This week with Social Security Matters – Annual Earnings Limits

by AMAC’s Certified Social Security Advisor C.J. Miles

Association of Mature American Citizens

QUESTION: I am filing to receive ex-spouse Social Security benefits.  I was told by a friend of mine that her benefits are reduced because her husband works and makes too much money.  I know my ex-husband works.  Will his earnings reduce my benefits?

ANSWER: It sounds like your friend is talking about the Annual Earnings Limit.  If you are under full retirement age and you earn over a certain income level, you (and your dependents receiving benefits on your record) will receive a reduction in your benefit amount.  (The Earnings Limit changes every year.)  However, this does not apply to ex-spouses.  Therefore, it does not matter how much your ex-husband earns – it will not affect your benefit amount.  Only your own earnings could possibly reduce your benefit while you are receiving ex-spouse benefits.

QUESTION: I talked to the Social Security office about my choices for filing for Social Security benefits and was told that I can get ex-spouse benefits and hold off on getting my own benefits.  But my ex-husband is remarried and his current wife and son are also getting benefits off of his record.  I’ve heard of the family maximum and with all these people on his record, should I just get my own benefits?  At this rate, my ex-spouse benefits are going to be hardly anything

ANSWER: Assuming your ex-husband’s current wife and son are his qualifying dependents (and assuming the son is not your dependent), they probably are affected by the family maximum, which reduces their monthly benefits.  The actual amount of the family maximum is a formula that is a little too complex to explain here, but in general, it comes out to anywhere between 150% and 180% of the worker’s full benefit amount.  To use a simple example, let’s say that your ex-husband’s full benefit amount is $1,000 and the family maximum for them is 150%, or $1,500.  This would mean that the dependents (the wife and child) would have to split the amount over $1,000 evenly even if they are entitled to more if there were no family maximum (i.e. $250/month each instead of $500/month).

The good news for you is that Social Security’s family maximum rules do not apply to ex-spouse benefits.  Therefore, you are not affected by his son’s and current wife’s Social Security benefits on his record.  In addition, the same is true for them – your benefits on his record do not affect their family maximum.  So regardless of which benefit amount you prefer to take at this time, do not worry about this issue in your situation.

And just in case you are wondering, multiple ex-spouses can receive benefits on the same person’s record without affecting the family maximum.

QUESTION: I’m currently 71 years old and started getting my Social Security payments about 5 years ago.  I have no children, wife, or other dependents.  I was only married once for a brief period when I was in my 40s.  So what happens to my survivor’s benefits from Social Security when I’m gone?  Should I contact them and tell them who I want my beneficiary to be?

ANSWER: In order for someone to receive survivor’s benefits on your record they would have to be some kind of dependent, such as a spouse or child.  This also includes step-children, adopted children, and ex-spouses.  However, it sounds like these situations may not apply to you.  Any child would have to meet some criteria, such as an age limit or disability.  You mentioned that you have an ex-wife, but you may not have been married long enough for her to receive your survivor’s benefits.  In order for a divorced surviving spouse to get a benefit, the two of you would have had to be married for at least 10 years.  In addition, she would have had to stay single at least until the age of 60 to receive the benefit.  Note that these requirements also apply for the lump-sum death payment of $255.

If there is not anyone who meets these eligibility requirements, no one will receive survivor’s benefits based on your Social Security record, including the lump-sum payment.  You cannot give them an alternative beneficiary.  The only other potential beneficiary would a dependent parent if you are caring for one (or both) and if he/she is your dependent.  Or, of course, you could always remarry! (Note that unlike other marriage requirement rules for spouses and ex-spouses, a widow(er) can receive surviving spouse benefits after only nine months of marriage.)

To ask a question about Social Security contact AMAC’s C.J. Miles at cmiles@amac.us.  

The information contained in this article is for general information purposes only. Every individual’s situation is unique and you should make your benefit choices according to your personal needs. Furthermore, AMAC and its affiliates do not provide legal or accounting services. Please contact a licensed professional for such advice.