CONTINUED FROM PAGE 31
By Bob Jennings
WHEN MY FRIEND Steve sold his business a few
years ago he seemed ready to retire. We started
talking, and it quickly became evident he was concerned about his wife, Janice, who had little experience with financial matters and had never worked
outside the home, and was the same age as Steve.
Steve asked me for a quick summary of what his
family should know about Social Security and
retirement in general.
I started by telling Steve about what I call the
“Triple D” rule for Social Security. This rule says
that if Steve were dead, disabled or drawing his
Social Security benefit, then his family would be
qualified for benefits as well. He calmly said his goal
was to meet the last part of the Triple D rule for
planning purposes. I then gave him this list of five
things for his family to remember in the event of his
meeting the Triple D rule.
☞ Steve’s wife will qualify for a retirement benefit from Steve’s account as early as age 60 if Steve
dies, or at 62 if Steve is still living. Both Steve and
Janice should realize that for each year they take a
benefit before they reach 66 their checks will be permanently reduced by about 8 percent. But they
would have to live to their late 70s before it costs
them more than they will receive by drawing early.
If they are also drawing a retirement benefit from
another retirement plan it will not reduce their
Social Security benefit. Both Steve and Janice must
apply to the Social Security office to obtain benefits
and can start the process at
www.socialsecurity.gov.
☞ Janice and Steve will both qualify for
Medicare at age 65. If Steve were
disabled he would qualify for
Medicare at any age, but only
after he had been disabled for
at least two years. Although
Medicare is a separate program from Social Security, if
Steve and Janice have signed
up for Social Security they will
automatically receive enrollment forms from Medicare several months before turning 65.
☞ If Steve becomes disabled, he will qualify for his full,
unreduced Social Security benefit
no matter what age he was when
he became disabled, but there will
be a five-month waiting period
before he receives a disability
check from Social Security.
☞ If Steve is still living,
Janice’s benefit will usually be half
of whatever Steve is drawing,
but Steve must be drawing a
check for Janice to draw on
Steve’s account. If Steve is
dead, Janice’s benefit will be the
full benefit Steve was drawing
Bob Jennings,
www.ssmcare.com, is a CPA, EA and
CFP and the author of Understanding Social
Security & Medicare.
Getting to know Social Security
The Costco Connection Costco offers a suite of personal finance and insurance services for members. For details, go to Costco.com and search “Services,” or look for brochures near the service counter in your local warehouse.
(or qualified for), but she will not get both his check
and her check if he dies. If Janice drew on Steve’s
account it would have no effect on his benefit.
Janice also needs to be aware of the divorce
rules. Once she has been married to Steve for at
least 10 years, she receives Social Security and
Medicare benefits based on Steve’s account, but if
they divorce before 10 years of marriage, she
receives no benefits unless she has her own history
of paying into the system.
☞ Medicare Part A, which covers hospital
and major medical care, is free, but Medicare Part
B will cost Steve and Janice around $100 each per
month when they sign up. Steve and Janice will
still have to pay various deductibles and co-pays
over and above the Medicare premiums.
Steve, like many other Americans, was also curious as to whether he would get everything out of
Social Security that he had paid in over the years.
Nearly all Americans withdraw far greater Social
Security and Medicare benefits than they have paid
in simply because the value of the Medicare benefit,
combined with a monthly retirement check, is much
greater than the cost of 40 years of payments. When
analysts look at what individuals have paid in versus
what they withdraw in benefits, they often overlook
the huge additional benefits from Medicare. C
Useful calculators
for planning
What do you need to
save to retire?
http://cgi.money.cnn.com/
tools/saveyoung/ index.html ;
Get a rough estimate of how
long you may live.
www.ssa.gov/planners/
lifeexpectancy.htm ;
Determine your Social
Security benefit.
www.ssa.gov/estimator
Downsizing
resources
National Association of
Professional Organizers
www.napo.net ;
National Association of
Senior Move Managers
www.nasmm.org
Social Security and
Medicare resources
The official website of the U.S.
Social Security
Administration,
www.ssa.gov,
is loaded with videos, down-
loadable publications, useful
links and tips about Social
Security and Medicare bene-
fits. Other worthwhile
resources include:
www.medicare.gov
www.aarp.org/work/
social-security
www.law.cornell.edu/
socsec
