Q: My partner and I live in Philadelphia and were recently married in New York City.
He’s 68 and collecting his Social Security. I just turned 66, which is my full retirement age for my Social Security benefits. Am I able to collect benefits based on my partner’s Social Security now that we are married?
A: This is a very timely question! Considering that the Social Security Administration to this point is only recognizing gay marriages based on “state of residence,” this topic has created much confusion for legally married gay couples living in states such as Pennsylvania that do not recognize their marriages. Here’s what you need to know.
Social Security and same-sex marriage
The good news is that, for the first time ever, Social Security spousal and survivor benefits that have been available for opposite-sex married couples are now also available for some same-sex legally married spouses. The key word in that previous sentence being “some.” That is because, as of the date of this column, the Social Security Administration has chosen to use “state of residence” rather than “state of ceremony” to determine eligibility for benefits.
So if you are legally married and living in a state that recognizes your marriage, such as New Jersey, New York or Delaware, to name a few nearby, you’re now entitled to all of the same Social Security benefits as opposite-sex married couples.
Now, the not-so-good news … If you live in a state that does not recognize your marriage, such as Pennsylvania, then you are not currently eligible for spousal and survivor benefits from Social Security. So, unfortunately for folks such as yourselves who were married in another state, but are still living in Pennsylvania, you’re out of luck, at least at the moment, for any enhanced Social Security options.
However, there may be some good news coming on the horizon from the Social Security Administration for people in your situation (those legally married but living in a state such as Pennsylvania that does not recognize that marriage). The current guidance provided by the Social Security Administration on this issue is as follows:
“We are working with the Department of Justice to develop and implement policy and processing instructions on this issue. However, we encourage you to apply right away, even if you aren’t sure you are eligible. Applying now will preserve your filing date, which we use to determine the start of potential benefits.”
So if you are eligible for spousal or survivor benefits based on the earnings record of your same-sex spouse and wish to file for those benefits, the SSA is encouraging you to do so immediately, even though they’re not likely to begin paying any such benefits right away. By applying now, you’ll be preserving your filing date, so that if they eventually do allow same-sex spouses living in Pennsylvania to collect these benefits, you’ll potentially be entitled retroactively to the date you filed. I would stress, however, that before you just blindly file for benefits, get a better understanding of what benefits you may be eligible for and whether or not it makes sense to file based on your unique circumstances.
The two main benefits that same-sex spouses are now eligible for in states recognizing their marriages are spousal benefits and survivor benefits. It’s important for you to understand what they are and how these benefits may or may not apply to your situation. I’d strongly recommend you seek professional guidance from an advisor who has a thorough understanding of the various benefits from Social Security to help guide you in the best filing strategy. Here’s some information to get you started.
What is a spousal benefit?
A spousal benefit, simply put, is equal to one-half of the primary worker’s benefit. As an example: Janet and Sue are married. Janet’s Social Security benefit at age 66 is $2,000/month and Sue’s Social Security benefit at age 66 is only $600/month. If Sue filed for benefits, assuming Janet had already filed, Sue would be entitled to $1,000/month in a spousal benefit (one-half of Janet’s $2,000/month benefit). Since they are married, Sue will be entitled to an extra $400/month in benefits. If their marriage were not recognized, Sue would only be entitled to her own smaller benefit.
Now, of course, there are some rules for spousal benefits, including the following: 1. Spouses must be married and living in a state that recognizes the marriage to be eligible. 2. The first spouse must have filed for their benefit for the second spouse to be eligible for the spousal benefit. 3. Spousal benefits can be collected as early as age 62; however, they will be reduced if collected prior to full retirement age (as are all retirement benefits from Social Security). 4. If you were to get divorced, you’re still eligible for divorced-spouse benefits as long as you were married for at least 10 years and you’re currently not remarried.
What is a survivor benefit?
A survivor benefit is the benefit that one spouse is entitled to when the other spouse passes away. If one spouse passes, the surviving spouse is entitled to the higher of the two benefits. Using our previous example, Janet’s benefit is $2,000/month and Sue’s benefit is $600/month (or $1,000/month as a spousal benefit). If Janet were to pass away, Sue’s lower benefit would automatically be replaced by Janet’s higher $2,000/month benefit, and she would retain that survivor benefit for the rest of her life.
There are also some rules with survivor benefits, some of which include: 1. The couple must have been married for nine months at the date of death to be eligible, except in the case of an accident. 2. Survivor benefits can be claimed as early as age 60 (age 50 if disabled); however, they will be reduced if collected prior to full retirement age. 3. Survivor benefits would stop if you were to get remarried prior to age 60. 4. Divorced spouses are also eligible for survivor benefits as long as the marriage had lasted for at least 10 years and you were not remarried prior to age 60.
These are just the basics about the benefits available to spouses through Social Security. Determining which options are available to you and which filing strategy makes the most sense for your situation is only a small piece of a broader retirement income-planning conversation.
Whether you are single, married, divorced or widowed, understanding how to maximize your benefits from Social Security and how to properly coordinate any spousal or survivor benefits can have a significant impact on your retirement income for years to come. It has been my experience that without proper guidance, nine out of 10 people would file for their Social Security in a manner that would not maximize their potential benefits. It’s important for you to be your own advocate and gather the information that you need to make the best decision.
As always, I recommend you speak with your financial advisor to assess their understanding of the Social Security rules and how they apply to your specific situation. And if any of our readers have additional questions/comments about your Social Security benefits and eligibility, please don’t hesitate to contact me with any general or specific questions you may have.
Jeremy Gussick is a financial advisor with LPL Financial, the nation’s largest independent broker-dealer.* Jeremy specializes in the financial-planning needs of the LGBT community and was recently named a 2013 FIVE STAR Wealth Manager by Philadelphia Magazine.** He is active with several LGBT organizations in the Philadelphia region, including the Delaware Valley Legacy Fund and the Independence Business Alliance. OutMoney appears monthly. If you have a question for Jeremy, you can contact him via email at [email protected] LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. *As reported by Financial Planning magazine, 1996-2013, based on total revenues. **Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of year 2012 and 2013 Five Star Wealth Managers.