Mysteries of Social Security Retirement Benefits: Part Trois--Who

In our two preceding blogs, we discussed how the Social Security Administration determines your retirement benefits, and the advantages and disadvantages of starting to collect benefits at various ages. Today, we discuss who receives benefits. This is where Social Security may be a bit more generous than you might have thought.

You, naturally, receive benefits based on your employment history. Your spouse can also receive benefits based on your employment history, up to as much as half of your benefits. Like you, however, your spouse is receives reduced benefits if he or she starts collecting them before his or her full Social Security retirement age. (We discussed full retirement age in yesterday's blog.) Conversely, you might be able to receive Social Security based on your spouse's employment history.

If you have an employment history that entitles you to benefits and are married, you will receive the benefits you have earned from your own employment history. In addition, if your spousal benefit would be larger than your personal benefit, you would receive an amount equal to the difference between your spousal benefit and your personal benefit. In other words, the amount you get is the greater of your personal benefit or your spousal benefit.

Divorced persons may be able to collect Social Security retirement benefits based on the employment history of their former spouses under some circumstances. They must have: (a) been married for at least 10 years; (b) reached the age of at least 62; (c) be currently unmarried; and (d) not be entitled to a larger benefit based on their own employment history. So not all is lost from the relationship. You can receive up to half of the amount of your ex's full retirement benefits if you wait until your full retirement age. Your spousal benefits will be reduced if you start earlier.

One little known fact about Social Security is that if you are entitled to retirement benefits and have dependent children or grandchildren, the kids under the age of 18 or who are disabled can start collecting benefits when you do. So late in life parents, and grandparents who are raising their grandkids, can get some help. This benefit is subject to limitations on much your family can collect in total (about 150% to 180% of the benefits you receive). If you are eligible for Social Security retirement benefits and are in need of cash to raise the young ones, here's some relief. If you don't need the money, save it up and use it as a college fund for the kids.

Social Security also provides life insurance of a sort, in the form of survivors benefits. Survivors can receive benefits, depending on the deceased person's employment history. A widow or widower can receive benefits as early as age 60, although they will be sharply reduced from what the widow or widower would receive at his or her full retirement age. A divorced survivor who was married to the deceased for at least 10 years and remains unmarried may also be entitled to survivors benefits starting as early as 60. A widow or widower (or divorced survivor) of any age who is supporting dependent children under the age of 16 or disabled children (who themselves are entitled to a child's benefit) may also be able to get survivors benefits. Unmarried children under the age of 18 can receive benefits (and can get them up to age 19 if they are still attending primary school or high school). Even your dependent parents, if you are providing at least half their support, can collect benefits if they are at least 62. Survivors benefits are complex, and we have only touched the surface. For more detail about survivors benefits, go to www.socialsecurity.gov/pubs/10084.html.

There's lots more to Social Security. People receiving pensions from governments or nonprofit institutions may be subject to nasty reductions and offsets if they didn't pay Social Security taxes in those government or nonprofit jobs, even if they otherwise qualify for Social Security benefits from other jobs. Your painkiller budget will skyrocket if you ever have to deal with Social Security disability questions. But it's important to be familiar with Social Security. Close to 50 million Americans receive benefits of one type or another. Almost 34 million receive retirement benefits. About 6.5 million receive survivors benefits. And about 8.6 million receive disability benefits. That means 1 out of every 6 Americans receives something from Social Security. It's by far the most important social welfare program in the country, and one that will benefit almost everyone eventually.

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