Medicare has its own set of tax brackets — so you can be sure that widowsdon’t know about this too. The first shockis that you have to pay your MedicarePart B premiums: Social Security automatically reduces your benefit for that.And when a woman goes from filing amarried joint tax return to a single filing[after being widowed], her Part B premium could jump from, perhaps, $148.50to $386. This is a big [deal] for widows.
They get hit on all fronts.
Does paying estimated taxes figure into
Social Security taxes?
Retirees — certainly women — don’tknow how often they have to pay quarterly estimates on their “income” inretirement. You’re creating income,whether from IRAs, investmentsor Social Security. So women can getnabbed with penalties and interest whenthey don’t make the correct paymentwithin the correct time. It’s hard forwomen who are newly retired to figureout the tax code because it’s not the firstthing on their to-do list when they retire!
What’s a pitfall for women who claim
Social Security early?
When they claim at 62, they think they’llget increased Social Security payments,a big bump-up automatic adjustmentwhen they reach full retirement age.The mistake is thinking that their benefits will change. They do not. As soonas you claim at 62, you’ve locked in yourpermanent reductions.
What are homemakers’ typical
misconceptions about Social Security?
The big mistake is made by women whohave had what I call “popcorn careers.”They pop in and out of a career over 40years and think they don’t qualify forSocial Security because they didn’t have
10 consecutive years of earnings. Therequirement for Social Security is not 10consecutive years — it’s whatever yourearnings are over your lifetime.
How about homemakers who didn’twork outside the home? Do they qualityfor a Social Security spousal benefit?At-home moms think they won’t get a SocialSecurity benefit. They assume that becausethey didn’t work [in the labor force], whywould they get Social Security? But they’reentitled to half their husband’s benefits.The spousal benefit was designed specifically for at-home moms and homemakers.It [now] applies to same-sex couples, too.Gender is out of Social Security now —you’re [ just] either legally married or not.
Suppose a couple with a homemaker
wife who’s younger than full retirement
age decides to retire. What’s the Social
Security impact on them?
Her spousal reduction factor — I call itthe penalty — is higher than that of thespouse who was the worker. Both spouses get penalized for claiming early, butthe reduction for the younger one, whohasn’t reached FRA, is more aggressive.So there are two different reduction factors. Women have no idea about that,and the woman’s is worse.
Do a widow’s benefits start as soon as
her husband dies?
Often women who are between 52 and60, whose kids are grown and gone, whobecome widowed think that’s [the case].They don’t realize they have to wait tillthey’re 60 to get their benefits. For some,that’s an impossible situation because theydidn’t plan early enough for the possibilitythat their husband might die [before theydo] and that they’d be left with no income.The mistake is thinking they can starttaking Social Security widow’s benefitsas soon as they become widowed. But thegap might be six months — or six years.
What’s another rude awakening for widows?
They don’t know that one of their Social
Security checks is going away — imme-
diately. The mistake is thinking that
both checks will continue even though
the husband has died. So they haven’t
planned for a reduction in household
income. The woman’s benefits can be
cut between one-third and one-half
depending on the career she had.
What’s an eye-opener for many women
who are divorced and remarried?
This is a big one: Divorced women —
who were previously married 10 con-
secutive years or longer and meet all the
other Social Security rules for a divorced
person — who remarry want to be in the
driver’s seat. They say, “My first hus-
band made lots of money; my current
husband doesn’t. So I want to choose my
first husband’s Social Security.”
You can’t choose between your ex and
your current spouse until they’re both
dead and you’re the remaining spouse of
the three. At that point, Social Security
looks at all the benefits: yours, if you
have your own; your first husband’s; and
your [second] husband’s.
You get the benefits that are highest,but you don’t get to add your own. It’sso disappointing for these women whenthe light bulb goes on and they realize:“Gosh, I don’t get mine and his!”
Please talk about the Windfall Elimination
Provision of the Social Security laws.
If you have a hybrid career, where youwork [or worked] partly for the government — which doesn’t withhold SocialSecurity taxes — and partly in corporate America, which does, your SocialSecurity benefit pays second to the pension — and those benefits will be reduced.
Let’s say a woman has been getting a$3,000-a-month pension and her husbandhas been receiving $1,800 in Social Security.When the husband dies, that $1,800 checkstops — literally overnight. How do youmake up for that? Lots of widows can’t.
Jane Wollman Rusoff is a contributingeditor who specializes in interviews withthought leaders. An author and prolificjournalist, Jane is founder of www.