Thursday, October 7, 2010

Working and Widow's benefits

Donna from Massachussetts
I am 56, and have been widowed since I was 43. I understand I can retire at age 60 and take my husbands SS benefits as I have never remarried. Can I take his SS and still work? If so, how much can I earn? and to what age can I work? Financially I cannot afford to retire, but the extra money his SS would provide would be a great assistance.

ANSWER:  Hi Donna- When you collect a social security benefit before full retirement age (age 66), you will lose one dollar in benefits for every two dollars you earn over the earnings limit for the particular year you get benefits. This is called the “work test” or the “retirement test.” For 2010, the annual amount for those under full retirement age is $14,160. So using that as an example, if you earn $25,000, then to determine how much would be withheld from benefits, simply deduct 14,160 and divide by two. This equals 5,420. If your monthly benefit amount is $1,000 as an example, that would be $12,000 per year, but because $5,420 must be withheld, no benefits would be paid for the first five months, and then $420 would be deducted from the sixth month. You ask to what age you can work, and the answer is as long as you want and are able. Your benefits may be withheld in full or part depending on your earnings, but at age 66 your earnings no longer will affect your benefits. You will have some choices to make though when you turn 62 as to whether you want to switch to benefits on your own account. Widows have the option to collect on the deceased spouse's account at an age-reduced rate, and the switch to their own at the full rate at age 66. I discuss this in my Social Security benefits Handbook. Here's a link to Chapter Three of my online edition:

Read Section 303 for the discussion.

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