Social Security 101 - What Do I Need to Know?
By Myra Alport June 10, 2022
Women rely heavily on Social Security (SS) as their primary source of income in retirement. These benefits are on average smaller for women due to lost earnings or part-time income during caregiving years. As a result, carefully consider the most appropriate time to begin your Social Security benefit to maximize this monthly payment over your lifetime. There is no one size fits all approach, that’s for certain. Let's explore the basics here.
What’s The Earliest Age I Can Claim My Social Security Benefit?
The short answer is 62. By taking SS as early as possible at your age 62, your benefits are reduced by a small, but not insignificant, percentage over your lifetime. Any so-called “cost of living adjustment” or increase to your benefit is determined yearly by the US Dept of Labor, which bases their decision on the Consumer Price Index.
Your SS payment is based on your highest 35 years of earnings. If you haven’t a work history lasting 35 years, any missing years count as zeroes. Some believe that taking it at 62 is good because it’s permitted.
What’s The Latest Age I Can Claim My Social Security Benefit?
The absolute highest benefit payable to you based on your own work history is age 70.
Any Options Between Ages 62 and 70?
Yes. A key acronym known as FRA (Full Retirement Age) refers to the age at which you are entitled to your full retirement benefit amount, which is based on your date of birth, somewhere in the neighborhood between ages 66-67. If you delay your benefits beyond your FRA, your benefit will grow by 8% for each full year until age 70. That’s an 8% raise for each year you wait it out.
Now, there are any number of personal reasons why you might not be in a position to wait until age 70 or a younger age. Perhaps you have health issues, you’re burned out, you are a caregiver to an elderly parent or grandchildren, you receive a healthy pension or have other assets to supplement your income.
Are There Options If I’m Divorced?
You may be entitled to a spousal benefit when your ex-spouse reaches their full retirement age (FRA) but there are caveats:
- Your marriage lasted 10+ years
- You have not remarried
- You are at least 62 years of age
- Your spouse paid into the Social Security system during their working years
- You have to be divorced for at least 2 years
If these requirements are met, the most you will receive as an ex-spouse is 50% of their benefit at their Full Retirement Age. You cannot receive both your own benefit and the ex-spouse benefit, but you will receive the higher of the two amounts where applicable. In short, this means that you can draw your own benefit starting at age 62, then at your ex-spouse’s FRA (whether he’s still working or not) if caveats 1,2 and 4 are met, you can receive an amount equal to as much as 50% of your ex's benefits, but NOT BOTH.
Example #1: Tammy meets the above eligibility requirements. Tammy takes her own benefit at 62, receiving $1200/mo. Her ex spouse turns his FRA at 66-1/2 and will receive $3200/mo. Tammy can receive 50% of this amount, or $1600/mo, which is greater than her current $1200. At this point, she claims the spousal benefit at the higher amount at that point.
Example #2: Joyce meets the eligibility requirements. She takes her SS at 65, receiving $2200/mo. Her ex turns his FRA at 67 and will receive $3800/mo. Since 50% of $3800 ($1900) is less than Joyce’s current benefit of $2200 she continues her own benefit instead of the spousal benefit.
Something to keep in mind if you divorce prior to age 62 - depending on your assets and sources of income post divorce, you may not be in the best financial position to start your benefits as early as 62. Staying in the workforce will help grow your Social Security benefit until such time that your retirement is more secure.
What Happens if My Ex Passes Away?
You may be eligible to receive up to 100% of your ex-spouse’s FRA benefit after they pass away. In the case of either Tammy or Joyce above they would then be eligible to receive the higher amount.
Visit ssa.gov to obtain a copy of your benefit statement, which is updated annually. The Social Security Administration will email you when a new statement becomes available a few months before your birthday.
Your best bet for getting answers to your specific questions is by calling the toll-free line at 800-772-1213.