I frequently hear from readers who tell me about Social Security-related advice they got from a friend or relative, or from a Social Security Administration representative. They are writing to ask me if the information they received is correct. Sometimes it is. But many times, it’s not. Actually, let me clarify that. Social Security information they get from a friend or neighbor or relative is frequently wrong. The advice they get from an SSA rep is usually right. But sadly, more than a few times, it’s also been wrong. (I’ve written past columns about this issue, primarily blaming the lack of training that current SSA representatives get.)
Anyway, when the information is wrong, I of course try to set them straight. But then I sometimes place myself in the shoes of the questioner, and I wonder if they think this: “Why should I believe this guy?” After all, the advice or answer I give them becomes just one more piece of their Social Security puzzle. What makes my answer more reliable than the answer they got from the other person, or other people?
Well, all I can tell you is this. No. 1: I worked for the Social Security Administration for 32 years — in a variety of increasingly responsible jobs in a variety of locations around the country. No. 2: I never really thought of myself as just another government bureaucrat. I was always a student of the history of Social Security. I was keenly interested in Social Security laws and rules, but also in the rationale behind those laws and rules. No. 3: I’ve been writing this column for the past 25 years. No. 4: I’ve written a book about Social Security that from time to time shows up on Amazon’s “bestseller” list.
So, bottom line: I know Social Security pretty darn well and I think you can trust the answers I give you. And now, here are examples of questions from people who got some bad information about their Social Security situations.
Q: I’m 63 and I’m planning to wait until I’m 70 to file for my Social Security. My wife just turned 62. My wife didn’t work much outside the home, so her Social Security benefit is much smaller than mine. I was planning to have her file for Social Security now and then switch to part of mine when I turn 70. But a Social Security rep told us over the phone that she can’t do that. He said if my wife files for her benefits now, she can’t switch to mine later on. Is that true?
A: It’s absolutely false. What you wanted to do is a very common occurrence and I’m surprised the SSA rep you talked to didn’t know that. Many thousands of women start out getting their own Social Security benefit. Then when the husband files at a later date, they can file for whatever extra spousal benefits they might be due.
In fact, here is roughly how they will figure your wife’s spousal rate once you file at age 70. They will take her full retirement age benefit and subtract that from one-half of your full retirement age benefit. (Not your age 70 rate.) Any difference will be added to your wife’s reduced retirement benefit.
Before I end this discussion, I must clarify something. Some of you may remember that I’ve said many times that when people file for Social Security, they must file for any other benefits they are due at the same time. For example, if the guy who asked this question were already getting his own retirement benefits, then his wife must simultaneously file for her own benefits and whatever spousal benefits she might be due.
But in this situation, at the time this woman would file for her Social Security, the husband is not yet getting any benefits. So, this so-called “deemed filing rule” doesn’t apply in her case. She can file for her own benefits now, and later, once her husband files, she can claim the extra spousal benefits on his record.
Q: I am 59 and recently retired. My husband is 67 and already getting Social Security. A friend told me I can get my husband’s benefits at 60 and then switch to my own later on. Is this true?
A: If you were a widow, you could do that. But it sounds like your husband is very much alive. In that case, you have to wait until you are 62 years old before you’re eligible for any Social Security. And because your husband is already getting benefits, the deemed filing rule mentioned above applies. So, you’d have to file for your own benefits first. Then IF you are due any extra spousal benefits, you would file for them at the same time. But you notice that was a pretty big IF. At 62, you’d be due about 70% of your own benefit, or about 30% of his. And I’ll bet your own benefit is more than 30% of his.
Q: I’m 62 and still working part time making about $40,000 per year. My financial adviser told me I should take my Social Security now and invest that money in real estate. But a neighbor told me that the government will take back some of my Social Security because of my earnings. Who’s right?
A: Unless there is something about your situation I don’t know, your financial adviser is wrong, and your neighbor is right.
People who are under their full retirement age and still working usually are not due any Social Security benefits. Let’s look at your situation. The law says that for every $2 you earn over a prescribed limit, $1 must be withheld from your Social Security checks. The 2022 limit is $19,560. So, your $40,000 in earnings are $20,440 over that limit. And half of that, or $10,220 must be withheld from any benefits due this year. Let’s say your benefit rate is $2,500 per month. If you filed now (in August), you’d be due five Social Security checks for 2022 totaling $12,500. But from that, the SSA would have to withhold $10,220, leaving you with only $2,280 to invest in real estate. I’ve got a barn in my backyard worth about that if you want to buy it. So, I suggest you wait until you retire or turn full retirement age, whichever comes first, to file for Social Security and start your real estate adventures.
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