Broker Check

Monday Money Report

| March 18, 2024

The markets squeaked out a positive week, despite declines to close out the week after data showed inflation remains stubbornly high. The Federal Reserve Bank will release updated economic projections on Wednesday and give investors insight into the possibility of rate cuts this year.

We’ve had a lot of questions lately about Social Security, specifically about spousal benefits. If you think about society in 1937, when Social Security began, there were few wives who worked outside the home. And if you look at your paystub, you’ll see the deduction for OASDI – Old Age, Survivors and Disability Insurance, which is the full name for what we call Social Security. It was intended to be a safety net for people who had lived past the normal lifespan, for widows and orphans, and for workers who became disabled and unable to work prior to retirement.

Today, even though both spouses often work outside the home, we still have spousal benefits and survivor benefits. Spousal benefits help the spouse who earned less. You’re entitled to the greater of your own benefits, or half of your spouse’s Primary Insurance Amount, which is what they receive if they take benefits at their Full Retirement Age. You are not entitled to both, and you no longer get to choose one over the other. When you file for Social Security, you provide information about current and former marriages.

If you are divorced, and were married for at least ten years, you are still entitled to spousal benefits. Your former spouse will never know, and it does not impact their benefits. They don’t even have to have claimed Social Security. If you remarry, you would claim on your current spouse’s record. If you divorce again, you can still claim on the first spouse’s record. Regardless of whose record you claim on, you will only receive one payment, the greater of your own, or one-half of a current or former spouses’ Full Retirement Age (FRA) benefit.

If you are a widow, or if your former spouse from a marriage of at least ten years, has passed, you are entitled to survivor benefits. Survivor benefits will vary based on when the person died, and if they had claimed Social Security. For example, if someone passed while still working, the surviving spouse is eligible for benefits based on their Primary Insurance Amount; the amount they would have collected at their Full Retirement Age. If someone passed after retirement, and had begun drawing Social Security, the surviving spouse would be entitled to the full amount they had been receiving.

Surviving spouses can also start these benefits at 60, although there is a reduction for taking benefits early. There is one advantage to these benefits, though. You can claim widow’s benefits and allow yours to continue growing, switching to your own record any point up to age 70. You can’t do that with spousal benefits. And again, both spousal and widow’s benefits are available for a current spouse and a former spouse if the marriage lasted at least ten years.

Choosing when to draw Social Security can have a big impact on your financial plan, and we recommend sitting down with your financial advisor to make this decision as part of your retirement plan.

Your action item this week is to check your Social Security statement. These used to be mailed annually, but the agency stopped in 2011 to save money. Go online at ssa.gov, establish an account, and review your reported earnings.
Be sure to check out our website at covingtonalsina.com, or our Facebook page, for more information and to register for our upcoming educational events, including this week’s Women, Wine & Wisdom talk on Long Term Care.
CovingtonAlsina is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.