When Oxford, Pa., resident Ute Clark remarried more than 10 years ago at age 59, she didn’t know it, but she had just made herself ineligible to draw down her deceased first husband’s Social Security benefits. The law limits your deceased spouse’s benefits if you remarry before age 60.
While it was only a year’s difference, the difference in her monthly income was stark. Her first husband had been the vice president at a major company, while Clark was a stay-at-home mom. With his benefits, she would have received $1,500 a month in income.
That figure plunged to $400 a month, all because she chose to marry one year too soon.
If it weren’t for her financial advisor, Michelle Ford at LifeLong Retirement Corp., Clark would have missed out entirely on her deceased husband’s benefit.
“My current husband and I annulled the marriage and then married again a year later,” Clark said, taking Ford’s advice. Clark, now 71, retired nine years ago, and her new husband continues to work.
Clark is one of the more than 70% of retirees who have elected to collect benefits before their full retirement age, according to Prudential.
Usually, if you are married 10 years before you are divorced or two years before your spouse dies, you can claim half of your former partner’s benefits.
“Married couples are entitled to spousal benefits based on each other's work record,” says Jeremy Kisner, a financial advisor and president of SureVest Capital Management in Phoenix. “If [you are] single and never married, your only option is to collect on your own work record. So there is an incentive to get married for retirement in order to have the option of spousal benefits.”
Another advantage of wedded bliss is that retirees will be able to circumvent a wage limit placed on them before they reach full retirement age, says Steve Gaito, director of the My Retirement Education Center in Raleigh, N.C. If a single person earns income when he or she is between 62 and 66 years old, the Social Security Administration will withhold $1 for every $2 more than $15,120. Meanwhile, married people can control who receives the income, allowing one spouse to draw down Social Security benefits while the other gathers all the earned income with no reduction in benefit.
Still, Americans’ limited understanding of the Social Security program prevents many of them from maximizing their benefits, according to a white paper, “Innovative Strategies to Help Maximize Social Security Benefits,” written by Jim Mahaney, the vice president of strategic initiatives at Prudential.