Q&A: How can Social Security help if I'm starting over at age 55?
Q: I am 55 years old and only worked for 10 years in the 1980s. I was a stay-at-home mom ready to re-enter the workforce when my husband had a massive stroke. I have been his caretaker for 15 years. He is steadily declining now and I am going to lose the disability benefits that I rely on to live. I realize that I will not get a great job since I have been out of work for so long. What would be a Social Security claiming strategy for me? If I were to remarry would it affect my benefits? I am also receiving an inheritance soon. What would be to best way to invest it to generate income for me while keeping it safe?
– Carol J.
A: Know first that you are not alone, says Dana Anspach, the founder of Sensible Money. “Many women who have taken on caretaking roles find themselves in a similar situation,” she says.
That said, it’s hard to offer you a specific claiming strategy for Social Security without knowing your exact earnings history and your husband’s earnings history. But Anspach says there are two strategies that could work.
“One would be for you to file a restricted application for widow's benefits at age 60,” Anspach says. “You would receive a reduced benefit amount but if your future age-70 benefit amount would be larger than the widow benefit then at that time you could switch to your own benefit.”
The other option, she says, would be for you to file a restricted application for your own reduced benefit amount at age 62, then at age 67 (what is called your full retirement age) you would switch over to receive the full widow benefit.
“Without knowing the numbers, however, it’s hard to say which choice would provide the most lifetime benefits,” says Anspach. “Generally we project out both options and then recommend you go with the one likely to provide you with the most income over life expectancy.”
There are several online websites that you could use to determine which option is best. Those include The RetirementEstimator; Planning forRetirement; Target Your Retirement; Social Security Benefits Calculator; Social Security RetirementCalculator; and Social Security Calculator.
As far as your inheritance, Anspach says that should be invested to complement whichever Social Security strategy you use. “The right investment approach depends on whether you need income now, or can find work for a few years,” she says. “Investing funds for income today is quite different than investing to produce income in five or 10 years.”
Another option, Anspach says, could be using some of the inherited funds to go through training and embark upon a new career. “It is not too late to find work that you love and that could earn enough to sustain you for 10 to 15 years,” she says.
Anspach also says a good financial planner – preferably fee-only (meaning someone who does not sell commissioned products) could help you sort through these options and come up with a plan that would work for you. You can find fee-only financial planners at http://findanadvisor.napfa.org and http://www.letsmakeaplan.org/choose-a-cfp-professional/ (use the advanced search feature and search under “Preferred Compensation Method” for “fee-only”).
Related:
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Q&A: Spousal benefits get complicated by ex delaying retirement credits
Robert Powell is editor of Retirement Weekly, contributes regularly to USA TODAY, The Wall Street Journal and MarketWatch. Got questions about money? Emailrpowell@allthingsretirement.com.