Do You Have Any Suggestions For Me?

Mar 23 2017 - 8:00am

Hello Mr. Larry!
My husband is retired military, he took out the SBP, he has also applied for his social security benefit at age 62 which will begin at the end of June 2017. We had a very small home based business that we did not take a salary; unfortunately the business isn't doing much business and therefore he hasn't paid into SS since 1998. His military retirement won't be effective for taking his social security.
I'm not sure what my question really is; but it concerns my widow benefits from his SS & SBP if something should happen to him. He has had some health issues however it appears he is doing better, thank the lord! It's funny that my projected SS benefit is less than his, I will be 60 in May, worked all my life and the schedule shows that I have paid into SS at this date $1100 more than he has in total, I have worked/paid in more years than he has. If I were to retire at 62 based on projected earning my monthly SS will be less than what he will get in June 2017; I do plan to work to 70 though. Why is his benefit more than mine? I have a state retirement, currently 10 years invested but I'm concerned that the SBP will off set my total SS monthly benefit if he were to die. Not sure what I need to do? We lost our life savings in the last crash, due to his poor health, the economy down turn, helping our single parent adult child's two children has me thinking I'll be living in a cardboard box....Any suggestions? Thank you for your time!

Hi,

There is no 'one size fits all' strategy for Social Security. Assuming that you were born after January 1 1954, whenever you apply for either spousal benefits or retirement benefits on your own record, you will be deemed to have filed for both benefits. And, you will only receive the higher of the 2 rates, which would be your own retirement rate provided that it is higher than 50% of your husband's full retirement age rate.

You can claim benefits as early as age 62, but your benefit rate will be reduced if you do so. In fact, if you wait until age 70 to start drawing your retirement benefits, your rate will be about 76% higher than if you start drawing at age 62.

If your husband dies before you, you could then be eligible for the higher of your own benefit rate or 82.5% of his full retirement age rate. Your widow's rate would be limited to 82.5% of his full retirement age rate, or PIA, because he's taking his benefits at age 62. If he had waited until his full retirement age or later to start drawing his benefits, your widow's rate could be as high as 100% of his monthly rate. His military SBP pension would not affect your potential widow's rate, even if you get a survivor pension from the military. Again, though, you can't get both your own benefit rate and a widow's benefit, just the higher of the two.

I can't explain why your benefit rate would be lower than your husband's. Social Security retirement benefits are calculated based on an average of your highest 35 years of work-adjusted earnings (https://www.ssa.gov/pubs/EN-05-10070.pdf), and the same method would be used for both of you. Extra deemed wages are added to a person's earnings record for certain periods that they were on active duty in the military (https://www.ssa.gov/OP_Home/handbook/handbook.09/handbook-0953.html), though, which may have boosted your husband's rate somewhat.

You may want to consider running the maximization software available on this website before making any filing decisions. That should help you decide which filing option is best for your set of your circumstances.

Best, Jerry