You’re not supposed to have to worry about Social Security. It’s supposed to provide the simple, reliable and predictable portion of your retirement income.
Instead, the program is a quagmire of thousands of rules that make it difficult to understand and difficult to make crucial choices.
It isn’t just regular people who don’t understand the ins and outs of Social Security—if you ask a question at a Social Security office, there’s a good chance that the response you receive will be wrong or incomplete. That faulty guidance could cost you a fortune in lost benefits (more on that below). To make matters worse, Social Security rules are occasionally changed in important ways that you might never hear about.
Bottom Line Personal asked economics professor Laurence J. Kotlikoff, PhD, a longtime Social Security expert who recently moved his “Ask Larry” column from the PBS News Hour website to the Forbes website, to provide answers to some of the important and tricky Social Security questions that people have now. In this issue, he focuses on questions related to eligibility and options for claiming benefits. In the next issue, he will explain what you need to know about paying taxes on your benefits and about earning money during your retirement years.
I read that the rules about claiming “spousal benefits” have changed. My wife turns 66 this year. Is she still eligible to claim those benefits, and would it be wise to do so?
You are correct that the rules have changed, but people who turned 62 on or before January 1, 2016, still can claim spousal benefits once they reach their “full” retirement age and they also can earn “delayed-retirement credits” on their own benefits. (Full retirement age is 66 for anyone born between January 2, 1943, and January 1, 1955.) In other words, if you yourself already are receiving Social Security retirement or disability payments, your spouse can start collecting benefits based on your income history while the benefits based on her own income history will continue to grow by 8% for each year that she delays starting those benefits until she turns 70.
But because of the rule change, people who turned 62 after January 1, 2016, and who file for spousal benefits at full retirement age will be “deemed” to also have filed for their own retirement benefits, which means that they will not continue to earn those valuable delayed-retirement credits. To be clear, these people will not receive two benefits. Instead, their monthly check will be equal to the larger of the two types, with the smaller one essentially lost.
Keep in mind that even though the spousal benefit often is described as being half of the wage earner’s benefit, your wife’s spousal benefits will not necessarily be exactly half of your benefits. If, for example, you earned delayed-retirement credits by waiting beyond your full retirement age to file, your wife’s monthly check will not be 50% of the amount reflecting those credits—it will be 50% of the amount you would have received each month had you filed earlier at your full retirement age.
I waited beyond my full retirement age to start my Social Security benefits so that my monthly checks would be larger—but when I received my first check, it was less than I expected. Is Social Security shortchanging me?
Probably not. People who apply to start their retirement benefits after their full retirement age but before age 70 often discover that their initial checks are slightly lower than they expected. That’s because the Social Security Administration takes time to calculate delayed-retirement credits for partial calendar years. For example, say you reached your full retirement age in April 2015 but did not start receiving benefits until July 2016 (15 months later). Your initial checks should include the delayed-retirement credits that you earned between April and December of 2015 (eight months’ worth) but not the credits you earned from January through June 2016. Those credits won’t be payable until you reach January 2017. Even then, it may take the Social Security Administration as long as two years to figure out exactly how much you are owed for the partial year, but when it does, it will not only increase your monthly checks to include your additional delayed-retirement credits, it also will pay you the money that you should have been receiving since January 2017.
My local Social Security office gave me bad information that caused me to start my benefits sooner than I should have, costing me money. Is there any way to get Social Security to compensate me for this?
Possibly, if you can prove that the Social Security Administration gave you the wrong information. But far too often, the Social Security Administration will not make good on the benefits you lost because of its erroneous guidance or, in some cases, even its outright mistakes.
Example: In one case I know, a widow in her 60s asked the Social Security Administration to start her “survivor benefits”—the benefits she was entitled to based on her deceased husband’s earnings. The Social Security employee instead processed her applications for both her survivor benefits and her own retirement benefits—the benefits she was entitled to based on her own earnings history. This widow never asked to start her own retirement benefits, and there was absolutely no advantage to doing so—it did not increase her monthly check by even a penny. On the contrary, starting her own benefits cost this widow the opportunity to earn delayed-retirement credits. The mistake will cost her $357 per month starting on her 70th birthday and continuing for the rest of her life. If she lives to 90, the Social Security employee’s blunder will have cost her more than $85,000.
It is possible to appeal when a Social Security error or faulty advice costs you money, and it could be worth contacting an attorney to represent you if the appeal fails.
I’m about to start receiving my Social Security retirement benefits. My wife is not a US citizen. Can she receive spousal benefits?
The fact that a spouse is not a US citizen does not affect his/her eligibility for spousal or survivor benefits as long as the spouse is living in the US. Your wife will be eligible to receive spousal benefits based on your earnings as long as she meets the eligibility requirements that apply to all spouses—she must be at least 62 years old, for example, and you must have been married for at least one year. (If the two of you were divorced, the marriage would have to have lasted at least 10 years for your ex to qualify.)
If your spouse is not a US citizen, does not have a green card and lives outside the US for six consecutive calendar months or longer, he/she may lose benefits. However, in general, such a spouse could continue to receive benefits if he/she is a citizen and/or a resident of any of more than 20 countries including Canada, Chile, Japan, South Korea and most of Western Europe. Such a spouse also likely could receive benefits if the two of you previously lived together in the US for at least five years. (See SSA.gov/international/index.html for details.)