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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Social Security
Satisfied Customers: 16559
Experience:  Licensed CPA, CMA, CFE, CGMA M.Accy Also Teach Accounting courses at Master's Level
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We have a family business and we can determine her salary as

Customer Question

We have a family business and we can determine her salary as we choose.
Does it make a difference in her benefits if we increase her salary?
Submitted: 10 months ago.
Category: Social Security
Expert:  Megan C replied 10 months ago.

Thank you for your question

If you increase salary, it CAN increase benefits IF the salary is higher than the other highest 30 years of her benefits. It's not going to make a HUGE difference, but it can help --

Here's an explanation of how benefits are calculated:

http://www.myretirementpaycheck.org/social-security/how-are-benefits-calculated.aspx

Please let me know if you need anything additional. If not, please rate positive.

Customer: replied 10 months ago.
What we are wondering is if her salary is and will always be lower than what I made all these years... Is there a benefit to her to have her own salary raised. if she is widowed or divorced later on. They are changing the rules to make it harder for widows, stay at home moms, and divorcees. It will cost us $6000 in extra taxes this year for her to have a larger salary just in case. What are your thoughts about what she would revive knowing that I have always made more. Are we waiting our money to increase her salary?
Customer: replied 10 months ago.
Achieve/ waisting :corrections Even with the increase it will never be as high as mine. Does she get her SS and a portion of mine if we divorce down the road?or is both not allowed?
Expert:  Megan C replied 10 months ago.

Both is not allowed -she would get hers or yours, but not both. Increasing her salary is not going to give her all that much more of a social security benefit. You would be better off putting the extra money back in an IRA (individual retirement account) for her benefit later on.

Thanks, ***** ***** rate so that I may receive credit for assisting you today.

Customer: replied 9 months ago.
I believe in divorce, she gets only a small amount or our SS and in the case of death... She would only receive 1/2 to 3/4 depending on what year I passed. She is 61 now. If I passed when she is 62 it would be grim for her and our daughter? I will be 86 soon, and if the differences between us get large, she is afraid of the future with all the scenarios. She saw it happen to her parents. She is worried that by not increasing her salary she will be limiting her options if I get worse and she has to be on her own. The laws are stacked against the stay at home mothers. They might change the laws again making it worse. Thoughts? Trying to hedge our bets and protect her in case of every scenario.
Expert:  Megan C replied 9 months ago.

They aren't going to take any money away with the changes - the changes only impact those who are just now filing, and wouldn't really apply to your situation as you are so much older than her. If she is 62 and you pass, she gets 3/4 of your full benefit. That won't change. Currenlty she will get 35% if she draws now.

Her own benefit would take years to become equal to your benefit, and she can't draw both. The future is only as grim as you set it up to be, for many respects -- if you save up assets for her on your own, then that's actually more reliable than social security.

Customer: replied 9 months ago.
We were told by SS that because I claimed my benefits at age 70, the amount they will adjust for my wife will be even less. Do you know anything about this? Also, to repeat, you are saying that she will get 35% and my child will get 35% if I were to die this year and they are forced to take benefits now? You are also saying that at 66, and she has touched it out and waited for full retirement age, she and my little girl will only get 75%? Thank you
Expert:  Megan C replied 9 months ago.

She will get 100% of your full benefit if she waits until 66-- not your age 70 benefit, but your full retirement age b enefit. Your daughter only gets benefits if she is under 18 when you pass. If she's over 18 then she gets nothing.

Please let me know if you need anything additional. If not, please rate positive.