I thought my husband and I had reached an agreement but a friend recently told me I might be getting a very different income than what we agreed because Social Security is going to cut off my benefits when my husband retires. I am 10 years older and already retired. I have my own IRA I take distributions from, but it isn’t huge. However, between my IRA and Social Security I can stretch to make ends meet. I live in an in-law apartment attached to our daughter’s house and take care of her kids while she is at work in exchange for my housing. So, I only have to pay for things like my car, health insurance, medical bills, food and utilities.
My husband is a teacher and is planning to retire in two years. At that point, I will start to receive half of his teacher’s pension. Is it true that Social Security will cut off my benefits when I start to receive my husband’s pension? I get $1,500 per month from Social Security and when my husband retires, my half of his pension is projected to be $2,000 per month. I can budget very carefully until then and dip into savings but, I’m not sure I can do this if my Social Security will go away when he retires. I will use up my savings very fast in that case.
The short answer is “Social Security is complicated” and you really need to consult an expert in Social Security law before signing your agreement. From what you have said, I assume the Social Security you are collecting is your own based on your own work over the years. If that is true, my understanding is there should be no reduction in your benefits — the reduction would be in your husband’s benefits if he is collecting spousal benefits on account of your Social Security.
However, if your Social Security benefits are widower benefits or spousal benefits on account of a prior marriage, that is a different story. In that event, there will be a somewhat complicated calculation that will reduce your Social Security retirement benefits when you start to receive money from your husband’s pension because of the Government Pension Offset rules.
If you do fall into the category where you will receive a reduction, it is not dollar for dollar but, rather two thirds on the dollar. The problem for you, however, is that the pension benefit you will receive is higher than the Social Security. If this does apply to you, the pension benefit would almost entirely wipe out your Social Security benefit.
But, again, this is only if your Social Security benefits are widower or spousal benefits. So, even though you have a very limited income, it would be well worth your money to obtain an opinion from a Social Security lawyer before potentially signing away a large chunk of your income upon your husband’s retirement.