Social Security Tips and Tricks for All: Divorcees, Widows, Older Workers, Teachers, More

As you approach retirement, figuring out when and how to claim Social Security benefits looms as one of the most important tasks on your to-do list. Choosing the right time and best strategy could significantly boost your income—and the stakes are particularly high for couples. Judging by the amount of mail we get on this topic, many retirees and pre-retirees are grappling with the complexity of their choices. Here we’ve answered several common reader questions. The best decisions for you depend on your own circumstances, but knowing the basics will help you choose the right options.

I’m deciding at what age I’ll claim Social Security benefits. How does my life expectancy factor in?

First, the basics: You can start getting benefits as early as age 62, but you’ll receive up to 30% less in each check than if you wait until your full retirement age, which is 66 for those born from 1943 to 1954 and gradually rises to 67 for those born in 1960 or later. For each year after your full retirement age that you wait to start benefits until the maximum age of 70, you’ll get an 8% boost in delayed-retirement credits.

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Social Security actuaries aim to set payouts so that if you die at the time your life expectancy projects, you’ll receive about the same total amount of benefits no matter when you start claiming them. If you are single and have never been married, spousal and survivor benefits aren’t a concern, so your de­cision about when to claim hinges on how long you think you’ll live. If you can afford to postpone taking benefits and are deciding whether to hold out to age 70, a key question is whether you expect to live past 80. Research shows that at about age 80, the cumulative amount you’ve received in benefits is approximately the same whether you started benefits at age 62, 70 or somewhere in between.

As a rule of thumb, “if you’re single and believe that your life expectancy is less than 80, you should claim before 70. If you think you’re going to live past 80, wait until 70,” says Bill Meyer, CEO of Social Security Solutions, which provides tools to help recipients determine when to claim benefits. A person who is eligible to receive $2,000 a month at a full retirement age of 66 and lives to 95 would receive $198,000 more in total benefits if he or she waited to claim at age 70 instead of at 62.

You can enter your gender and birth date at www.ssa.gov/oact/population to get an estimate of how many more years you may live at your current age as well as at 62, your full retirement age and 70, if you haven’t reached those ages yet. But you should also account for your health, your lifestyle and your parents’ longevity (especially that of your mother) as you gauge your potential life span.

How can my spouse and I make the most of our combined benefits?

Married couples have more to consider to maximize their benefits, but they also have certain advantages. Even if one spouse never earned income covered by Social Security, he or she may claim benefits based on the other spouse’s record, as long as the other spouse has started claiming benefits. If you claim spousal benefits at your full retirement age, you get 50% of your spouse’s primary insurance amount (PIA)—that is, the benefit your spouse is eligible to receive at his or her full retirement age. If your husband or wife waited to claim benefits past full retirement age, the calculation of your spousal benefit does not include any delayed-retirement credits. And if you claim your spousal benefit between 62 and your full retirement age, the benefit is reduced.

If both members of a couple can claim benefits based on their own work history, the lower earner may still get spousal benefits if his or her own benefit is less than half of the other spouse’s PIA. In that case, the lower earner receives his or her own benefit plus an additional amount so that the total payout adds up to the maximum spousal benefit for which the lower earner is eligible.

Beyond the ins and outs of spousal benefits, there’s the question of when each spouse should start benefits. Ultimately, the spouse with the higher PIA should determine when to start benefits based primarily on the life expectancy of the spouse who is expected to live the longest, says Meyer. If at least one spouse is likely to live past 80, it often makes sense for the higher earner to delay claiming until age 70. Meanwhile, the lower-earning spouse may choose to claim his or her own benefits as early as 62 to gain some income. When one spouse dies, the surviving spouse receives 100% of the highest benefit.

Those who were born before January 2, 1954, can use a strategy called “restricting an application to spousal benefits.” Using this method, the higher-earning spouse can temporarily take a spousal benefit, which may prove lucrative in the long run. At full retirement age or later, the higher earner applies for spousal benefits while the lower earner collects his or her own benefit. Because the higher earner has reached full retirement age, he or she gets half of the lower earner’s primary insurance amount. During this time, the higher earner builds delayed-retirement credits on his or her own benefit, and at age 70, the higher earner switches to the boosted benefit. The lower earner switches to a spousal benefit if it’s higher than his or her own.

What should divorcees know?

If you are divorced and were married to your ex-spouse for at least 10 years, you can claim spousal benefits based on your ex’s record as long as you’re single now and the benefit to which you’re entitled based on your own work history is less than the spousal benefit. Even if your former spouse hasn’t applied for or suspended his or her own benefits, you can claim spousal benefits if your ex is 62 or older and you’ve been divorced for at least two years. Be aware that if you remarry, you’ll lose the spousal benefit—but you can reapply for it if you and your spouse divorce or he or she dies.

If you’re eligible for the spousal benefit for divorcees and aren’t close to retirement, don’t assume that it’s your best bet. You may be able to boost your own benefit higher than the spousal one because Social Security bases your own benefit on the 35 years that you earned the most. Jeannette Bajalia, president and founder of financial-planning firm Woman’s Worth, encourages clients to generate more income if their benefits are on the cusp. “I’ve shown clients that if they made, say, $18,000 a year, that would throw out some zeros on their earnings record” and tip their benefit over the edge, says Bajalia.

What about widows and widowers?

At age 60 (or as early as 50 for those who are disabled), widows and widowers may begin claiming survivor benefits based on their deceased spouse’s record. But, says Bajalia, “just because you’re eligible at 60 doesn’t mean it’s the right thing to do at 60.” If you wait to take the survivor benefit at your full retirement age, you’ll get the same amount that your spouse was receiving or was eligible to receive; claiming earlier reduces the benefit.

The size of your survivor benefit also depends on when your spouse died and whether he or she started claiming benefits during his or her lifetime. If your spouse had started claiming benefits, your maximum survivor benefit is the amount he or she was collecting. If your spouse died before full retirement age and had not yet claimed benefits, the survivor benefit is based on the amount your spouse would have obtained at full retirement age. And if your spouse died after his or her full retirement age and had not begun benefits, you’re eligible for the amount your spouse would have received at the age of death, including delayed-retirement credits.

An additional perk for widows and widowers: You can claim survivor benefits while letting your own benefit grow, then switch to receiving your own benefit later—a smart move if your benefit will exceed the survivor benefit. Or you may choose to start your own benefits at 62, then switch to survivor benefits at your full retirement age. Pursuing the optimal strategy can mean “hundreds of thousands of dollars of difference,” says Meyer.

What happens if I sign up for Social Security before full retirement age and then go back to work?

If you work and collect Social Security before you reach full retirement age, the “earnings test” may decrease your benefit payout, depending on how much you earn. If you won’t reach full retirement age in 2020, you can earn up to $18,240 without affecting benefits (the earnings limit adjusts each year based on the national average wage index). For amounts above that threshold, Social Security withholds $1 in benefits for every $2 you earn. The year you turn your full retirement age, Social Security cuts you a break: The amount exempt from the earnings test is higher—in 2020, it’s $48,600—and the test applies only to the months prior to the month of your birthday. Plus, benefits are trimmed by $1 for each $3 earned.

Rubbing a little salt into the wound, Social Security doesn’t remove benefits from your checks proportionally. Say that in 2020, your monthly benefit is $1,000, you won’t reach full retirement age and you estimate that you’ll earn $23,240 for the year. In that case, $5,000 of income is subject to the earnings test, and Social Security needs to withhold a total of $2,500 for the year. Because Social Security typically doesn’t make partial monthly payments, you’ll get no benefit check for three months, missing out on a total of $3,000. If your 2020 tax return shows that you correctly estimated your earnings, you’ll get the $500 back in 2021. If your 2020 tax return shows that you previously overestimated your earnings, you’ll get back the difference. If you earned more than expected, you’ll have to repay the amount due to Social Security.

Once you reach full retirement age, the earnings test vanishes. Note that income from investment earnings, retirement-account withdrawals and pensions does not fall under the earnings test, which applies only to earnings from a job or self-employment.

The earnings test may cause some pain while you’re working, but benefits withheld aren’t lost forever. Starting at your full retirement age, Social Security boosts your monthly check to make up for the missed benefits. For example, if you started taking benefits at 62, your full retirement age is 66 and you lost 12 months’ worth of benefits to the earnings test, Social Security will adjust your monthly payout as though you had started benefits three years early instead of four.

I work in the public sector, as a teacher, and I’ve heard that I may receive reduced Social Security benefits. Is this true?

In certain states, government em­ployees such as teachers, firefighters and police officers may be affected by what’s known as the windfall elimination provision (WEP). Under the WEP, you would face a cut in benefits if you receive a government pension paid from an employer that did not withhold Social Security tax from wages and, at some point, you also worked in the private sector, paying Social Security tax on earnings. The WEP won’t eliminate your Social Security benefit, but it could shrink your monthly payout by hundreds of dollars. For a list of the 15 states in which public employees may not be covered by Social Security, go to www.nea.org/home/16819.htm. If you’re affected by the WEP, use the calculator at www.ssa.gov/planners/calculators to estimate your benefit.

Before the WEP was enacted in 1983, Social Security considered workers who had no earnings covered by Social Security for a certain number of years to be low-wage workers—and for low-wage workers, Social Security adjusts benefits so that they replace a greater percentage of average career earnings than for high-wage workers. The WEP is designed to remove this advantage for those who are also receiving a pension based on employment in a public-sector job. The WEP doesn’t apply if you have at least 30 years of substantial earnings under Social Security.

Holding a public-sector job not covered by Social Security may result in a hit to your spousal or survivor benefits, too. The government pension offset (GPO) lowers such benefits by two-thirds of the amount of your government pension. If your monthly pension amount is $900, for example, your spousal or survivor Social Security benefit will be reduced by $600. The GPO may wipe out your entire spousal or survivor benefit.