I will never see Social Security Benefits in my lifetime. Considering the baby boomers are retiring and there are fewer workers replacing them, this seems like a logical outcome. In the not-so-distant future, the government will be paying out more than it is collecting. As of today, “benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.”*1. However, political pressures make this an extremely unlikely scenario. Regardless of political affiliation, Americans believe in preserving Social Security. “At a time when Americans seem deeply divided about the right size and role of government, it is striking that Americans across political and generational lines agree on specific policies to pay for and improve Social Security benefits.”*2 There are continuous debates on whether to increase Social Security’s taxable wages and eliminate the cap, raise the payroll tax rate, or possibly delay the earliest age of eligibility for benefits. We can rest assured the solvency of Social Security is top of mind for policymakers on both sides of the aisle.
I will lose benefits if I remarry. Like many things, that depends. Every scenario is different. Whether you are divorced, widowed, or remarried determines your benefits eligibility and amount. "Indeed, one of the many things people don't know about Social Security is how drastically it can be affected by marital status."*3 Plus, the rules regarding marriage have changed numerous times over the last 50 years. When Social Security benefits were first introduced, a widow would forfeit survivor benefits if she were to remarry regardless of age. In 1979, the age-60 remarriage rule took effect stating that a widow could remarry and still be eligible for survivor benefits as long as they were over 60 years old. Interestingly, studies have shown that this rule significantly impacted widows’ decision to wait until after 60 years old to remarry. Unfortunately, for some people who did not carefully consider the impact of this amendment, it made a huge dent in their livelihood. With regards to divorce, if the marriage lasted 10 years, the ex-spouse is eligible for 50% of spousal benefits and 100% of survivor benefits.*6 However, you cannot claim divorced-spouse benefits linked to a living ex-spouse if you are married. If you began drawing ex-spousal benefits when you were single but then remarry, those payments will cease upon remarriage. There are many variables surrounding Social Security Benefits whether single or married, divorced or widowed. A Certified Financial Planner can provide recommendations based on your circumstances.
Source: Social Security Spousal Benefits Explained by Dana Anspach. The Balance. June 26, 2022. Illustration by Theresa Chiechi.
I am better off taking Social Security benefits as soon as possible. Often enough, people believe they will not live to old age. Statistically, life expectancy today is considerably longer than when Social Security was first implemented in 1935. A combination of more effective medical treatments, accessibility to healthcare, and healthier lifestyles play a major role in living longer. However, people believe their life expectancy will resemble their parents. While genetics do play a role, the likelihood of living longer than the generation prior is a real possibility. There is a mental block when an adult approaches the age in which their parents may have passed; psychologically, they cannot imagine themselves living longer. “When a parent dies, they become frozen in time, forever their age at death.”*4 It doesn’t matter that the deceased parent had a different lifestyle or smoked two packs of cigarettes daily. Nonetheless, it is critical to recognize that longevity can pose a huge risk on your financial welfare and it’s important to plan for a longer runway.
If you take Social Security at age 62, you permanently reduce your (PIA) primary insurance amount and your spousal benefit amount. Starting benefits early decreases benefits by 30% (as illustrated below). Additionally, “you’ll get an extra 2/3 of 1% for each month you delay after your birthday month, adding up to 8% for each full year you wait until age 70.”*5 Considering longevity and the extra financial incentive, the decision to delay Social Security Benefits may make more sense.
Source: The Balance. October 21, 2021. Illustration by Britney Willson
It is important to note that employees of the Social Security Administration are not permitted to offer advice about how and when to file for Social Security Benefits. If you would like to speak with a financial advisor about when to claim benefits based on your individual situation, please reach out to VLP Financial Advisors. You can conveniently schedule time with one of our advisors here:
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2. www.nasi.org/learn/social-security/public-opinions-on-social-security by Jasmine V. Tucker
3. The Los Angeles Times, August 13, 1995. "What Widows Should Know Before Remarrying," by Kathy M. Kristof.
4. PsychologyToday.com. When You Reach the Age Your Parent Died by Dena Kouremetis.
5. Kiplinger.com. Boost Your Social Security Benefit Every Month You Delay. By Kimberly Lankford. OCTOBER 03, 2017.