Ask Larry: Do I Need To File And Suspend To Increase My Social Security Retirement Benefits?

Social Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.

Today’s column examines whether it’s necessary to file and suspend to earn delayed retirement credits (DRCs), spousal benefit availability, effects of remarriage on benefits already being received, reductions for filing early and widow’s benefits while working. 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.

Ask Larry about Social Security here.

Do I Need To File And Suspend To Increase My Social Security Retirement Benefits?​​

Hi Larry, I will be 66 next April but I’m still working full time. Do I have to file for my Social Security retirement benefit before my birthday and then suspend my benefits so they grow .67% per month? Or do I do nothing my benefits will increase automatically if I don’t apply? Do I then apply shortly before the time I plan to retire and collect my benefits? How much time before I retire should I apply?

I thought I had to apply for social security at 66 and then suspend my benefits so they grow but was told I actually didn’t. Was the Social Security representative correct?

I already applied for Medicare last April and declined Part B because I have group health insurance at work. I will apply for Part B for me and my husband, who is on my health insurance, shortly before I retire, correct? Thanks, Sandra

Hi Sandra, You don’t need to file for and suspend your retirement benefits in order to accrue delayed retirement credits (DRCs) starting at your full retirement age (FRA). Your benefit rate will grow at the same rate if you simply delay filing for your benefits instead.

When you do decide to start drawing your benefits, you can apply up to four months before the month that you want to claim benefits, and you can file for Part B of Medicare up to 3 months prior to the month you want your coverage to start. It would likely be easiest to file for both benefits at the same time, so you’ll probably want to plan on filing two or three months in advance of the month that you want your benefits to start. Depending on your husband’s age and his status with regard to Social Security benefits, it may be possible for one of you to receive spousal benefits while letting your own benefit rate grow until age 70. Best, Larry

Could I Collect Spousal Benefits?​​

Hi Larry, My wife is 63 collecting Social Security disability. I am 66 and working with higher income and benefit, though I haven’t filed yet. Could I collect my spousal benefit on her record while I am still working? Thanks, Mitch

Hi Mitch, Potentially, yes. If you were born prior to 1/2/1954 and you haven’t yet filed for your own Social Security benefits, you could file for spousal benefits at 66 or later while letting your own retirement benefit rate grow until 70. However, a special formula is used to calculate the family maximum benefit (FMB) payable on Social Security disability (SSDI) accounts, and that formula can in some cases reduce the amounts payable to eligible spouses and children to zero. That only occurs in cases where the worker’s SSDI rate is relatively low, though.

If the FMB on your wife’s SSDI account would lower your spousal benefit rate or reduce it to zero, it might be advantageous for her to opt to receive reduced retirement benefits as opposed to SSDI. That would lower your wife’s benefit rate but can in some cases result in more total family benefits. And, as long as she remains technically entitled to SSDI while she’s getting reduced retirement benefits, her benefit rate would go back up to her full SSDI rate when she reaches FRA.

It sounds like you 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

What Happens To My Benefits If I Remarry?​​

Hi Larry, I am 65 and collecting my divorced spousal benefit. If I remarry now, what happens to my divorced spousal benefits? Can I switch to my new husband’s record? If so, when could I do so? Thanks, Rebecca

Hi Rebecca, If your ex is still living, your divorced spousal benefits would be terminated if you remarry unless your new spouse is also receiving Social Security dependent benefits. If your ex is deceased, though, you could continue to receive your surviving divorced spousal benefits since your new marriage will have occurred after you reached age 60.

Either way, you could potentially qualify for spousal benefits on your new husband’s record as early as the first full month of your marriage, assuming that he’s drawing either Social Security retirement or disability benefits. Best, Larry

Is It Really Worth It To Delay My Application?​​

Hi Larry, My birthday is 12/30 and I’ll be 63. I’m putting in for early benefits. Is it really worth it to delay my application? Do they prorate the previous year so that I get at least some of the higher benefit? Or am I treated the same as if I applied on my birthday at 62? Thanks, Ted

Hi Ted, The reduction percentage applied to your retirement benefit rate if you file between ages 62 & 63 is calculated at 5/12ths of 1% per month. So if you started drawing your benefits in November as opposed to December, your benefit rate would only be roughly 5/12ths of 1% lower. The actual percentage difference could be slightly different though, due to dollar down rounding.

You don’t mention whether or not you’re working, so I don’t know if the Social Security earnings test might be a factor in your case, nor do I know if you have any better options available to you. Best, Larry

Can I Still Draw Widow’s Benefits If I’m Working?​​

Hi Larry, I just turned 60 and my husband passed away and he would have been 71 this year. Can I draw widow’s benefits from Social Security now? If so, what happens when I am at full age to retire? I currently work, so can I still draw my widow’s benefits? Thanks, Betsy

Hi Betsy, I’m sorry for your loss.

It sounds like you’d potentially qualify for widow’s benefits, but some or all of your benefits could be subject to withholding depending on how much you earn. Basically, you’d lose $1 of benefits for each $2 that you earn in excess of $17,640 this year, and $1 for each $2 that you earn in excess of the exempt amount next year.

Widow’s benefits are reduced by 28.5% if you start drawing when you turn 60, and that reduction is permanent assuming that you’re paid all of your benefits between age 60 and your full retirement age (FRA). You could later switch to drawing on your own record however, if your own Social Security retirement benefit rate is higher than your reduced widow’s rate. Normally, you would want to start out drawing the lower benefit first and then switch to the higher record when it reaches its highest potential rate. Best, Larry

To learn more about your Social Security options, visit Economic Security Planning, Inc.

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