your spouse’s record who is younger than age 16 or disabled.
If you start receiving benefits as a spouse at your full retirement age, you will get 50% of the monthly benefit your spouse would receive if their benefits started at full retirement age. Your benefit will be permanently reduced, if you start receiving benefits at
- age 62, you will get 35% of the monthly benefit instead of 50% because you will be getting benefits for an additional 48 months; age 65, you will get 45.8% of the monthly benefit instead of 50% because you will be getting benefits for an additional 12 months.
- If you do have enough credits to qualify for your own Social Security benefits and you apply for your own retirement benefits and for benefits as a spouse, YOUR benefits are paid first. If your benefits as a spouse are higher than your own retirement benefits, you will get a combination of benefits equaling the higher spouse benefit.
HOST: So, if my spouse qualifies for $2500 per month, and I never worked outside the home, I am eligible to take $1250 per month off my spouse’s record?
KLAAS FINANCIAL: Yes, so if you are married and have no Social Security benefit coming from your own record:
- You are entitled to all of your benefit or half of your spouse’s benefit, whichever is greater (be aware of age discounting).
- You must be married for at least a year. They would have their benefit and you collect ½ of theirs.
- So, if you did work you can collect the higher of the two benefits, off of your record, or ½ of your spouses.
HOST: What about divorce and social security?
KLAAS FINANCIAL: Great question, don’t do it. But, if your marriage lasted at least 10 years, you may be able to get benefits on your former spouse’s record, even if they have re-married and if you are still unmarried.
HOST: What happens when one person in a couple passes away, in terms of SS benefits for a household?
What about divorce and social security?
KLAAS FINANCIAL: Since the average current benefit is around $1372 (in 2018) for a person, and if both have been collecting, keep in mind what happens when one person passes. Discuss that upon your death, no benefit from SS will continue to your family (similar to a pension); YOU will at that point only keep the highest benefit of the two.
Also, remember that that there is a special widows benefit which can provide for reduced benefits as early as age 60. You probably know people who are receiving Social Security survivors benefits because they’re a widow or widower. According to Social Security, Presently, there are about 5 million widows and widowers receiving monthly Social Security benefits based on their deceased spouse’s earnings record. And, for many of those survivors, particularly aged women, those benefits are keeping them out of poverty.
HOST: Is there a death benefit available from Social Security?
KLAAS FINANCIAL: Yes, there is a lump sum Social Security Death Benefit. A spouse (who is living in the same household) can receive a one-time lump sum benefit of $255.
HOST: I heard that even once I start collecting Social Security, my benefit can still grow?
KLAAS FINANCIAL: Actually, yes!
Something else to know it that Social Security does have Annual cost-of-living adjustments (COLAs), first initiated in 1972, are based on the Consumer Price Index for the July/August/September quarter of the previous year. In 2018, the COLA did increase about 2 percent — the largest increase since 2012.
HOST: Anything else we need to know about Social Security? I mean, will it still be there when I go to retire?
KLAAS FINANCIAL: Great question. There is a lot to understand about Social Security as it may pertain to your specific situation.
- Yes, we believe it will still be there, but the form and the taxation may be different.
- Some pensions can have Social Security offset due to not paying into the Social Security system (ex: post office employees).
- Visit www.ssa.gov to establish a login and get information about Social Security.
Catch C.J. Klaas and Maleeah Cuevas on Money in Motion every Thursday on Madison's 1310 WIBA from 8:05-8:35am.