Dina Milne: Welcome to another episode of The Adviser You Can Talk To Podcast. My name is Dina Milne and I’m an account executive here at Adviser Investments. We are very excited to bring you the second episode of a three-part podcast series all about Social Security. I’m joined today by Alec Rosen, who is a certified financial planner and also our resident Social Security expert. Today, Alec and I want to cover how you can get the most out of your Social Security benefits. So Alec, where do we want to start? There’s a lot more to one Social Security benefit that people may not realize. What do we want people to know?
Alec Rosen: Hi, Dina. I’m excited for us to dive into this topic because I think a lot of people don’t always get their full retirement benefit. Our goal today is to explore some situations that might help folks maximize their benefits through Social Security.
Just as a recap, in our first episode we talked all about the fundamentals of Social Security and also the history of the program. We also discussed waiting until age 70 and the advantages that can bring.
Today, we want to dive in a bit deeper and talk more about some of the benefits folks may not realize they’re eligible for. There are really three topics we want to focus our conversation around today: Spousal benefits , disability benefits and death benefits.
Dina Milne: Well, Alec, why don’t we start with spousal benefits because they’re rather straightforward.
Alec Rosen: Yeah, Dina, I think that’s a great place to start. Put simply, you can claim a Social Security benefit based on your own earnings records, or you can collect on a spousal benefit that will provide you essentially 50% of the amount of your spouse’s Social Security benefit. I think that’s going to be the theme of today: You can’t take two benefits in Social Security. You either need to take your own, or you need to take the spousal—or in the later stage we’ll talk about death benefits. But we can’t overlap these benefits when it comes to Social Security checks. The other thing I might just mention is that you must be married for a year in order to be eligible for spousal benefits through Social Security.
Dina Milne: That’s good to know. Now the perfect example for spousal benefits I would say would be a stay-at-home mom. She may have worked for a couple of years and then stayed at home with the kids and gone back to work much later, and so her benefit might be a lot smaller than the spousal benefit, which is 50% of her spouse’s.
Alec Rosen: And we see that often here so I think that’s a really good point you made there, Dina. Let’s talk about divorce benefits because they can also be plentiful right?
Dina Milne: That’s right. Now there are certain criteria that you need to keep in mind. If you’re divorced, you need to have been married for at least 10 years. You need to be divorced for at least two years. You should be 62 years or older to get the full benefit, and your benefit should be smaller than your ex-spouse’s. Something to keep in mind as well is that your ex-spouse doesn’t have to have claimed their benefit.
Alec Rosen: I think that’s very important to point out. Moreover, you can be eligible for benefits even if your ex-spouse has remarried. Some folks can get caught up in the weeds here. It’s worth exploring if this falls into your camp.
Dina Milne: That’s true. Just keep in mind though that if you have remarried before the age of 60—and are still married—you don’t qualify for this benefit.
Alec Rosen: That’s right. We joked around the office here, but a friend of ours, or at least someone we all seem to know, the late Johnny Carson, talk show and comedian host. He was married multiple times, but there were still benefits around. Right, Dina?
Dina Milne: That’s true. He was married four times. His first marriage lasted about 15 years, the second for nine and the third for 13. He was still married to his fourth wife when he passed away in 2005, and they had been married for 18 years. Now, assuming that the ex-spouse rules were the same as today, his first and third wives would be eligible to claim ex-spouse benefits.
Because he was only married to the second wife for nine years, she unfortunately couldn’t file for spousal benefit. His fourth wife, of course, would be eligible for the widow benefit, which we’ll cover a little bit later in the podcast. I think this is a perfect story and a perfect example of just how plentiful Social Security benefits are. Unfortunately, a lot of people aren’t aware of what they’re entitled to, so it’s very important to know what you can get out of it.
Alec Rosen: Right. It’s amazing that one person can benefit so many in a situation like Johnny’s.
Alec Rosen: Let’s pivot to disability benefits. Today about 307 million U.S. citizens are on Social Security disability income. It’s important to know the benefits of that. Hopefully, we don’t have to take advantage of them, but they’re certainly there for you.
The first, you must have worked in jobs covered by Social Security. In order to get your full benefit, just like retirement, you generally need 10 years of working history; but with disability you could be eligible for reduced benefits if you haven’t accumulated that amount of time just yet.
The second bullet? You must meet Social Security’s definition of a disability, which says you cannot do the work you did before; your disability lasts more than a year and you really can’t earn more than $1,200 a month. Then, the last one: you must be younger than your retirement age because if you had reached your full retirement age you would simply take your retirement benefits.
Alec Rosen: Also important to note here, your benefits are paid monthly and continue until you’re able to work again on a regular basis. Just keep in mind Social Security’s real goal is to get you back to work, so there are a number of incentive programs to encourage people to seek employment after receiving disability income.
Dina Milne: Just remember that Social Security disability benefits are only up to your benefit amount at the age that you file, so it’s basically how much you’ve contributed to them. We normally recommend that our higher earners apply for private insurance or, more likely, take advantage of disability insurance through work.
Alec Rosen: Many companies offer this sort of short-term, long-term disability, so I think that’s a really good point, Dina.
Alec Rosen: Okay, let’s pivot to maybe our meatiest topic here, and that’s Social Security death benefits and widow and widower benefits. The first thing that we should point out to our listeners is that surviving spouses are immediately eligible for a one-time check from the Social Security Administration for over $200 upon the death of their partner.
Many of our clients have missed this. It’s not a large sum of money, but let’s make sure we’re collecting what’s due. The second thing to note is that if you are a widow or a widower you are eligible to collect on your former spouse’s Social Security payments as a survivor. You can do that as early as age 60 at a reduced amount.
Just remember here that your choice doesn’t have to be permanent, but you do need to make a selection: Otherwise the Social Security Administration will simply default to the higher benefit. But there’s some strategy here right, Dina? It depends on your age, but I think folks should consider thinking about this twice if the circumstance fits.
Dina Milne: That’s right. Now, if you’re over the age of 70, you would just get the higher of the two benefits, so that’s very straightforward. The strategy comes into play if you’re between the ages of 62 to 70. You can claim one benefit and defer the other. One strategy would be to claim the survivor’s benefit and then switch to your own. That would allow yours to grow if it’s going to be larger than the survivor benefit. The other option would be that you claim your own benefit and switch to the survivor’s later. Many retirees are surprised to learn that survivor benefits can increase after a spouse passes away.
Alec Rosen: That’s right.
Dina Milne: But they do until full retirement age. This strategy may work best if you’re younger than full retirement age and you have a low monthly benefit compared to your deceased spouse’s.
Alec Rosen: What else should our listeners know, Dina?
Dina Milne: There are a couple of things to note. I think the first and foremost is survivor benefits are dated from the time that you apply and are not retroactive at the time of death. I know this is a horrible time: You’re dealing with a death. Your priority is not to run and do administrative work, but your benefit is not going to start until you do that. Survivor benefits can also be collected from age 60. There are special circumstances to keep in mind, so unmarried minors or disabled children could be eligible for a reduced benefit. Late parents who were dependent on their children, sons or daughters. If they have passed away they are also eligible for a reduced benefit. Divorced spouses, as we mentioned, can collect survivor benefits if the marriage lasted for 10 years or more. If you’re a young widow with children, there might be some benefits available for you there as well. It’s important to know what questions to ask.
Alec Rosen: Right. That’s really well said.
Alec Rosen: Okay, let’s just recap our time together here. We talked about three broader topics: The first, spousal benefits. We spent some time on disability benefits, and at the end here we talked about death benefits. I just want to reiterate something that Dina mentioned. Social Security is really complicated and like we said in our first podcast, the Social Security Administration is really great at processing paperwork and providing operational support. They aren’t great when it comes to the more complex issues or really giving any advice.
Alec Rosen: In fact, I’m sad to report we had two instances just last week where clients were given misinformation regarding restricted applications, and we had to step in and help out. I just, I want to make sure folks are seeking help here for some of these more complex issues and also remind everyone we take a lot of pride in the retirement planning work we do here with our clients at Adviser Investments and Social Security is a very big portion of that. We’d love to prove that we’re an adviser you can talk to, so please don’t hesitate to call us if we can help.
Dina Milne: Thanks, Alec. Now, in our last installment of this series we will be taking your questions, so please send any and all questions that you might have to firstname.lastname@example.org, and we will answer them.
Dina Milne: This has been Dina Milne and Alex Rosen from Adviser Investments. We thank you for listening to another Adviser You Can Talk To podcast. If you have enjoyed this conversation, please subscribe to our show. You can also check us out at www.adviserinvestments.com/podcasts. If you have any topics you’d like us to explore, please send us an email at email@example.com. We would love your feedback and to hear back from you. Thank you!