Q. In a recent column (June 2, 2005) a reader's question mentioned that part of his income was a Social Security check, as well as some part-time income of $36,000 per year. I am also receiving Social Security and was told by the Social Security Administration I could not earn more than $14,000 in any one year while receiving Social Security. Does this amount change depending on the income amount one retired at?

---D.F., by e-mail from Dallas, TX


A. No, the amount doesn't change depending on the income you retired with. If you retire early--- before what Social Security deems your "full retirement age"--- two things happen. First, your benefit entitlement is reduced from what it would be if you did not retire early. For those born in 1940, for instance, full retirement age is 65 years and 6 months. A person born in 1940 who retired at age 62 would receive monthly benefits about 22.5 percent lower than if he waited to 65 years and 6 months.

Here is the URL to the Social Security website page with information on the full retirement age: http://www.ssa.gov/pubs/10035.html

The second thing that happens for early retirees is that their benefits can be further reduced if they continue working and earn too much money. They can have unlimited income from investments but excessive wage income will reduce their benefits. The formula allows you to earn $12,000 a year before your benefits are reduced. Once you earn $12,000, your benefits are reduced by $1 for every $2 you earn over the limit. A more liberal limit applies in the year (and that year only) you reach full retirement age.   To learn more, visit The Social Security website and read "How Work Affects Benefits" at http://www.ssa.gov/pubs/10069.html.

Once you reach full retirement age, there is no limit on how much you can earn in wages--- your benefits will never be reduced, except by taxes if your total income exceeds certain limits.


Q.   My husband and I are retired, ages 70 and 67, and in fair health. We married 5 years ago and he moved into my house, which I own mortgage free. We would like to buy a larger house in a better neighborhood. My house is worth $100,000. I am not sure how much we should spend on another house.

We have a combined monthly income of $5,900. We also have investments of $400,000 and $45,000 in cash. We would pay cash for the new house after selling mine.

If he dies first, however, I do not get any of his retirement income. I would have my Social Security ($890 a month) and dividends from his portfolio of about $1,800 a month to live on. We have no debts.

What do you suggest?

---B.T., by e-mail


A. The future may be less hazardous than you think.

Two can't live as cheaply as one but there are some "economies" to being a couple. Most research suggests that your expenses will decline by about 30 percent if you are widowed in the future. That would narrow the income gap you are anticipating.

In addition, when one spouse dies the surviving spouse gets the larger of their Social Security benefits. So if your husband is receiving Social Security and his benefits are $1,400 a month, your benefits would be $1,400 a month as a widow, not $890 a month. That would also narrow the income gap.

Finally, if your husband is eligible for life insurance, you can narrow the gap further by taking out a life insurance policy. The premiums will reduce your current income but they will also provide a future fund that will offset some or all of the income lost at his death.

None of that answers your basic question: How much can you spend for a new house?   The answer, however, is simple: Unless you plan to move if you are widowed, you should pay no more than you'll be able to afford as a single person.