Today’s column addresses filing and suspending versus simply delaying filing, how married couples might sequence benefit applications, early retirement benefits before spousal benefits, and how to understand and respond to negative decisions by the SSA. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc, a company that markets Maximize My Social Security and MaxiFi Planner. Both tools maximize lifetime Social Security benefits. MaxiFi also finds retirement account withdrawal strategies and other ways to lower your lifetime taxes and raise your lifetime spending. Most important, it suggests how much to spend and save each year to enjoy a stable living standard through time.
See more Ask Larry answers here.
Should I Have Filed And Suspended Instead of Delaying My Social Security Benefit?
Hi Larry, I turned 67 last February. My husband will be 66 in September. I have not claimed benefits yet, but waited for the 8% delayed retirement credits to build. I did not know to file and suspend and have been told I should have doe it. But I have also read in Get What’s Yours that its ok to just delay filing until ready. Which is correct: file and suspend now or wait and just file without having suspended? I want to get the delayed retirement credits. I wanted the benefits to start this September, but the book says that since it’ll be before I’m 70, I should wait till next January to see a higher payment. Correct? My husband said he’ll file for his benefits in September. I turned 62 in 2014, will I qualify for full spousal benefits and thus can let social security grow without wiping them out? Thanks, Pattie
Hi Pattie, There would almost certainly be no reason for you to file for and suspend your benefits, since you could still accrue delayed retirement credits (DRCs) until you reach 70 by simply not filing for your benefits until then. Furthermore, you couldn’t draw spousal benefits while your own benefits are suspended, which is something that you might be able to do if and when your husband files for his benefits.
Depending on your and your husband’s relative benefit rates, it may be advantageous for one of you to file for your Social Security retirement benefits and have the other spouse file for spousal benefits only. That way, one of you could collect spousal benefits until 70 while still letting your own retirement benefit rate grow by 8% per year. You must be at least full retirement age (FRA) in order to claim spousal benefits without also filing for your own retirement benefits, though, so the earliest that your husband could potentially claim spousal benefits only would be in September 2019.
If you do decide to file for your retirement benefits in September, you’ll initially only be credited with the DRCs you earned through 12/2018. Your DRCs for January–August of 2019 would be creditable effective with your payment for 1/2020, but you likely wouldn’t actually see that increase until much later. That’s because Social Security adds partial year DRCs through an automated process, which I understand is only done every other year. Best, Larry
What Is The Best Strategy For Us To Maximize Our Social Security Benefits?
Hi Larry, I will be 67 next April. I was considering drawing my Social Security retirement benefits at that time. I am the primary earner and still working. My wife turned 62 in December of 2018, and recently talked about filing for her reduced benefits. What is the best strategy for us to maximize our Social Security benefits. Thanks, Albert
Hi Albert, It sounds like your best strategy would depend largely on your and your wife’s relative benefit rates. If your benefit rate will be significantly higher than your wife’s, you may want to at least consider having her file for her retirement benefits so that you could file for spousal benefits only on her record. You would potentially be able to do that because you were born prior to 1/2/1954, and were thus grandfathered under the 2015 Social Security amendments that changed the deemed filing rules. However, if your wife will still be working and earning more than the amount permitted by Social Security’s earnings test, then a different strategy may be better.
You and your wife may want to use one of my company’s two tools — Maximize My Social Security or MaxiFi Planner — to help maximize your lifetime Social Security benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry
Can My Wife Get Spousal Benefits Or File For Her Own Benefits Now And Upgrade To Spousal Benefits Later?
Hi Larry, I am 66 but not claiming my Social Security retirement benefits yet. My wife is 63 and wants to file for benefits. Can she get spousal benefits or can she file for her own record and then upgrade to spousal benefits later when I file? Thanks, Trey
Hi Trey, Your wife couldn’t get spousal benefits at least until you start drawing your Social Security retirement benefits. She could file for her own retirement benefits now and potentially qualify for additional spousal benefits when you file for your retirement benefits, but she’d keep any rate reduction that she takes in return for starting her benefits early.
If your wife does start drawing her retirement benefits before you file for your benefits, you could potentially be able to draw spousal benefits on her record while still allowing your own retirement benefit rate to continue to grow. The reason you would have that option is because you were born prior to 1/2/1954, so you are not affected by the 2015 amendments to the deeming rules, the Bipartisan Budget Act of 2015. Best, Larry
If My Wife Files For Her Own Benefits At 62 Will Her Subsequent Spousal Amount Also Be Reduced?
Hi Larry, I am 63 and plan to wait until 70 to file for my Social Security retirement benefits. My wife just turned 62 and has a projected full benefit that is less than half of mine. If she files now to take her reduced benefits, when I turn 70 can she get her full spousal benefit or will it also be reduced?
My projected benefit at my full retirement age is about $2,500, which I know is equal to my primary insurance amount (PIA); my wife’s is about $1,000. My projected benefits at 70 are around $3,200. As I understand it, my wife’s spousal benefit should be about half my PIA, i.e., about $1,250. But will that $1,250 be reduced if she takes her own benefits early at 62, but does not start taking her spousal benefit until I turn 70, when she will be 68 years, 8 months? Also, when I pass, will her widow benefit be reduced or will it be my full $3,200 or whatever it turns out to be if I wait until 70 to start my benefits? Thanks, Frank
Hi Frank, If your wife files for her own retirement benefits at 62, her retirement benefit rate would be permanently reduced by roughly 27%. If she later qualifies for additional spousal benefits on your account, those benefits would not be reduced if she becomes eligible after reaching her full retirement age (FRA), but nonetheless she’d keep the reduction that she took in order to start drawing her own retirement benefits early.
For example, say June starts drawing her retirement benefits at 62. June’s full retirement age rate, or primary insurance amount (PIA), would be $1,000, but she receives a reduced rate of $730. June’s husband files for his benefits after June reaches FRA, and his PIA is $2,500. June’s unreduced spousal benefit would be calculated by subtracting her PIA from 50% of her husband’s PIA, which in this case would amount to $250 (i.e. $2500 / 2 – $1,000). That partial spousal benefit would then be added to June’s reduced retirement rate of $730 to give her a combined benefit amount of $980.
Any reduction applied to your wife’s retirement or spousal benefits would not carry over to her survivor benefit rate if you die before her. If you wait until 70 to start drawing and subsequently die before your wife, she would draw your full age 70 rate as a survivor. She wouldn’t get both your rate and her own retirement rate, though, just the higher of the two. Best, Larry
What Can I Do Legally To Receive My Survivor Benefits From Social Security?
Hi Larry, My ex died this year and the Social Security Administration will not give me survivor’s benefits because of retirement. They classify it as double dipping. I currently have to substitute teach to pay my debts because of two previous bouts with cancer. As a substitute teacher, I currently am paying into Social Security. This is a rip off! I am in need of that money. I am in debt because of the system that the politicians have designed to keep the middle class down while the rich get massive tax breaks. I am sick of politicians in their attempts to destroy the middle class while the rich get richer! What can I do legally to receive my survivor benefits from Social Security? I am in debt and working my butt off going no where! Thanks, Claire
Hi Claire, I sympathize with your situation, but I don’t have enough information about your case to be able to properly advise you. You say that Social Security won’t pay you survivor benefits because of retirement. I don’t know if that means that you’re already drawing your Social Security retirement benefits, or if you’re still working and earning too much to be paid benefits.
If you’re already drawing Social Security retirement benefits on your own record, you could only be paid additional survivor benefits from an ex-spouse’s record if the benefit rate payable on your ex’s account is higher than your own retirement benefit rate. You can’t receive both benefits in full.
If you’re under full retirement age (FRA) and still working, Social Security would likely need to withhold $1 of your benefits for every $2 that you earn in excess of $17,640 this year.
Social Security does have a formal appeals process that you can pursue if you file a claim and are dissatisfied with the results. For more information on the appeals process, refer to the following Social Security publication: https://www.ssa.gov/pubs/EN-05-10041.pdf. Best, Larry
To learn more about your Social Security options, visit Economic Security Planning, Inc.