Suze Orman’s Lame Social Security Advice

Over the past few years, the Social Security Administration (SSA) seems to have dramatically expanded its marketing budget. SSA is constantly putting out blog posts and other communications, primarily focused on enhancing its brand and trying to persuade us that it cares deeply about the members of the public they exist to serve.

The April 13, 2017, post was entitled What Every Woman Should Know About Social Security, written by “Suze Orman, Personal Finance Expert.” http://blog.socialsecurity.gov/suze-orman-what-every-woman-should-know-about-social-security/  Following is a verbatim quote from Ms. Orman’s article:

 “Here’s what women need to understand about Social Security.

  1. You can claim a benefit based on your own work history, or on your spouse’s Social Security earnings record, if you are married for at least ten years.
  2. You are eligible for Social Security if you have worked (and paid into the system) for 40 quarters, which is 10 years.
  3. Your benefit is based on the highest 35 years of earnings. That’s where working through your 60s might be helpful, if it knocks out some of your lower-income years from your benefit computation.
  4. When your spouse dies, you won’t be allowed to keep collecting his/her benefit and you are entitled to just one benefit. But you will be able to claim the higher of the two benefits.
  5. If you were married at least 10 years before you divorce, you will be eligible to claim a benefit based on your ex’s Social Security record.”

What, you may ask, is so dangerous about that? The answer: taking it at face value and relying on it in your planning. Here are some observations and comments relating to her numbered paragraphs:

  1. You do not have to be married for 10 years to potentially be eligible to claim benefits on your spouse’s Social Security record. You are required to have been married for only one year. However, whether you have been married for 10 years or one year at the time you claim, there are a number of additional hurdles you must be able to clear in order to be eligible to collect spousal benefits.
  2. While it is true that you must have accumulated 40 credits of covered earnings to be eligible for benefits on your own record, you may still be eligible for benefits on the record of a spouse (or former spouse) even if you have never worked. In 2017, it takes earnings of $1,300 to generate one credit; and although the maximum number of credits you can earn in any given calendar year is four, you could theoretically earn enough ($5,200) in one quarter (or even in one day) to accumulate 4 credits. So you don’t actually have to have worked in 40 separate quarters to be eligible for benefits on your own record, although you must have earned credits over a minimum of 10 different years.
  3. It is essentially true that your benefits are based on your highest 35 years of earnings, but keep in mind that we are talking about inflation-adjusted However, the potential to increase your benefits by continuing to work is not limited to your 60s. For example, if your earnings during the year you turn 83 become part of your highest 35 years, your benefits will increase.
  4. It is true that you cannot receive spousal benefits after your spouse has died, because spousal benefits are available only during your spouse’s lifetime. Moreover you cannot collect your own benefits plus survivor benefits at the same time. However, there are circumstances under which it makes sense to claim benefits on your own record until you reach Full Retirement Age, and then switch to survivor benefits. In other situations, you might claim survivor benefits first and later switch to benefits on your own record.
  5. Yes, you must have been married for at least 10 years to have the possibility of claiming benefits on your divorced spouse’s record. However, there are many circumstances under which you will not be eligible to receive divorced spouse’s benefits despite having been married to your former spouse for at least 10 years.

By the way, to the extent that any of the above is applicable to women, it also applies to men.

I suspect that Ms. Orman was well compensated for bringing her name-recognition and celebrity status to the SSA’s online blog. However those who rely on these kinds of sound-bite articles do so at their peril.

Peter M. Weinbaum, J.D.