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PERSONAL FINANCE / KATHY M. KRISTOF

What Widows Should Know Before Remarrying

August 13, 1995|KATHY M. KRISTOF

Lynn is a 57-year-old widow in love. But she fears that getting married soon, as she and her fiance planned, could cost her a fortune--because of the rules that govern Social Security. Government officials acknowledge that she's right.

"At least she's smart enough to check it out ahead of time," says Leslie Walker, a spokeswoman with the Social Security Administration in San Francisco. "I just dealt with a couple where she was a teacher and he was a government employee [two groups that generally can't claim Social Security on their own records]. They both thought they could get their deceased spouses' benefits. But because they married before age 60, they get nothing."

Indeed, one of the many things people don't know about Social Security is how drastically it can be affected by marital status.

The issue is of particular concern to the millions of individuals who give up their careers to stay home and raise children. Predominantly women, they often have too few years of earnings to claim Social Security benefits on their own.

They can, however, claim spousal benefits that are tied to the amount their husbands earned when working. Or, if widowed, they can claim survivor's benefits.

The tricky issue that Lynn discovered is this: If you remarry after age 60, you can choose to claim Social Security benefits either as a spouse or as a survivor. But if you marry before your 60th birthday, you're only allowed to claim benefits as a spouse of the new husband.

That's important because the calculation for survivor's benefits is more generous than the one governing benefits to spouses. Survivors can also start collecting benefits sooner--at age 60 compared to age 62.

In many cases, the difference can add up to thousands of dollars annually, or tens of thousands of dollars over the length of an average retirement. For most seniors, that's too much money to pass up. Nuptials may simply have to wait.

Just how much money are we talking about? It varies based on the wage earner's lifetime earnings, years of work and when Social Security benefits are actually claimed. However, a simple example can help illustrate how dramatic the difference can be.

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Consider a hypothetical widow we'll call Jill Smith. Her husband, Ron, earned enough to collect $1,000 in monthly Social Security benefits at retirement. But he passed away suddenly, leaving Jill a widow at age 56. Jill doesn't qualify for Social Security on her own because she stopped working soon after marriage.

Soon after Ron's death, Jill meets John, a 60-year-old widower who also expects to collect $1,000 in monthly Social Security benefits. What happens to Jill's benefits if she weds?

If she remarries after her 60th birthday, she can claim survivor's benefits that amount to between 71.5% and 100% of Ron's monthly benefit. The percentage she gets varies based on whether she claims benefits immediately at age 60, or if she waits until normal retirement age of 65.

But, if she marries before she turns 60, she gets only spousal benefits on John's record. Those spousal benefits amount to between 37.5% and 50% of John's monthly stipend, depending on whether she claims them at the earliest possible date--age 62--or waits until age 65.

Let's say Jill wants the benefits as soon as possible and she's willing to delay the wedding until after her 60th birthday. She gets the survivor's stipend of $715 monthly. If she lives to age 80, she'll collect total payments of $171,600 over her lifetime.

If she wants the benefits as soon as possible but isn't willing to wait for the wedding, she'll collect spousal benefits amounting to 37.5% of John's benefits, or $375 per month, starting when she's 62. If she lives to age 80, she gets $81,000 in Social Security benefits over her lifetime--an astounding $90,600 less than she'd get if she'd postponed the nuptials.

The difference is equally marked if she waits to claim benefits until she's 65. Assuming all other things stay constant, she'd claim $180,000 over her lifetime with survivor's benefits compared to $90,000 if she claims benefits as a spouse.

"I'm sure there are other considerations more important than Social Security when you are contemplating marriage," says J. Robert Treanor, manager of the Social Security division at William M. Mercer Inc. in Louisville, Ky. "But from the narrow perspective of Social Security benefits, it would be a disadvantage to remarry before age 60."

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Kathy M. Kristof welcomes your comments and suggestions for columns but regrets that she cannot respond individually to letters and phone calls. Write to Personal Finance, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053, or message kristof@news.latimes.com on the Internet.

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More Personal Finance

* From tax strategies to derivatives, the TimesLink on-line service has scores of frequently asked questions about money and investing. To get the straight answers from Times columnists Carla Lazzareschi and Kathy Kristof, sign on to TimesLink and "jump" to keyword "Finance."

For more information on TimesLink, call 1-800-792-LINK.

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