Estate Planning

Spouses Benefit

A spouse receives 1/2 of the retired worker’s full benefit unless the spouse begins collecting benefits before age 65. In that case, the amount of the spouse’s benefit is permanently reduced.

Example: Age 64 - 46%
  63 - 42%
  62 - 37.5%
(Note: If your spouse is taking care of a child under the age of 16 or disabled and receiving Social Security benefits, your spouse gets the full 50% benefit, regardless of age)

Because a spouse is eligible for both their own retirement benefits and for benefits as a spouse, payments are based first on their own retirement benefits.

Here’s an example: Mary qualifies for a “retirement benefit” of $250 and a “wife’s benefit” of $400. At age 65, Mary will receive her own $250 “retirement benefit” and $150 from her “wife’s benefit”, for a total of $400.

How earnings affect your benefits

First, unearned income such as investment income, annuity payments, and interest does not affect your Social Security benefits.

However, the law limits the amount of money you can earn through employment and still collect all your Social Security. This provision affects people under the age of 65 who collect Social Security retirement payments.

  • Under age 65, you can earn up to $11,640 in 2004 and still collect all of your benefits.
  • For every $2 you earn over $11,640, $1 will be withheld from your benefits.

(Note: Limits are indexed for inflation)

Income taxes on benefits

If you file your tax return as an “individual” and your combined income* is between $25,000 and $34,000, you may have to pay taxes on 50% of your Social Security benefits. If your combined income is above $34,000, 85% of your benefits are subject to tax.

If you file a “joint” return and you and your spouse’s combined income* is between $32,000 and $44,000, you may pay taxes of 50% of your Social Security benefits. If combined income is over $44,000, 85% of your benefits are subject to tax.

*”Combined income,” means your and your spouse’s adjusted gross income, plus nontaxableinterest, plus 1/2 your Social Security benefits.

Checking your future estimated benefits

To check the accuracy of your Social Security benefits, call 800-772-1213 and ask for Form SSA-7004. Within six weeks after returning the form you will receive your “Personal Earnings & Benefit Estimate Statement”. This is a free service and you can check the accuracy of your Social Security records. (You have three years to correct any errors.) The report also shows your estimated monthly retirement benefits.