Social Security & Medicare Q&A: Should I start benefits to augment my earnings?

Q:  I’m 63 and my marriage of 18 years ended some years ago.  I’m thinking about starting benefits to augment my earnings.  I have not worked for very long and my earnings aren’t great.  My former husband remarried, and then died at age 64 before starting benefits.  What should I do?

A:  You require the help of a Social Security representative, but here are some important factors to ask about: 

• You may be eligible for more than one type of benefit.  If you have worked for 10 years or more, you are likely to be eligible for a retirement benefit based on your own work record.  In addition, a divorced spouse age 60 or over may be eligible for a survivors benefit on a deceased former husband’s account if the marriage lasted more than 10 years, even if your former husband had not yet started benefits.
  
  
• The age at which you start your benefit determines the amount you get.  Complicating matters, the age at which persons become eligible for full retirement benefits is no longer 65, but going up.  For a person born in 1940, as you are, your full retirement age is 65 years and 6 months.  You may start benefits at age 63, but your benefit will be reduced.
  
  
• Your earnings could reduce your benefit further if you are under full retirement age.  Benefits are reduced $1 for every $2 earned over certain limits.  In 2003 that amount is $11,520.  (A special rule applies for the year in which you turn full retirement age}.
  
  
• To maximize what you receive, you may find it to your advantage to start with one type of benefit, then switch to the other unreduced benefit when you reach full retirement age.  Before starting benefits, get estimates for both your own retirement benefit and a divorced spouse survivor’s benefit (if eligible).  Then get an estimate of what those benefits would be if you waited and started them at full retirement age.  Generally you automatically receive the higher of the two.  But it may be to your advantage to start with one of the benefits, then switch to the other unreduced benefit when you reach full retirement age. 

To determine your best course of action, I suggest you schedule an appointment with your local Social Security office.  For more information call Social Security toll free at 1-800-772-1213.  If you have Internet access you may find answers to some of your questions and helpful online calculators on the Social Security web site at http://www.ssa.gov.

May 2003

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