Social Security, or the Old-Age, Survivors, and Disability Insurance (OASDI) program, provides benefits to retirees, survivors, and the disabled. Social Security is funded primarily through payroll taxes (FICA and SECA) and retirement benefits received are based on wages earned. To be eligible for retirement benefits, one must have paid taxes on a minimum amount of income for at least 40 quarters and be at least 62 years old. Retirement benefits are based on the adjusted average wages earned in the last 35 years and will be higher when a person waits until full retirement age (determined by birth date) to claim benefits. Marriage, divorce, and death can all affect the amount and types of benefits you may be eligible to receive.
If you are married, there could be spousal benefits available to you even if you have never worked and contributed to Social Security. If you have worked, you can apply for your own retirement benefits and for spousal benefits to receive whichever amount would be higher. Spousal benefits can be as much as half of your spouse’s full retirement benefit amount and spousal benefits do not decrease your spouse’s retirement benefit. It is important to consider spousal benefits when determining the timing of claiming Social Security because spousal benefits are only available when the spouse is receiving their retirement benefit.
Spousal benefits may still be available to you even if you and your spouse get divorced. You can receive spousal benefits if you are unmarried, your marriage lasted at least 10 years, you are at least 62 years old, your ex-spouse is entitled to retirement benefits, and your spousal benefit would be larger than your own benefit. In this case, the ex-spouse does not need to be receiving their retirement benefit, they just need to be eligible (if you have been divorced for at least two years). This also applies in the reverse, meaning your ex-spouse can receive spousal benefits based on your record. However, if you or your spouse remarry, the person who got remarried is no longer eligible to receive spousal benefits.
After a death, you may be eligible to receive survivor benefits. There are different requirements for the length of work of the deceased, which depend on age at death, to be eligible for survivor benefits. Those eligible to receive survivor benefits could be a widow or widower, a surviving divorced spouse, an unmarried child of the deceased, or other family members under certain circumstances. A widow or widower can receive full benefits at full retirement age or reduced benefits beginning at age 60. There are different criteria if there is a child of the deceased involved or if you are disabled. If you remarry before becoming eligible (at age 60), you will no longer be eligible to receive survivor benefits. However, if you remarry after you reach age 60, this will not affect your survivor benefits.
There are options to consider at every stage of life to receive the most benefit from Social Security and we encourage you to speak with a Certified Public Accountant (CPA) or financial planner before claiming any Social Security benefits.
If you have any questions, please reach out to your personal Sciarabba Walker contact or email us at info@swcllp.com.
By Samantha Jordan, CPA