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We receive a lot of questions by email, and we can’t possibly respond to all of them. We do use the emails to produce new columns based on the general questions. Occasionally an email presents a specific situation that we’ll address in a column by itself. Today is just such a column.
Dear MarketWatch,
My ex-wife died in October 2020. We married in 1984 and divorced in 2000. She remarried, I have not remarried. She was 70 years old at the time of death. I was 61 at the time of her death. I contacted Social Security to try to claim spousal benefits. They indicated that I made too much money; I am still working full time making approximately $45,000 annually.
Is there another way that I may receive her benefits until such time (66+) that I choose to collect my own benefits? My own benefit will be a far greater monthly amount than she was getting. Thank you.
Dear reader,
It’s important to understand how survivor benefits and benefits based on your own working record are handled, so that you can make the most of each benefit. It is possible to coordinate the timing of filing for each benefit (if your circumstances permit), such that you might take advantage of one benefit for a period of time, and then switch over to the other benefit when it has increased to the maximum (or some arbitrary date).
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In this email you’re referring to survivor benefits, not spousal benefits, just to be clear. The initial problem in this case is that you’re earning too much from your job to be able to receive a benefit from Social Security — the earnings limit (which is $19,560 in 2022) is lower than your full-time earnings by quite a lot. At this earnings level, most (probably all) of any Social Security survivor benefit would be withheld due to your level of earnings. Once a person reaches Full Retirement Age (FRA, somewhere between 66 and 67, depending on year of birth), this earning limitation will no longer apply.
Read: This hidden wrinkle in Social Security can help you decide when to file for benefits
But since you’re under FRA, for every $2 over the earnings limit, $1 of Social Security benefits is withheld. Income from your job is $45,000, so this is a total of $25,440 over the limit. This means that a total of $12,720 ($1 for every $2 over the limit) would be withheld from any Social Security benefit that you might be eligible for. Assuming that the survivor benefit from your late ex-wife is something less than $1,060 (the monthly equivalent of $12,720), then the entire amount is withheld, and you would receive nothing from that benefit.
But putting the earnings limitation aside, let’s look at the rest of this situation. From our calculations above, it’s safe to assume that the survivor benefit is approximately $1,000. You indicate that your own benefit will be something “far greater” than the survivor benefit, so let’s just put that at $2,000 for the sake of the example.
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The question is: Is there a way I can receive the survivor benefit until such time (assuming you mean Full Retirement Age) that I choose to receive my own benefits? Unfortunately, as we saw above due to the earnings limitation, the answer is no. If, however, you chose to stop working, or limit your earnings to something less than the $45,000 job, you could receive at least a portion of the Social Security survivor benefit in the interim.
In addition, during the year that you’ll reach FRA, there is a much more liberal earnings limit ($51,960 in 2022, and only $1 of every $3 over the limit is withheld). When you get to that year, there is no reason to forgo the survivor benefit (reduced a bit since you’re still under FRA), since your income is below the earnings limit. You could receive the full amount of the survivor benefit up to your month of Full Retirement Age, and then switch over to your own retirement benefit.
Read: The messy math of Social Security, spousal benefits, and when to claim
The reason you’re able to make this switch is because the survivor benefit and your own retirement benefit are unaffected by the deeming rules. (As a refresher, just know that the deeming rules require that if you’re eligible for a spousal benefit and a retirement benefit based on your own record, if you file for one benefit you’re deemed to have filed for both, there’s no separating the two. The deeming rules do not apply between survivor benefits and retirement benefits.)
To better explain this, let’s say you have left the $45,000 job, so the earnings limitation doesn’t apply. At age 61, when your ex-wife died, you would be eligible to receive a reduced survivor benefit based on her record, while still delaying your own retirement benefit to a later date. Receiving the survivor benefit at an earlier age has no impact on your own retirement benefit.
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The reverse also holds true: if your own benefit was something smaller than the survivor benefit, you could start receiving your own retirement benefit as early as age 62 (at a significant reduction), and then at FRA switch over to the much larger survivor benefit. Filing for one of these benefits early has no impact on the other benefit — this is why the two can be coordinated in this manner.
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Going back to the original example with the limitation: In this case, once you reach FRA, you could file for and receive the survivor benefit, and continue delaying your own retirement benefit to a later date when the delay credits have maximized the benefit. Assuming your FRA is 67 and you delay your retirement benefit until you turn 70, the resulting benefit at that time could be as much as $2,480 (for three years’ worth of delay credits on your original benefit of $2,000). Meanwhile, you would be receiving the survivor benefit (based on your late ex-wife’s record) for three years.
Have a Social Security question? Write us at HelpMeRetire@marketwatch.com.
