When people think of Social Security, they often think of it as just a retirement benefit.  They assume if they work and pay into Social Security long enough, they will qualify for a monthly retirement benefit that lasts the rest of their life.

Social Security is that and much more.  In addition to retirement benefits, there are spousal benefits, children’s benefits, survivor benefits, disability benefits, and even divorced spouse benefits.  Let’s look at this fictitious married couple:

  • Joe (age 40) and Debra (age 39) are married and have been for 10+ years
  • They have two children, Steven (age 8) and Jane (age 5).
  • Joe earns $120,000 per year and receives cost of living increases to his salary each year.
  • Jane does not work. Her past work record if very limited (less than 5 years), so she does not qualify for Social Security on her own work record.

Below are four scenarios that could apply to Joe and Debra.  The estimated Social Security benefits in each scenario were obtained from the Quick Calculator on the Social Security website at this link: https://www.ssa.gov/OACT/quickcalc/

SCENARIO #1: Joe works full-time to age 67 (his full retirement age), then retires:

  • Joe’s retirement benefit is $2,992 per month if he begins it at age 67.
  • Debra’s spousal retirement benefit is $1,496 per month at her full retirement age of 67.
  • If Joe predeceases Debra during their retirement years, Debra’s spousal retirement benefit will increase to $2,992 per month (what Joe was receiving).

SCENARIO #2: Joe dies prematurely at age 40:

  • Debra receives a survivor benefit of $2,080 per month until her youngest child (Jane) reaches the age of 16.
  • Their children (Steven and Jane) will each receive $2,080 per month until they reach the age of 18, or age 19 if still in high school.
  • There is a Family Maximum of $4,854.10 per month. If the combined monthly benefit for Debra and the children is larger than that, it will be reduced to $4,854.10 per month.
  • When Jane reaches her full retirement age of 67, she qualifies for a monthly survivor retirement benefit of $2,773 per month.

SCENARIO #3: Joe becomes totally and permanently disabled at age 40 and can’t work:

  • Joe receives a disability benefit of $2,747 per month
  • Debra and the children may also qualify for benefits if Joe is disabled.

SCENARIO #4:  Joe and Debra divorce when Joe is 62 and Debra is 61:

  • Once Debra reaches her full retirement age (67), she may qualify for a divorced spouse benefit of $1,496 per month.
  • If Joe predeceases her while retired, her benefit may increase to $2,992 per month.

The above numbers are estimates only, and the actual numbers could be different because:

  • The benefit amounts shown in today’s dollars. The actual amounts would likely be higher due to the cost of living increases that apply to future Social Security benefits.
  • If Joe or Mary decide to begin retirement benefits earlier or later than age 67, the benefit amounts will be different.
  • If Debra is under the age of 67, and decides to go back to work if Joe dies, her survivor benefit may be reduced.
  • If either Joe or Debra have a history of working for a government entity where they did not pay into Social Security, their retirement and/or survivor benefits may be reduced.

Social Security provides a substantial safety net, but the rules are complicated.  The Social Security website, www.ssa.gov provides good information plus calculators so that you can estimate your own Social Security benefits.  For those approaching retirement, there are benefit claiming strategies that can be used to help maximize your lifetime Social Security benefits.  A financial advisor could help determine the best strategy for you.



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