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# Can someone set me straight here on SS?

It is difficult to find clear cut answers to some of this.

Let's say a married couple has a single wage earner making \$90K. When said wage earner retires, this SSA quick calculator gives the following benefit:

Date of birth: 6/15/1950 (used for all calcs)
Current earnings: \$90,000.00
Benefit in year-2005 dollars (used for all calcs)

Retirement age____________Monthly benefit amount
62 and 1 month in 2012____\$1,410.00
66 in 2016________________\$1,927.00
70 in 2020________________\$2,612.00

Let's say that \$90K was earned by both parties making ~\$45K each:

Current earnings: \$45,000.00

Retirement age____________Monthly benefit amount 1
62 and 1 month in 2012____\$969.00
66 in 2016________________\$1,347.00
70 in 2020________________\$1,850.00

Just using the age 70 bennies, that would be \$3700 monthly to two wage earners, vs. roughly \$2600 for the single wage earner.

So ... can anyone answer the following questions for me:

1. Do two wage earner households receive two SS checks?
2. If the wage earner in the single earner case dies, what percent of the benefit is then paid to the spouse?
3. If the one of the two wage earners in the split household dies, they collect their's, do they get any portion of the deceased spouse's?
4. Does the married couple in the 45K/45K split make out better divorcing "on paper" then?

How about a more common split for incomes -- usually there is a primary and secondary wage earner. Here are the numbers for a 60K/30K split:

Current earnings: \$60,000.00

Retirement age____________Monthly benefit amount 1
62 and 1 month in 201_____\$1,193.00
66 in 2016________________\$1,620.00
70 in 2020________________\$2,184.00

Current earnings: \$30,000.00

Retirement age____________Monthly benefit amount 1
62 and 1 month in 2012____\$737.00
66 in 2016________________\$1,018.00
70 in 2020________________\$1,393.00

Again, the sum of the two benefits amounts to almost \$3600, considerably more than the \$2600 for a single wage earner.

So again I wonder, do both wage earners receive separate SS checks on retirement?

What does the lower wage earner get if/when the higher wage earner predeceases them?

In this scenario I can see where it is more of a gamble to "divorce" for the lower wage earner, if, as I think is the case, they would receive a percentage of the higher wage earner's benefit. But for the 45/45 split, there would seem to be only a monetary plus to "divorcing". Please tell me I'm wrong on this!!

This whole thing demonstrates how crazy SS is IMO. And makes a strong case for personal accounts.

Evie

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Yes each person gets their own check

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Actually, you have an option, Glenda.

The spouse entitled to the lower amount of SS can either get the SS (s)he earned, or the higher-entitled spouse can get 1? time his/her benefit -- whichever way works out better for the couple.

-- Dave K, Speakeasy Moderator

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Isn't that after the spouse dies?

And if I went on Jim's SS I would have to wait two tears to get my medicare back! I can't afford to do that with my history
Glenda

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From my experience as a widow, Glenda...

... having had a spouse die...

If my benefit had been higher than his, I would claim that. But, it was not, so what I get is his benefit. I get no benefits from my own earnings.

I took my benefit at age 62. Then I was disabled for 1 1/2 years before I turned 65. So I got SS disabilty just until 65. (He had to agree to a portion of his being "given" to me for the disability.) Then it returned to the previous amount. It all ended when he died.

As for Medicare, I am assuming that as you now have it at under 65, for any reason , you would still have it.

Angeline

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Not as I understand it, But................ :)

My neighbor had been on SS Disability, and when she turned 65, she did get her ex husbands benefits, BUT she had to wait two years to get her medicare back!
I have been on SS Disability since 1990, and they have never taken anything form Jims SS check. He just retired in May. Also, I don't think I could get Jim's SS even after he dies until I am 62. Not sure about this one. What a morbid subject this is
Glenda

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Survivors benefits

... which are separate from retirement benefits. These go to widows, children until they reach (the last time I heard, 19, but that could have changed.In 2000 it was 50%, bnut that could also have changed.

I do not know how that effects your SS disability. But the SS could answer that for you. But you would be getting money.

I have never heard of a case like that of your neighbor, so cannot offer an opinion. That is another point to check with SS so you don't have further concerns about that.

As far as what Joe "gave" me, it did not reduce his payment, either. Frankly, I don't know how that worked.I had reached 65 by the time he died. I wish I hadn't thrown all of that stuff away!

If you have a local SS office nearby, they have all sorts of pamphlets.

Angeline

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Thanks Angeline, I will have to check all this out!

One of our waitresses had her first husband die and her Son received his benefits, Until he turned 16 and they said he was old enough to work! This kid was still in High School! So many conflicting stories you never know what to believe
Glenda

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So ...

... single income families get screwed??

Evie

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Not really.

We think of SS as an "old age" benefit, but there is also what is called "survivir's benefit".

A) Family members include a spouse, children under the age of 19, and adult children who are disabled.

B) Each family member may be eligible for benefits equal to 50% of the worker's benefit, but there is a limit on the amount of benefits that a single family can receive.

http://www.justfacts.com/socialsecurity.htm#_ftn39

* Social Security is composed of two separate entities: The "Old Age and Survivors" program and the "Disability" program. Each program has separate finances, but for the purpose of simplicity, the figures shown below reflect the combination of both programs unless otherwise stated. [4] [5]

* The "Supplemental Security Income" program provides benefits for aged, blind, and disabled people without regard to prior workforce participation. It is administered by the Social Security Administration, but it is not funded by Social Security taxes. This program is not covered in this list of facts. [6]

http://www.justfacts.com/socialsecurity.htm#Benefit

Angeline

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Thanks Angeline ...

... I just found this that clears things up a bit (sorta). It deals with women and SS.

Sixty-two percent of female beneficiaries aged 62 and older receive Social Security benefits as spouses or surviving widows based on the earnings records of their husbands (34 percent) or as dually entitled beneficiaries (28 percent).7 Dually entitled beneficiaries qualify for their own retired worker benefits; however, they are entitled to higher benefits based on earning histories of their husbands and so receive the higher of the two benefits. Wives as well as divorced women who had been married to their ex-husbands for at least ten years are entitled to spousal benefits amounting to 50 percent of the benefits of their husbands or ex-husbands. Upon widowhood, they are automatically eligible for a benefit amounting to 100 percent of their current or former husband's benefit.

OK, so let me see if I get this right.

\$90K single earner \$2600
Spouse gets 50% of this or \$1300 Total = \$3900
If the non-wage earner passes away first, the wage earner then collects \$2600.
If the wage earner passes away, spouse still gets spousal benefit plus survivor benefit of 100% = \$3900

Two \$45K earners each receive \$1850 while alive = \$3700
Spousal benefit doesn't apply while alive because their individual earnings benefit would be more.
Either spouse dies, the surviving spouse gets their full benefit paid \$3700.

So there seems to be little difference here, except if I am correct the single wage earner loses "household income" when the non-wage earner passes away.

The \$90K wage earner does get shafted if they are not married. They have paid in 2X the taxes that a \$45K earner does, yet their benefit is far shy of 2X paid out.

Evie

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Wives as well as divorced women who had been married to their ex-husbands for at least ten years are entitled to spousal benefits amounting to 50 percent of the benefits of their husbands or ex-husbands.

So what happens when there are multiple ex-wifes with this 50%?

Roger

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I suppose it is somewhat self-limiting as divorces that remarry no longer have any claim to the previous spouse's benefits no matter how long they were married to them. At least that's what I interpret.

Evie

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It might not be that high.

When I looked for maximum benefit that can be paid, I couldn't find that \$3700. So, I am as confused as you!

Here's what I found:

On this site somebody who said they made \$250,000 for the past 8 years asks how much SS will be forthcoming.

Your Social Security retirement benefits are based on your entire working history--not just your highest earning years. However, higher lifetime earnings will result in higher benefits.
While I cannot tell you what your specific retirement benefit will be, I can tell you that the highest retirement benefit issued by Social Security is \$1,342 per month for those retiring at 65 in 1998. Those electing early retirement at 62 will see their benefits reduced by 20 percent to a maximum of \$1,073.60.

http://www.thirdage.com/marybeth/980105-01.html

That maximum amount has gone up, though.

When figuring anticipated retirement income, the maximum Social Security benefit a retiring worker can expect to receive is \$1,825 per month (\$1,939 per month beginning March 2005).

http://www.finance.cch.com/text/c40s05d180.asp

(This site also has a calculator.)

I can't find a decent site. but I think that there is a cap on the income subject to an FICA tax, and I think it is \$90,000, or thereabouts. In other words, those making over that amount only are taxed up to that.

So, when I made \$300,00/yr (Hat-DE-HAR!) my employer and I paid FICA tax on \$90,000.

So it seems, Evie, that you are paying a higher percentage of your income to support me than does the highest paid athlete. And I would guess the owners stop at \$90,000, too.

Thanks!

Angeline

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Very fuzzy indeed.

Lots of "some limits", "up to 50%'s", etc.

The maximum benefit to one person seems to be \$2600/month to the 90K wage earner. If there are two such wage earners in a couple, is one or the other's benefit reduced in any way, or is the payout \$7200/month? I think we have such a couple approaching retirement here in SE that could probably share the answer to this. (My \$3700 was for two \$45K earners retiring at age 70 per the SSA's Quick Calculator)

I have no problem with the income cutoff as Bill Gates doesn't pay in to SS on any more than 90K, and he can only draw \$2600 no matter how much he earns (I guess his wife gets \$1300 if she doesn't work a wage bearing job -- I know she does a lot of charity work, not sure about anything else) . However everything in normal life depends on a "household" budget. IOW, two couples are likely to live similar lifestyles that \$90K support regardless of the source of this income (OK, there will be some differences, but the size of house mortgage and other things will be pretty comparable). So if there is any difference in the benefits depending on who made what this is unfair IMO.

For two 90K earners vs. 180K, I suppose it does even out in a way because a 180K wage earner wouldn't have paid in on the 91+K income, while two 90K earners would both have paid in, thus both get out. The 180K single wage earner could invest his/her 6% privately.

I don't understand your statement about paying FICA on 90K. We pay FICA on a percent of our income up to that amount.

Yep, lower wage earners pay a higher percent of their income into the system than the very highly paid, but I have no problem with this. Anyone under 90K pays the SAME percent of their income into the system, while lower earners get more back upon retirement. I do have a problem with this. If SS is to be an income redistribution system or welfare for the elderly, let's call it what it is.

Evie

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No, Evie....

because the single-income family gets that same 1? times the breadwinner's earned benefit. Some dual income folks claim they get screwed, but I think it's a fair system. I wish the Feds would do that on taxes, the way Maryland does. Yes, they've eased the marriage penalty, but it's not gone completely, because while the upper end of the 15% bracket for married filing jointly is now exactly 2x the single limit, the upper end of the 25% bracket is still well below 2x the upper limit for filing singly. For Maryland state income tax you can (or at least could when we lived there 25+ years ago) calculate either as two singles or married filing jointly, and pay the lower amount. BTW, the same bias against dual income families also applies to things such as the breakpoints for full deductibility of IRAs, convertability to Roth IRAs, AMT exemption, etc -- in each case, the joint limit is considerable lower than 2x the single limit.

-- Dave K, Speakeasy Moderator

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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So you are saying ...

... that the single income earner's benefit would be 1.5* 2600? While both alive and the same amount for their surviving spouse?

Evie

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Hi, Evie.

Sorry, but I don't know if there are any limits. But other than that, yes -- the total monthly benfit for the couple would be 3900, while her survivor's benefit when he dies would be \$1300.

-- Dave K, Speakeasy Moderator

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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(NT) (NT) did i mention that im adoptible:)
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re
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Tilt...

no, we didn't catch you cheating the pinball machine, but social security benefits are tilted, not directly proportionate to earnings. Just as they ratchet marginal tax rates up on high incomes, they ratchet SS benefit rates down on high incomes. In the examples you printed out, the trend looks like this:

The \$90K worker will get full benefits of \$2,600/mo, or \$31,200/year. Thats a retirement income of 35% of the work-a-day income.

The \$60K worker will get \$1,850/mo or \$22,200/year, which is 44% replacement.

The \$45K worker (continuing the same math here) gets a 50% replacement.

The \$30K worker gets 56%.

The original idea was that persons with low lifetime earnings are nonetheless kept out of poverty by tilting the replacement ratio in their favor. But it gets dicey when, as you posit, the family w/ one wage earner files an identical income tax return (\$90K taxable wages) as the neighboring family w/ 2 half-size incomes (\$45K each = same \$90K taxable income). Why do they get a better deal than the single income family. And it really gets hairy when you bring the divorce attorneys in to haggle over who gets what portion of the other's future benefit.

dw

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See my post ...

... HERE. DK has also mentioned that the benefit to the single wage earner couple is 1.5X the \$2600 because the spouse gets 50% of her husband's benefit as a spousal bennie.

In my opinion, I think the only real fix would be to scrap the system we have now (phased out and honoring existing system for those that opt to) and replace it with a totally personal account system. That would be supplemented with a Senior Citizen Welfare system for those that fall into poverty upon retirement.

Evie

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What we can't or won't decipher often seems "crazy".

To each according to their needs, eh?

Lesson # 1
There is a pie, a limited pie. You have two cows.
Q. - What about those, through no fault of their own, with disabilities?

I know it's an article of faith with some that 2 + 2 = 4, even when the pie is a 3 1/2...
If you're contemplating divorce at some particular point in time in order to be a wise and "personal responsibility" type shopper Evie, I suggest a review in your heart of the concept of team. The lives we live are a consequence of the total efforts of the, so to speak, hive. Half the worlds population live on less than \$2 a day. 20% make under \$1. At some point, ones sense of inequity and pure on the ground practicality leads one to believe that direct action against the King would be more fruitful than redoubled effort at productivity.

Social Security pay-outs are not incomprehensible, but you DO have to be able to see that one circumstance is more likely to have greater need than another. Get with the big picture, Evie. Get on the team.

-->

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(NT) (NT) Thanks Evie for sparking a great discussion.

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