The Economy, Married People, Widows, and Social Security Benefits

Social Security establishes the age at which workers and their families may begin receiving retirement benefits. If you were born before 1938, this is set at age 65. If you were born between 1938 and 1954, the full retirement age increases progressively from 65 up to 66. If your birth year is 1955 or later, your full retirement age increases progressively up to 67. Age 67 is currently the oldest full retirement age though this could increase in the future.

Many people ask me if they will lose their social security benefits if they stay on the job or go back to work. With the economy being as it is, many older adults have put off retirement and are working past the time planned. If you have reached full retirement age you will not lose your benefits. This is the result of legislation passed in 2000.

Only those under full retirement age and already receiving Social Security Retirement Benefits are affected by the following (2008) limits. For that group of individuals the formula is as follows:

If you are under full retirement age you can earn up to $13,560 without penalty. For every $2.00 over the limit your benefits will be reduced by one dollar. If you are reaching full retirement age this year, you can earn up to $36,120 without penalty. Your benefits are reduced by $1 for every $3 earned over the limit. For example, if you earn $40,000 a year and your Social Security payout is $13,000 a year, that payout would fall by $1,293 (about 10%) to $11,707.

Again, if you have reached full retirement age, there is no penalty for earned income.

If you can make do without Social Security benefits until age 70, you will receive a larger monthly benefit. When they begin, monthly benefits will be increased substantially above the base full retirement age, increasing at about 7 to 8% for each year of delay beyond full retirement age. Conversely, if you begin before reaching your full retirement age, the monthly benefits are paid at a permanently reduced amount (up to 20 to 25% less) to reflect receiving benefits for more years.

Another question is whether an individual will continue to receive Social Security benefits as a widow (or widower) if that person remarries. The answer is yes, if you are at least 60 when you remarry. (A widow or widower isn’t actually eligible for benefits until age 60 or, if disabled, until 50.) Or you could apply to receive benefits based on your new spouse’s work record instead if those benefits would be higher. If you remarry before turning 60, however, you will be ineligible for widow’s benefits throughout your marriage.