Many people believe that Social Security will contact them if or when they qualify for a benefit, or a change in benefits. Too often, this is not the case. By policy, Social Security staff are trained not to advise us on how to get the most from our benefits. Instead, they just answer our questions, and sign us up. Here are a few examples of what I mean:
Extra Benefit #1: Survivor Benefits
When the first person in a marriage passes away, the survivor will receive a benefit amount going forward, that equals what was the higher of the two benefits. The lower benefit amount goes away. For couples where both have already started to collect benefits, this generally works smoothly.
However, a problem regularly arises when the survivor has not started collecting a benefit yet. You can start the benefit as early as age 60 (50 if disabled), though it is reduced if claimed before Full Retirement Age (called FRA, which is age 66 in 2018). If the deceased spouse has started a benefit, the base amount will be what they would have received if starting at FRA. If they are older than FRA, the base amount is the amount they would have received if starting in the month they passed away.
For most survivors who are retired but not yet claiming, it will probably make sense to start the survivor benefit when eligible, and then wait to 70 to switch to their own maximized benefit. If their age 70 benefit would be low, then it is probably best to start their own benefit at 62, and then switch to the full survivor benefit at FRA. It depends on each of your benefit amounts.
Yes, the calculation can be a bit tricky. However, you can’t begin to run the numbers if you don’t understand the rules of the game!
Extra Benefit #2: Increased Spouse Benefit
Suppose you claim your Social Security benefit, and your spouse is waiting to claim later. If you had a somewhat limited work history, the amount may not be so much…but still, it’s the benefit you earned.
Now your spouse claims, and has a much higher work-based benefit. From then on, you are eligible for the benefit you are currently claiming, or your spouse benefit. It is called dual eligibility, because you can now receive an amount that equals the greater of the two separate benefits. The spouse benefit is based on 50% of what your spouse would receive if starting at FRA. To qualify, your spouse simply has to start their benefit, whatever their age between 62 and 70.
While the process for making this adjustment should be automatic—as soon as the effective month for the spouse’s benefit claim—the fact is, it is not. I have reviewed cases of many spouses where I told them that their numbers appeared off, and sent them pronto to the Social Security Administration to sort it out. Every time, they have been due an increased benefit.
Extra Benefit #3: After Divorce, you may Have Rights on Your Spouse
In some ways this is a repeat of the first two extra benefits. Still, it is important to call them out separately, because in my experience, divorcees are woefully uninformed about their right to receive benefits based on their ex-spouse’s record—even if you have remarried!
Here are the two key rules for qualification: (1) You were married for ten or more years, and (2) you remain unmarried or got remarried after age 60.
If this is the case, then the two extra benefits—for survivors and for spouse benefits—apply to you as well. It doesn’t matter if your ex-spouse has remarried or not.
In one way, this benefit is even better for you: You can get the spouse claim benefit, even if your ex-spouse has not yet started to collect any benefit. Not so for the current spouse of your ex: They have to wait for that filing to collect a spouse benefit.
This is far from a complete list of ways you could be missing out on available benefits. Fail to apply in a timely manner, and you will be kissing money goodbye. The only way to be sure this doesn’t happen to you is to understand the rules before you apply.