Social Security FAQs

     The last substantive change to Social Security occurred in 2015. That's when Congress eliminated the file-and-suspend and restricted-application strategies that gave married couples the opportunity to increase their lifetime benefits.

     But still, people often have questions about how the sometimes-complicated retirement system works, and how long it will be able to pay full benefits without some changes to the system. So here are a few Frequently Asked Questions, brought to us by Jeremy Kisner, Director of Financial Planning at Surevest Wealth Management in Phoenix, AZ. For those who are interested, he also writes a financially user-friendly blog called Clear and Concise Financial Advice.

     1. Can I collect benefits even if I continue working?
     Once you reach full retirement age, you can earn as much as you want without affecting your Social Security benefits  However, between age 62 and the year of your full retirement age you can only earn up to a certain threshold ($18,240 as of 2020) before benefits are reduced. For every $2 you earn above the threshold, your benefits are reduced by $1. But remember, only earned income from working counts towards the threshold. And also, if your benefit is withheld, Social Security will make it up to you with a higher monthly benefit after you reach full retirement age.

     2. How much are payments reduced when claiming retirement benefits early?
     They are reduced by approximately 0.555% for each of the 36 months you collect prior to full retirement age, and 0.416% for each month more than 36 months before full retirement age. So if your monthly benefit would be $1000 at full retirement age of 66, you would collect only $750 a month if you claimed benefits at age 62, for a 25% reduction.

     3. Are spousal benefits also reduced by the same amount for claiming early?
     Spousal benefits are actually reduced more. For example, claiming Social Security at age 62 would reduce the worker's benefit by 25%, but a spousal benefit by 30% -- or an average of 0.625% for each month prior to full retirement age.

     4. How much are benefits increased if I delay benefits until age 70?
     You accrue Delayed Retirement Credits which increase your benefits at a rate of 0.667 for every month you wait beyond your full retirement age. That works out to 8% per year simple interest.

     5. If I get married, am I immediately entitled to spousal benefits?
     No. You have to be married for one year before your are entitled to spousal benefits.

     6. What if my spouse dies prior to collecting benefits?
     You have to have been married for nine months to collect survivor benefits, and you have to wait until you are at least 60 years old (unless accidental death). There are also family benefits available to an unmarried child if one of their parents dies while the child in under 18., and spouses are also eligible to collect family benefits prior to age 60 if they are taking care of a child under 16.

     7. What happens to spousal benefits in the case of divorce?
     You can claim benefits on your prior spouse's record if you were married for at least 10 years, and are not currently remarried. It is not uncommon for two or more people to be claiming spousal benefits on one person's work record.

     8. Can I pay back benefits I collected prior to age 70, then get a higher payment as if I'd never collected?
     No. You used to be able to do this, but the option was eliminated in 2010.

     9. Are the ages of eligibility for benefits the same for widows and divorcees?
     Widows or surviving divorced spouses can claim survivor benefits at age 60. Divorcees can qualify for benefits at 62, even if the ex-spouse (age 62 or older) has not yet filed for benefits. You have to have been divorced for at least two years to file for benefits on an ex-spouses's record.

     10. What is now considered full retirement age?
     It depends on when  you were born:
     Year of birth       Full retirement age
     1942 or before          65
     1943 - 1954              66
     1955                         66 and 2 months
     1956                         66 and 4 months
     1957                         66 and 6 months
     1958                         66 and 8 months
     1959                         66 and 10 months
     1960 and after          67

     Bonus Question. Should I factor in the possibility that Social Security will go bankrupt in deciding when to start my benefits?
     Despite some reports to the contrary, Social Security is not in danger of going bankrupt. However, if no changes are made to the system, the trust fund (which has been built up over the years by collecting extra payroll taxes) will be depleted sometime around 2034. That's when benefits will have to be reduced -- by about 25% from their current level. There are ways to fix the system. But that's a topic for another post. Just one thing to keep in mind in this political season: If anyone is proposing a payroll tax holiday, that might put more money in workers' pockets, but it would also further deplete the Social Security system.

     Meanwhile, if you're interested in improving your own financial system, I can recommend Kisner's book A Good Financial Adviser Will Tell You ... from which these questions were drawn. And if you really want to get into the weeds, check out IRS Publication 915 for even more detailed information about Social Security benefits.