Sunday, November 13, 2011

Be informed about Social Security

Both of my parents were eligible for a mere pittance in Social Security benefits at age 65 despite working together on the family farm 31 years before they divorced. My dad worked exclusively on the farm his entire life except for a brief stint with the army reserves. I found this hard to believe. I remember the farm not generating much income when I was small, but I thought it did fairly well once my younger siblings were in high school. How could this be?

Filing a Federal Income Tax return has nothing to do with Social Security:
My family's farm was owned by my grandparents. My father received a monthly allowance which my parents recorded as income when they filed their joint income tax return. The problem is filing an income tax return has nothing to do with the assignment of Social Security. The Social Security portion of a self-employment tax return is filed on a form called Schedule SE. So first my grandfather's name and Social Security number were listed on the Schedule SE and after his death my grandmothers. This meant all of the farm earnings and credits were posted to my grandparent’s accounts and none to my parents. This is an important lesson for anyone jointly running a family business, if you plan on one day collecting Social Security benefits make sure your portion of the business profits are filed on a separate Schedule SE with your name and social security number.

You need to remain married ten years in order to collect on your ex-spouse's Social Security account:
A marriage must last ten years before a divorced person may be eligible for an ex’s Social Security benefit. So if you’ve been married 9 years and ten months hold on for another two months if you want to one day tap into your spouse’s Social Security account. Note you will need to be unmarried to collect these benefits and at least 62 years old.

Read the obituaries:
If you were married to your ex for more than ten years make sure you read the obituaries. Once an ex-spouse has died you are eligible for a divorced survivor benefit. This benefit will be 100% of the deceased ex-spouse's benefit. If you remarry after age 60, you can still receive the survivor benefit.

My dad may be eligible for a spousal benefit:
My Mother, who worked before she was married, returned to work after her divorce and is still working at age 74. Her Social Security benefits continue to increase, as she makes additional contributions. Plus on a side note, her Social Security benefit was no longer subject to income tax once she turned 70 years old. It just occurred to me that my dad could probably collect a higher Social Security benefit if he applied for spousal benefits. He is eligible for 50% of her benefit which is probably more than he receives now. He could also be eligible for free Medicare Part A benefits based on her earnings record, since I doubt he has accumulated enough Social Security credits to be eligible for Medicare on his own. If she were to die before him he would be eligible for the higher deceased ex-spouse benefit.

He was such a jerk towards her throughout their marriage and divorce proceedings though I don’t think I can bring myself to tell him this.

See also:
Do you review your Social Security statements?


  1. Savvy, I am sitting her giggling at your last note. My parents divorced with silent acrimony after 25 years of marriage. Mother very proudly refused spousal support and worked for many more years. When dad died, she marched herself (at 85) down to the SS Admin office in town and signed up for his benefit. It was $17 a month more than hers. "I earned it", she told me!

    More seriously, tho, if there is a wide age gap between spouses the younger spouse may actually end up with a larger monthly payment than the older one due to COLA's. It's important to see how you can coordinate your benefits. For example, I am delaying my benefit until I am 70 - ugh! - even tho I may retire at 68. It will give me a 30% larger monthly amount at a time when my husband will probably predecease me. While it is true that I would take home more TOTAL dollars if I start taking the money at 62, it would also mean a reduced monthly amount when I am too old to work (perhaps) and on my own. It's very complicated.

    Sorry your folks got caught in that technicality.

  2. Webb,
    I bet your Mother did earn every penny of that $17.

    Delaying benefits is something my spouse and I are strongly considering. We do have a wide age gap (11 years). DH will probably retire in 2 years and I would like to in ten. These are hard decisions to make. I grew up poor and would hate to live like that again.