Social Security offers more than just retirement benefits

Question: I filed for Social Security early (62) but need to go back to work at least part time because I don’t think that I will have enough income for the long haul. What are the repercussions of going back to work full time or part time, and given my decision, how can I best preserve my Social Security benefits?

Answer: If you filed less than a year ago and you have savings available to pay Social Security back for the benefits you have received, you might consider ‘canceling’ your claim as you go back to work. This would ‘reset’ your benefit amount as if you did not take the early, discounted amount. On the other hand, if it has been more than a year since you began receiving benefits, you no longer have the option to “pay it back.”

Q: I am 66 and I can’t decide if I should:

a) work full time and take benefits.

b) work part time and take benefits.

c) work full time and put off taking benefits until age 70.

d) quit working altogether and collect benefits.

A: Choice a) is usually not a good plan unless you are in distressingly ill health. Choice b) is usually not a good plan unless your spouse has higher benefits and is waiting until age 70 or you need the money to keep a roof over your head and food on the table. Choice c) is usually a good plan, especially if you like your work and its contribution to the world. Before making choice d) you should consider questions like: What is your goal? Do you like your work? Do you have others financially dependent on you?

Q: What are some Social Security benefits that people might not know that they are eligible for?

A: Many people focus on the retirement benefits provided by Social Security. Social Security also pays benefits in the case of long-term disabilities or those expected to end in death. Survivors, spouses and minor and/or disabled children can also receive benefits on a worker’s record. Finally, your ex- or deceased spouse may provide you with additional benefits. There are many rules, and exceptions to the rules, that determine if you are eligible under an ex-spouse’s record — the basic one being that you had to be married for 10 years. The Social Security Administration is quite good at helping you determine how to get the greatest dollar benefit “today” as long as you have the earner information for records that might impact your eligibility (ex- or deceased spouses, usually).

Q: How do I minimize the taxes on my Social Security payments?

A: The short answer is if you have no earnings or any other income from any source — other than Social Security — you probably won’t pay taxes on your benefits.

Q: There is a category on my Social Security statement that says maximum family benefit. What is this, and how does my family get it?

A: Once someone is entitled to Social Security benefits, their spouse and minor/disabled children may also be eligible for a benefit. However, the total family benefit is capped. Once the cap is met, an additional child, though eligible, would not get benefits.

Q: I am in a civil union or a gay marriage that is not recognized in all states. Can I draw benefits on my partner’s Social Security? If not, what are some other steps that we can take to plan for our future?

A: At this time, spousal benefits appear to be restricted to spouses recognized by the federal government. So you can’t draw on your partner’s record. Contact an attorney who is well versed in creating legal documents that mimic the “marital” benefits prevalent in our legal system: inheritance, medical directives, powers of attorney, etc.

Q: I am single but have been widowed and divorced. How do I decide which of the three Social Security records to collect on? Is it possible to switch between my late husband’s record and my divorced husband’s record?

A: This is an excellent situation to call Social Security directly — make sure you have all the applicable Social Security numbers. You will have to have been married for at least 10 years before getting divorced and at least nine months before the passing of your husband (with many exceptions). Usually, the Social Security Administration phone bank folk are quite good at working through a situation like this and giving advice on how to maximize your benefit right now. Yes, you can draw benefits as a widow(er) starting at age 60 or later and switch later. Keep in mind that you want to wait as long as reasonable to draw the highest benefit so you have the highest government-guaranteed payout later in life. If that highest payout is based on a spouse’s record, there is usually no reason to wait past full retirement age.

Q: People keep saying that Social Security is going to run out and that I should collect it early or risk it not being there. Are they right?

A: Short answer: I don’t think so. But anything can happen in theory. My rationale is that anyone who is near enough to retirement age to start looking at Social Security benefit levels is likely to be protected to some degree against future adjustments to the system. Possibly if benefits become more means-tested in the future, actual payments may be impacted.

However, the risk of living to 95+ and actually needing the highest possible check from the government trumps (to me) the race to get a few more dollars while you’re in your 60s.