I pointed out in last week’s column that there are hundreds of myths and rumors being spread — mostly on the internet — about Social Security. Half of them deal with the politics and financing of Social Security. I covered some of those in recent columns. But there are also a multitude of myths about Social Security programs and how they work. Last week, I dealt with myths surrounding Social Security retirement benefits. This week, I’ll take on the rumors that people hear about dependent and survivor benefits.
Myth: As a wife, I will get half of my husband’s Social Security.
The 50% spousal rate applies only to those women who wait until their full retirement age to claim benefits. But benefits are reduced roughly one-half of 1% for each month they are taken before full retirement age. At 62, the earliest age you can claim spousal benefits, you’d get about one-third of your husband’s benefit, but only to the extent it exceeds what you are due on your own record.
Myth: I can take reduced benefits on my spouse’s record at 62 and later switch to full benefits on my own Social Security account.
With one exception, which I’ll get to in a minute, you can’t do that. There is a rule that says all Social Security claims are open-ended. In other words, when you file for one kind of Social Security benefit, you must file for any and all other benefits you are due at the same time.
To explain further, let’s follow an example. Sue is 62. Her husband, Hank, is 68 and already getting his Social Security. Sue thinks that she can file for half of Hank’s Social Security at 62 and then at 66, switch to 100% of her own benefit. Again, she can’t. She must file for her own Social Security benefit first. At the same time, they will look to Hank’s record to see if she can get any additional spousal benefits from him. But it’s not likely. As a 62-year-old spouse, she is due about 35% (not 50%) of Hank’s Social Security. And if Sue has worked any decent amount of time, her own Social Security benefit will exceed what she is due from Hank’s record.
But it would be a different story if Hank were dead. And that leads to the exception I mentioned earlier. Widows do have the option of taking reduced benefits on one record and later switching to full benefits on the other record. For example, if Hank were no longer with us, Sue could file for widow’s benefits at 62 and get about 82% of Hank’s benefit. Then at 66, she could switch to 100% of her own Social Security or wait until 70 and get 132%.
Myth: Once I make a choice, I can’t switch from one benefit to another.
Yes, you can. It happens all the time. Some readers may be confused because I just said that you can’t take spousal benefits and later switch to your own. But now we are talking about the opposite side of that coin. It is a fairly common practice for people to start out taking their own retirement benefits and later switch to benefits from a spouse.
Let’s go back to Sue and Hank and change their circumstances just a bit. When Sue turns 62, she files for her own retirement benefits. But this time, let’s say Hank is also 62 and wants to wait until he is 66 to file for his Social Security. When he does that, assuming his benefit rate is significantly higher than Sue’s benefit check, she can file for some additional spousal benefits on Hank’s account.
Myth: The government robs the families of deceased Social Security beneficiaries by taking back the last Social Security check.
Three Social Security rules come into play here. The first rule says that Social Security benefits are always paid a month behind. For example, the October Social Security benefit is paid in November. The second rule says that Social Security benefits are never prorated. The third rule says you must be alive the entire month to get a Social Security benefit for that month.
Let’s follow an example. Sam dies on Oct. 27. Sam’s family must return the check that comes in November (the payment for October). They gripe about that rule, claiming that Sam was alive for most of the month of October, so the family should get most, if not all, of the proceeds of that last check.
What they don’t consider is that the lack of proration of Social Security checks can oftentimes work in the favor of the beneficiary or a surviving spouse. For example, let’s say that Sam started his benefits at 66 and his birthday is July 30. Because Social Security benefits are not prorated, Sam would have received a Social Security check for the entire month of July even though he was 66 for only a couple of days of the month. And if Sam left a widow, she would get a widow’s benefit for the whole month of October even though Sam died on Oct. 27, meaning she was widowed for only four days of the month.
Myth: When my husband dies, I will get all of his Social Security.
That’s generally true if you are 66 or older when your husband dies. But the widow’s rate is reduced if taken earlier. For example, at age 60 (the earliest most women can claim widow’s benefits), the rate is about 71%.
And there is another little twist to this story. It is best explained with a simple example. Sam took his Social Security at 62. He is getting a reduced retirement benefit equal to 75% of his $1,000 per month full retirement rate.
So Sam is getting $750. His wife, Sadie, who never worked outside the home, is getting spousal benefits equal to about 35% of Sam’s full benefit, or $350 monthly. Sam dies at age 89. Sadie is 87. Although Sam was getting the 75% rate, there is a law that says a widow over age 66 cannot get less than 82.5% of her husband’s full rate. So instead of a widow’s benefit of $750, Sadie will start getting $825 off Sam’s account.
