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Daughter due benefits gives retiree options

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POSTED April 17, 2015 7:49 p.m.

Q: I am about to turn 62. I am trying to decide if I want to retire and take my Social Security now; or wait until age 66 to get higher benefits. I know everyone has to make a similar decision. But I have a bit of a twist. I have a 14-year-old daughter, and I know she is due benefits on my account until she is 18. I am wondering: Can I file for her Social Security now and defer my own until age 66? Or can I “file and suspend” my benefits so that she can get hers?

A: I’ll answer your last question first. You can NOT file and suspend until you are 66 years old. By that time your daughter will be 18 and not longer eligible for benefits. So forget about that option.

And to answer your first question: In order for your daughter to get benefits on your record, you must file for Social Security yourself. So you have to decide if you want to file at age 62, and get reduced benefits for yourself but also receive a dependent’s benefit for your daughter. Or do you want to wait until age 66 and file for full benefits for yourself, but get nothing for your daughter (because she will be 18).

To help you think that through, here is an example. Let’s say your full age-66 monthly benefit is $2,000 per month. Your reduced retirement rate at 62 would be $1,500. Your daughter is due 50 percent of your age 66 rate, even if you take benefits at 62. So she would get $1,000 per month if you file now. Here are your options.

Option A: Take benefits at age 62. You would get $1,500 per month and your daughter would get $1,000 — giving you a total monthly income from Social Security of $2,500.

Option B. Wait until age 66 when you would get $2,000 per month but your daughter wouldn’t be due anything.

A little fingering on your calculator will show you that under Option A, you and your daughter would get $120,000 between age 62 and 66 — money you would forfeit if you wait until age 66 to file. However, under Option B, you personally would start getting $500 per month more. That means it would take you 20 years to come out ahead if you pick Option B and wait until age 66 to file.

To my way of thinking, it’s a no brainer. You should take Option A. So I think you should call Social Security right away and file a retirement claim for yourself and a dependent’s claim for your daughter.

Q: My wife died about five years ago at age 59. I was 60 at the time. I am now turning 66 and just retired and want to sign up for my Social Security. I recently learned from a friend that I could have been getting widower’s benefits all along. She had worked all her life and would have been due a fairly high Social Security benefit. Can I apply for those benefits now retroactively as part of signing up for my own Social Security?

A: Your friend wasn’t quite right. You said you “just retired,” so I am assuming you were working at the time your wife died. If that is the case, then you were not due any widower’s benefits. There is an earnings limitation for any Social Security beneficiaries under age 66. (It’s $15,720 now but was probably around $12,000 five years ago.) I’m guessing you were making more than $12,000 per year, meaning you would not have been eligible for any kind of Social Security, including benefits on your wife’s record.

But those earnings penalty rules go out the window when you reach age 66. So what you should do is contact Social Security (call them at 800-772-1213) and tell them you want to file for widower’s benefits. You will get 100 percent of your wife’s Social Security rate. And you will get those benefits until age 70, when you can switch to 132 percent of your own.

Q: I am 69 years old. My Social Security is $1,070 per month. My husband is 77 and he gets $1,990. We just learned that he has only about 6 months to live. So I am thinking about widow’s benefits. The problem is he is my second husband (my first husband died in 1999) and we have been married for only seven years. That means we will not be married the required 10 years when he dies. Is there any way around this 10-year rule so that I will be able to get his widow’s benefits?

A: I’m sorry to hear about your husband’s prognosis. But I do have good news for you. The 10-year duration of marriage rule you are worried about applies only to divorced women. Because you are currently married to your husband, that rule doesn’t apply. (There is a 1-year rule, but you are well past that, so you are OK.)

That means when your husband dies, you will start getting what he was getting. Or to be more precise, you will continue to get your $1,070 benefit, and then you will get an extra $920 in widow’s benefits to take you up to his current rate of $1,990.

And there is one other possible twist to your Social Security scenario. When your current husband dies, you also will be potentially due widow’s benefits from your first husband’s Social Security account. You won’t get two widow’s benefits. But you will get the one that pays the higher rate. So make sure you tell the Social Security people about this prior marriage at the time you are signing up for widow’s benefits.

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