Social Security Benefits In A Nutshell — Everything You Need To Know

This article explains the many Social Security benefits that are available for you determine your best Social Security claiming strategy. As you work through this planning process keep 3 things in mind:

Claiming Social Security benefits is a one-time decision you must make correctly.
A married couple needs to look at this decision as a joint life decision, not as individuals in a silo.
Take the wrong benefit at the wrong time, it is always smaller, and it is forever.

BENEFITS

Worker Benefit

This is your own personal benefit. You are always paid your own benefit first regardless of what benefit you are entitled to. The earliest you can apply is 62. If you apply before your full retirement age the benefit will be reduced. It is the only benefit that accrues delayed retirement credits. The annual earnings limitation applies until you reach your full retirement age. You can voluntarily suspend your worker benefit at full retirement age. Finally, there is no good reason to wait past 70 to collect this benefit. You can apply online.

Spousal Benefit

This benefit is applicable to a current spouse if the other spouse is receiving their own Social Security benefit. It is based on both your Primary Insurance Amounts, not what you are currently receiving. The maximum spousal benefit is equal to 50% of your spouse’s Primary Insurance Amount at your own full retirement age. If you apply before your full retirement age the benefit will be reduced. To receive this benefit, the spousal benefit must be greater than your own worker benefit, you need to be married at least 1 year, and both you and your spouse must be at least 62. You must apply for this benefit as it does not start automatically. Both spouses cannot be receiving a spousal benefit at the same time. The annual earnings limitation applies before your full retirement age. There is no advantage to be gained by deferring collection of this benefit past your full retirement age. You can apply online.

Divorced-Spousal Benefit

This benefit is basically the same as a current spouse. The maximum spousal benefit is equal to 50% of your ex-spouse’s Primary Insurance Amount at your own full retirement age. To qualify for this benefit, you need to be single, both at least 62, must have been married for 10 or more years and the ex-spousal benefit must be greater than your own worker benefit if you have one. There are two categories of divorced spouse benefits. If you are divorced less than two years, to qualify for benefits your ex-spouse must be receiving their benefit. If you are divorced more than two years, you are considered “independently entitled,” your ex-spouse does not need to be receiving benefits but needs to be eligible to claim benefits. If you remarry, you cannot collect a spousal benefit from any ex-spouse. If you are divorced from more than one spouse, you can claim benefits from the highest spouse assuming you were married to each for at least 10 years. And finally, a divorced spousal benefit paid to an ex-spouse does not affect benefits available to a current spouse. The annual earnings limitation applies before your full retirement age. There is no advantage to be gained by deferring collection past your full retirement age. You can apply online.

Children’s Benefit

This benefit is paid to a child’s representative for children up to age 18, 19 if still in high school, or disabled if disabled before 22. One parent needs to be receiving benefits. The benefit is equal to 50% of the workers’ full retirement age benefit even if the parent filed before their own full retirement age. There is no reduction for age. This benefit does not affect the parents’ benefit. The annual earnings test will apply to the child if they work. This may be a situation to consider filing early depending on the child’s/children’s age. You cannot apply online.

Child in Care Benefit

This benefit is paid to a spouse who is not at least 62, not yet eligible for benefits, and married at least 1 year. Their spouse must be receiving their Social Security benefit. The benefit is equal to 50% of the receiving spouse’s Primary Insurance Amount. You can only receive one Child in Care benefit regardless of the number of children. This benefit ceases when the child turns 16. You cannot apply online.

Survivor Benefit

Do not confuse this with a spousal benefit, it is not. If you are receiving a spousal benefit, that benefit stops and you now will be eligible for a survivor benefit. This benefit is paid to a spouse, ex-spouse, and young children when one spouse passes away. If both spouses are receiving a monthly benefit, the surviving spouse will receive the higher of the two benefits and the lower benefit stops. To qualify for this, benefit the survivor needs to be at least 60 and not married, or 50 if disabled. You need to be married for at least 9 months except in the case of an accident. If you apply before your full retirement age the benefit will be reduced. The annual earnings limitation also applies. You cannot apply online.

If you remarry before age 60, you cannot receive a survivor benefit.
If you remarry after age 60, you will still be eligible for the survivor benefit.
Eligible children under 18 can also receive a survivor benefit, worth up to 75% of the deceased’s benefit.
There is NO advantage to waiting to start collecting survivor benefits after you reach full retirement age.
You can choose to claim survivor benefit and switch to your own worker benefit later if advantageous.
Any time there is a survivor benefit involved, you should always consider taking one of the two benefits as soon as possible.
An ex-spouse can collect a survivor benefit if married at least for 10 years.
There is a one-time death benefit of $255 available to the current spouse.
If your deceased spouse HAS NOT FILED for benefits and passed away BEFORE FULL RETIREMENT AGE, you are entitled to receive the deceased’s full retirement age benefit.
If your deceased spouse HAS NOT FILED for benefits and passed away AFTER FULL RETIREMENT AGE, you are entitled to receive the deceased’s benefit as if they filed on the date of death.
If your deceased spouse DID FILE for benefits BEFORE FULL RETIREMENT AGE, you are entitled to receive what your spouse was receiving or 82.5% of your deceased spouse’s full retirement age benefit.
If your deceased spouse DID FILE for benefits ON OR AFTER FULL RETIREMENT AGE, you are entitled to receive what the deceased was receiving at the date of death.