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BFG in the News: Nick answers readers’ questions about Social Security Benefits

Income Planning Social Security Baron Team Insights

Nicholas Scheibner, CFP®, is quoted on the topic of Social Security benefits, answering readers’ questions on NJMoneyHelp.com by Karin Price Mueller.  

A 90-second read by Nicholas Scheibner, CFP®

“I never paid into Social Security. Can I get benefits anyway?”, originally published on May 2, 2022.

The first thing to know is that your pension will not be affected by your Social Security benefits.  Second, your husband’s Social Security will not be affected by your pension, or your decision to apply for Spousal Benefits.  However, your Social Security benefits may be affected by several factors:

Regarding Social Security Spousal Retirement Benefits, even if you never paid into Social Security, you may be eligible for spousal benefits.  In your case, since you do not have any Social Security quarters earned, your maximum spousal benefit will be ½ of your husband’s Full Retirement Benefit.  You have the option to start taking these benefits as early as 62, but they will be permanently reduced.   The Social Security Administration has a quick online calculator to help you estimate the reduction of benefits by taking Social Security early: https://www.ssa.gov/OACT/quickcalc/spouse.html#calculator

If you had been paying into Social Security, but your own retirement benefits were less than ½ of your husband’s, your spousal benefit would equal the difference between your benefit and ½ of your husband’s benefit.  Social Security explains this as:  Under Social Security’s “dual entitlement rule”, a person’s spousal benefit is reduced, dollar-for-dollar, by the amount of his or her own Social Security.

Your application for Spousal Benefits will not have an effect on your husband’s benefit.  However, note that your husband needs to be receiving Social Security benefits for you to receive Spousal benefits.  So, if your husband has not begun his Social Security yet, you’ll need to wait until he starts collecting. 

Your pension, however, may affect your Social Security benefits paid to you.  You may find your spousal benefits will be reduced by the “Government Pension Offset”.  Social Security states: “If you receive a retirement or disability pension from a federal, state, or local government based on your own work for which you didn’t pay Social Security taxes, we may reduce your Social Security spouses or widows or widowers’ benefits.”

“We’ll reduce your Social Security benefits by two-thirds of your government pension. If two-thirds of your government pension is more than your Social Security benefit, your benefit could be reduced to zero.”

Note, your pension will not affect your husband’s Social Security, since the GPO only applies to pension for work based on your own record.   

Read Karin Price Mueller’s article about never paying into Social Security here.  

“If I file for Social Security first, can I still get spousal benefits?”, originally published on June 13, 2022.

It is best practice to assume nothing happens automatically with Social Security.  Regarding your situation, you will only be entitled to spousal benefits once your husband begins collecting his benefits.  This, however, doesn’t mean you need to delay your benefits. You could begin your own retirement benefits at 62, and then apply for spousal benefits once your husband files.  At the time your husband files, it would be best to arrange a phone appointment with Social Security, as they may be able to apply for your husband’s benefits and your spousal benefits on the same call. 

Keep in mind, depending on the amount you may receive, filing for your own benefits at 62 may impact your overall benefits. Spousal benefits are actually a combination of your own benefits and your spousal benefits.  So, if you take your Social Security early, your benefits would be reduced.

Read Karin Price Mueller’s article about spousal Social Security benefits here.

If you have any further questions, please reach out to your Baron Team.

Disclosure:  This is a general communication being provided for informational purposes only.   This material is not intended to be relied upon as a forecast, research, tax or investment advice.