September 15, 2020

Edited 11/05/20

Wake-Up Call with Katie Couric Q&A: Taking Charge of Your Social Security Benefits

Wake-Up Call with Katie Couric asks all your Social Security benefits questions to Rhian Horgan, Founder and CEO of the retirement planning app Silvur. Rhian answers and guides you through navigating your retirement income whether you’re single, married, divorced, or widowed.

Your spouse or you are retiring soon and are now in a flurry to figure out how you can live comfortably while in retirement. If you’re in your 50s or 60s, you may be thinking about what your second or third act will look like and while most of that can be really exciting, you might also be dreading the idea of doing retirement math. From figuring out your income sources to healthcare, there’s a lot to calculate. 

Today, we’re going to dive deep on Social Security. Why? Because for most Americans it’s their largest retirement asset (often worth over $500,000) and for more than half of Americans, Social Security represents over 50% of their retirement income.  

Deciding when to start receiving benefits can be tricky, especially for women. Women typically have a longer life expectancy than men (remember the Golden Girls?). According to the Social Security Administration, women are also 12x more likely to receive widow(er) benefits than men. This makes lifetime income, like Social Security, particularly important to figure out before retiring.

We find it incredibly frustrating that there are so few resources that are simple and straightforward to explain how to make this decision. That’s why we are speaking with Rhian Horgan, CEO of Silvur. Silvur is a free retirement planning app dedicated to helping individuals in their 50s and 60s have confidence as they enter their 2nd or 3rd act of life. Silvur’s no-fear retirement calculator and Retirement Score give everyone the ability to improve their financial wellness over time and have an optimistic outlook towards retirement.  

We ask Rhian about all the Social Security questions you may have so you can make informed choices about your retirement income, whether you’re single, married, divorced or widowed.

Wake-Up Call with Katie Couric: How do I apply, and when should I start collecting Social Security benefits?

Rhian Horgan: Let’s start by discussing when you should start collecting benefits. You can start collecting benefits any time from age 62-70. The time that’s right for you is personal—it depends on your financial situation, life expectancy and marital status. Life expectancy is one that’s particularly important for women. Women are likely to live 5 years longer than their male partners so we need to make sure to account for that when we think about when to collect.

Why does this matter? Well, Social Security gives you a set amount of money every month, for the rest of your life. But how much money you receive depends on when you collect. The first year you are eligible to collect Social Security is at 62, and you can wait to collect all the way till you turn 70. But here’s the catch—the amount you receive increases by 8% every year after 62 until you turn 70.  So, if it’s financially feasible, we recommend waiting until you are at least 65-67 (also known as your full retirement age) before electing your benefits. Waiting can be particularly important for people who are single or divorced, which 50% of Silvur users are. When you can maximize the amount of money you receive, it tends to give you more flexibility in your life.

Depending on your situation, here’s my advice on a few examples:

  • If you’re divorced, delaying your benefit has no effect when you reach full retirement age because the amount you collect at full retirement age is the maximum amount you can collect. 
  • If you took time off work to care for children or elderly relatives, which many women have, it may be best to delay your benefits.  When you wait to start collecting Social Security, you’ll qualify for a larger benefit, which may help you fund a more fulfilling 2nd or 3rd act. 
  • If you’re married and need Social Security to help pay for necessities, consider collecting the lower-earning spouse’s benefit first and then wait to receive the higher-earning spouses’ benefits. That way, you can maximize the higher earner’s benefits.

Do you want to see how much you can expect to collect by your age? With Silvur, we thoughtfully designed a Social Security calculator to help you estimate your benefits and figure out what your retirement income will look like. Your personal Retirement Score easily identifies the age at which your retirement income is expected to last to. Download Silvur to see what your future retirement finances will look like.

WUC: Will Social Security even be around when I’m planning to retire?

RH: Social Security is a program that’s critical for most Americans’ retirement. And while there may be changes to help adequately fund it, we don’t believe it’s going anywhere.

WUC: How do benefits work with my spouse?

RH: If you’re married, you’re entitled to receive the Social Security benefits from your work record—if you qualify—or half of your spouse’s benefit. You can collect half of your spouse’s benefit even if you never worked or didn’t work long enough to qualify for Social Security on your work record. If you choose to collect half of your spouse’s benefit, you must wait until they begin claiming benefits before you can receive benefits.

We cannot stress enough that you and your spouse should be making an election decision together. Even though you have your own benefits, you both should be calculating your benefits together in case one outlives the other—which is most likely going to be you. We know that it can be hard to have these conversations, but it’s worth it.

WUC: How do benefits change if I’m divorced?

RH: Over the last few decades, divorce has been on the rise. Today, almost 45% of 55 year olds are divorced, separated or in a second marriage. If you’re divorced, you can receive benefits on your ex-spouse’s work record. You qualify if you’re 62 or older, were married for at least 10 years, and never remarried.  If your ex-spouse has not claimed their benefits yet but you’re looking to claim, you will also need to be divorced for at least two years. Similar to spousal benefits, you will automatically receive the greater of your benefit or half of your ex-spouse’s benefit.

With the average length of American marriages lasting 8.2 years, many Americans are walking away from hundreds of thousands of dollars of retirement benefits. For women, who initiate more than 70% of divorces, keeping an eye on the calendar is important. Crossing the 10 year mark could mean hundreds of thousands of dollars more, guaranteed for life—which could be larger than your divorce settlement.

WUC: How do benefits change if I get remarried?

RH: The silvur-lining is you have found (modern) love again, congratulations! But, don’t forget to do a bit of math before walking down the aisle again, particularly if you plan to rely on spousal benefits. This may affect your decision to get remarried because remarrying sacrifices your eligibility to receive benefits based on your ex-spouse’s work record. However, you’ll be able to receive benefits on your new spouse’s work record.

WUC: What can I do now to maximize my benefits?

RH: The exciting reality is that the choices you make today can have a positive effect on your Social Security benefits you collect. Social Security calculates your benefits from your 35 highest-earning years. That means by boosting your income from now until you retire, you can increase the amount you’re eligible to collect. Luckily, you can do that in lots of ways. 

Starting a new business is something that is becoming increasingly popular to do in or near retirement. We’re also seeing more people working part-time. One of my favorite facts is: women in their 50s are the most successful AirBnB hosts. As long as you or your employer are contributing to Social Security, this income will count towards your overall retirement benefits.  

Over the past few months, we’ve been speaking with many Silvur users in or near retirement. We’re learning that many are adding part-time income to help them retire. For example, Sandy, 60, from South Carolina, became a DoorDasher during the COVID-19 pandemic to add more income for her savings. If she continues to add an additional $500 per month for at least 10 years, she can increase her Retirement Score by 4 years. By adding part-time income, you are benefiting your retirement plans while also staying active, like Sandy. 

So don’t be afraid to ask for that raise, go for the promotion, or start up something on your own. In fact, women are now almost 50% of the retired worker base, which grew from 12% in the 1940s. We know how capable and awesome women are. You deserve it, and you can do it!

WUC:  Will getting a part-time job affect my benefits?

RH: The hard truth is that the Social Security system was created in the 1920s, and not much has changed since then. The government didn’t expect people to work and take Social Security.  There are a bunch of arcane rules but the most important thing to know is that if you elect Social Security before your full retirement age, there is a limit of what you can earn ($18,240 as of 2020) before your benefits are reduced. If you earn more than the yearly limit, your benefits will be reduced by $1 for every $2 you earn over the annual limit. Yep, Uncle Sam actually penalizes you for working in retirement!

Even though you need to watch the Social Security earnings limit, I’m a big supporter of having part-time income in retirement. Small amounts can make a big difference. For example, if you add $2,000 a month for 10 years, you can increase your Retirement Score by 8 years. In addition, if you met the minimum hours requirement, you may be able to contribute to your employer’s 401(k) plan—allowing your savings to grow.

There are many fun and remote part-time jobs available that can reap benefits. If you’re looking for your 2nd or 3rd act, try any of these: online teaching, virtual assistant, consultant, or create your own online store.

WUC: What if I’ve already started collecting Social Security? Is there anything I can do?

RH: We all know that even with careful planning, sometimes things don’t work out the way we think they will. Life happens, and you may need to go back to work to earn some extra money. If you’ve reached full retirement age and are collecting Social Security benefits, you can pause them for one time only. This is SSA giving you a ‘hit reset’ button. The good news is that if you take this option, you’ll continue to earn delayed retirement credits until you turn 70, which will increase your monthly benefit.

WUC:  Thanks Rhian for sharing your tips.  We knew Social Security is complicated but wow, the devil is definitely in the details.

RH: We’re big believers that planning your well-earned retirement shouldn’t be this complicated. In fact, that’s why we built our app Silvur. You can download it here and we hope it will give you peace of mind as you embark on your next act! 

Ready to elect? You can apply for Social Security online, in-person or by calling 1-800-772-1213.

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