Last week, I attended an intensive four-day, in-classroom review for next month's Certified Financial Planner Board of Standard Inc.'s certification exam.
Going into the Dalton Review program, I was afraid I would be tripped up by complicated mathematical computations involving Greek letters that I couldn't identify.
But I never thought I would stumble in my area of expertise:
Social Security. Wrong!
It seems that too much knowledge can be a dangerous thing. I answered several questions incorrectly when confronted with sample test questions on the subject.
For example, when asked which beneficiaries are eligible for survivor benefits when a fully insured parent dies, I incorrectly included an 18-year-old child in the answer. Wrong!
Social Security rules specify that a child is entitled to survivor benefits up to age 18, but I knew it also extends benefits to dependent children up to 19 who are still in high school or children older than 18 who are disabled before 22.
It seems that the CFP Board is more interested in general rules than exceptions. Lesson learned.
Another question asked if the retirement-age spouse of a deceased worker who is currently insured would be entitled to survivor benefits. I answered yes. Wrong again.
I didn't read the fine print and made a faulty assumption that the deceased spouse had worked long enough to qualify for retirement benefits for himself and survivor benefits for his dependents.
But the question didn't state that the worker was "fully insured." It said only that he was "currently insured."
To be fully insured, one needs at least a quarter of coverage for each calendar year of work after 21. The minimum number of qualifying quarters, also known as credits, is six and the maximum is 40, which most people earn after 10 years of work.
Because I am usually answering questions about retirement benefits for people who have worked all their adult lives, I tend to live in the realm of fully insured workers.
A person is "currently insured" if he or she has at least six
Social Security credits during the 13 quarters that ends with their disability, retirement or death.
In the sample test, one question asked about the survivor benefits for the family of a deceased worker who was currently insured when he died.
Although the worker's dependent child who is under 18 and his wife, who is caring for a child under 16 would each be entitled to a benefit worth 75% of the deceased worker's earned benefit, there would be no survivor benefit for a retirement-age spouse. By contrast, a surviving spouse of a fully insured worker is entitled to 100% of the deceased worker's benefit if collected at the surviving spouse's full retirement age or later.
Another lesson learned.
As a side note,
Social Security rules say that individuals are permanently insured once they are fully insured, and they won't lose fully insured status when they stop working under covered employment.
These questions serve as an excellent reminder that
Social Security is an earned benefit, designed to help workers retire with some financial security and to provide for their dependents in the event of their death or disability. But people must pay into the system for the requisite amount of time to accrue these valuable benefits.
The one exception we tend to overlook in this dual-income-couple world is that a non-working spouse is entitled to retirement benefits as early as 62, Medicare benefits at 65 and survivor benefits as early as 60, upon the death of a fully insured spouse. (One of my Dalton Review instructors rightly called this person the "non-compensated spouse," noting that being at stay-at-home parent is often the hardest work in the world).
Divorced spouses who were married for at least 10 years and who are unmarried are entitled to the same benefits as married couples. And now same-sex couples are eligible for these same valuable benefits if they are legally married and living in one of the 14 states (New Jersey joined the list this week) or the District of Columbia that recognizes their marriage.
So please keep sending me
Social Security-claiming strategy queries. I seem to do fine with the tough questions, and I rely on the experts at the
Social Security Administration's press office for the really hard ones.
And I promise to pay attention to the fine print.
