Dear Rusty: I will be 70 in January and my wife will be 65 in February, at which time we will both go on Medicare. I am currently working, and my approximate Social Security benefit will be around $2,900. My wife was a stay-at-home mom and, therefore, has minimal Social Security benefits on her own. At 65 she is eligible for $870 and at full retirement age will qualify for $990. A few questions: if she starts to draw benefits at 65, what would be her total spousal benefit? If she waited until her full retirement age, what would the amount be? Of greater concern, what would be her survivor benefit given the same criteria as mentioned above. Signed: Planning Ahead
Dear Planning Ahead: Based on the Social Security amounts in your email, your wife is eligible for a spousal benefit while you are both living. Her spouse benefit when she claims will consist of her own Social Security retirement benefit plus a spousal boost to bring her payment to her spousal entitlement. Spouse benefits are computed using full retirement age (FRA) benefit amounts, so if your age 70 benefit is “around $2,900” then your FRA (age 66) benefit amount (known as your “primary insurance amount”) should be around $2,225. Your wife’s base spousal boost would be the difference between her FRA amount and 50% of your FRA amount, so her total benefit, if taken at her full retirement age, would be about $1,112 (her $990 plus a $122 spousal boost). But taken at age 65, both her own benefit and her spousal boost would be reduced. At age 65 your wife’s total benefit would be around $963 (her own $870 plus a reduced spousal boost of about $93).
Regarding your wife’s survivor benefit as your widow, if she has reached her full retirement age (66 years and 8 months), at your death she would get the same amount you were getting when you died – the $2,900 you will get by claiming at age 70. Your wife’s survivor benefit as your widow will replace the smaller spousal amount she was receiving while you were both living. Since your wife will be already collecting a spousal benefit from you, if she has reached her FRA when you pass your wife will be automatically awarded her survivor benefit at that time. If she hasn’t yet reached her FRA when you pass, the spousal portion of her benefit will stop but she can request a reduced survivor benefit early. In that case her early survivor benefit will be actuarially reduced by .396% for each month before her FRA it is claimed. If you were to die in the month your wife turns 65, her early survivor benefit would be about $2,668.
One final thought about Medicare: if you continue to work and have “creditable” health-care coverage from your employer, you can defer enrolling in Medicare Part B (coverage for outpatient services), thus avoiding the Part B premium until you stop working. If your wife is covered under your “creditable” employer health-care plan, she can also defer enrolling in Medicare Part B until that coverage ends (“creditable” is a group plan with at least 20 participants). However, enrolling in Medicare Part A (coverage for inpatient hospitalization services), for which there is no premium, is mandatory to collect Social Security after age 65.
Russell Gloor is an Association of Mature American Citizens certified social security advisor. To submit a question, visit amacfoundation.org/programs/social-security-advisoryor email firstname.lastname@example.org.