The Wall Street Journal-20080126-Ask Encore - Focus on Retirement
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Collecting on a Working Partner's Social Security
Is there a way for my wife to collect Social Security based on my record while I'm still working?
My wife is almost 65 and doesn't qualify for benefits on her own. I will be 63 in July. I have worked since 1968 and have always paid in the maximum amount to Social Security, and I am paid in the low six figures in my industry. I plan to work for a couple more years. I have read that my spouse will be able to qualify for benefits on my Social Security earnings, but that I must be receiving benefits before she can draw anything (though she will be able to apply for Medicare when she is 65).
So, if I apply for Social Security at age 63, in July -- even though I am still working with no chance of receiving any benefits, because of the earnings penalty -- will my spouse be able to claim benefits based on my account? Also, would we both receive increased Social Security benefits when I retire in a couple of years (after I get credit for the deductions from the earnings penalty)?
James Franks
Tampa, Fla.
Your strategy won't work in your case -- though it might have if you made less money.
To figure out your wife's benefit based on your work record, the Social Security Administration would first calculate what you can collect while you continue to work. At your wife's full retirement age, she would be eligible for half that amount. If she started taking the benefit before that date, the check would be reduced further, says Mickie Douglas, a Social Security spokeswoman.
In your case, your salary -- if you file for benefits this year -- will substantially exceed Social Security's annual earnings limit. (More about that in a moment.) As a result, you wouldn't receive any benefits -- which means your wife can't receive any, either. Simply put, half of zero is still zero. (To figure out your full retirement age and the amount by which a worker's or spouse's benefit would be reduced by taking it early, go to socialsecurity.gov, click on "Plan your retirement," and then click on "Find your retirement age.")
Social Security recipients who are younger than their full retirement age are allowed to earn a small paycheck without affecting their benefit. This year, the earnings limit is $13,560. Social Security would deduct $1 from your benefits for each $2 you earn above that limit.
So, if you made $100,000 this year, you and your wife together would have to be eligible for more than $64,830 this year in early Social Security benefits for either of you to get any. And that isn't possible; the maximum Social Security benefit for a worker retiring this year at full retirement age is $21,085 (or $31,627.50 for a couple in which one spouse collects based on the other's work record).
If you made less money, your wife might have a shot at collecting benefits, depending on the Social Security benefits for which you are eligible. To get a better idea, go to socialsecurity.gov, again click on "Plan your retirement," then select "Near retirement?" and click on the "earnings limit" calculator.
One note: In the year you reach your full retirement age, you can earn $36,120 before any penalty. Then, for every $3 over the earnings limit, $1 is withheld from benefits until the month you reach full retirement age.
On your second question: You're right, Ms. Douglas says. If you have Social Security retirement benefits withheld because you make too much money on the job, your benefits will increase -- starting at your full retirement age -- to take into account the months in which benefits were withheld. There are more details and examples at socialsecurity.gov: Again click on "Plan your retirement," and then go to "Find out what happens if you work after you retire."
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