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How to Handle Spousal Benefits and Social Security

Personal finance expert Jane Bryant Quinn answers your queries

Jane Bryant Quinn

Jane Bryant Quinn is a personal finance expert for AARP.

Q. My wife will turn 65 in April. She doesn't qualify for Medicare herself because she wasn't in the workforce long enough. I qualify but will not turn 65 and join the plan until September. Can she be covered for the next six months under my eligibility?

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A. Yes. She can sign up for premium-free Part A (hospitalization) provided that you are at least 62. She'd have to pay the usual premiums for Part B (medical) and Part D (drugs). Compare the coverage and price with whatever private health insurance she has now, to see what's best.

Q. My husband is 66 and he's collecting Social Security. I'm 61. As a spouse, am I eligible to draw half his Social Security next year? I have my own Social Security earnings record.

A. To be eligible for half your husband's benefits, you have to wait to file until your full retirement age. For people born in 1955, that's 66 and 2 months. If you file for spousal benefits as early as 62, your payment would be chopped by 31 percent. It might turn out, however, that you've earned a higher benefit than what you'd receive as a spouse. When you file, Social Security will compare any benefit you're due on your own earnings record with whatever you'd be due as a spouse. If your personal benefit is the higher of the two, that's what you'll receive. Best advice: Try not to file as soon as you're eligible. If you do, your own benefit will be discounted by 26 percent — for life.

See also: The Term Life Insurance Quandary

Q. I'm 69, working full time, with a pension, Social Security and $500,000 in assets, and I have seven more years to pay on my mortgage. At a seminar we were advised to take a new mortgage for 30 years, pull out the equity on our house and invest the cash we receive in liquid, high-return investments. Opinion?

A. Ugh. Double ugh. The seminar salesguy wants to sell you something. Your home equity is the quickest cash he can lay his hands on because I suspect much of your $500,000 is tied up in tax-deferred retirement accounts. What's wrong with owning a paid-up home that lowers your monthly expenses when you finally retire?

Jane Bryant Quinn is a personal finance expert and author of Making the Most of Your Money NOW.

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