Carrie Schwab Pomerantz

Dear Carrie: My husband and I are both considering taking Social Security next year at age 62. I'm told that I could draw on my husband's account and potentially collect more monthly than I would if I draw from my own earnings without it affecting what he gets. Is this true? Also, should my husband die before me, would I collect his full monthly benefit or a portion of it? -- Mary

Dear Mary: Your question is interesting because it brings up several issues about spousal and survivor Social Security benefits that can be confusing. Whether to take benefits at 62 or at full retirement age (66 for those born between 1943 and 1954) or even later (your benefits will continue to increase until age 70) is something everyone should consider.

The answer has a lot to do with your current work status, income level and life expectancy. For instance, if you take Social Security at 62 and keep working, $1 in benefits will be deducted for each $2 you earn over a certain income limit ($14,160 in 2010). Keep in mind, however, that the reduction is not permanent --you will receive a higher benefit at full retirement age to make up for it. On the other hand, if you wait until your full retirement age, there's no reduction; you can earn as much as you like without affecting your benefit.

But be aware that Social Security benefits are taxed when your income from all sources is over a certain amount. In addition, there's the break-even age -- the age you have to live to in order to make delaying Social Security worthwhile. All of these options are a lot to consider. But there's more.

What many people don't consider is the fact that taking Social Security early can affect both the spousal benefit as well as the survivor benefit for a widow or widower. So before you and your husband decide, you'll want to make sure that your decision, even if it makes sense now, doesn't negatively affect one of you in the future. Here are some things to consider:

SPOUSAL BENEFITS

At age 62, a spouse (working or not) can choose to take a benefit based on his/her own earnings or take the benefit based on his/her spouse's earnings, whichever is higher. The only caveat is that to receive the spousal benefit, the higher-earning spouse must have already filed for Social Security.


Carrie Schwab Pomerantz

Carrie Schwab Pomerantz is a Motley Fool contributor.

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