Today’s column addresses restricted applications, when the deeming provision is applied, the availability of divorced spousal benefits, unexpected payments from SSA and the earnings test. 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.
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Ask Larry about Social Security here.
Can I Restrict My Application To Social Security Spousal Benefits Only?
Hi Larry, I am confused about restricted applications. I am retired and 67, and planning to delay my Social Security retirement till 70. My wife is 61 and still working. Can I restrict my application now? Or would I have to wait till my wife reaches 62, or even full retirement age? Or am I not eligible at all? Thanks, Henry
Hi Henry, Filing a restricted application simply means applying for one Social Security benefit without also applying for other benefits that you’re eligible for. This is necessary in certain circumstances because most Social Security application forms are considered as applications for all Social Security benefits for which the applicant qualifies, even if the person only intended to file for one benefit.
People are only allowed to restrict their applications to a single benefit if they meet certain requirements. For example, people born prior to 1/2/1954 are allowed to file for only their spousal benefits without also being required to file for retirement benefits on their own record, but only if they apply at their full retirement age (FRA) or later. People born after 1/1/1954 are not permitted to file for spousal benefits without also applying for their own retirement benefits regardless of their age at the time of filing, unless they are caring for an eligible child of the worker on whose record they apply.
So, since you were born prior to 1/2/1954 and are past your FRA, you could potentially file a restricted application for spousal benefits only while still allowing your own retirement benefit rate to grow. However, your wife would have to be drawing her benefits in order for you to qualify for your spousal benefits. Your wife must be at least 62 in order to claim her Social Security retirement benefits, and even then if she continues to work and earn more than the Social Security earnings test exempt amount, both her benefits and your spousal benefits could be subject to full or partial withholding until she reaches her FRA. Best, Larry
Will I Be Forced To Apply For Benefits When My Wife Files?
Hi Larry, My wife is eight months older than I and she will be applying for her Social Security retirement benefit in 2020 in January when she turns 66. Regarding deeming, will I be forced to apply as well because she applied on her own record? My plan is to wait until 70 to claim my retirement benefit based on my own record, but, like your book Get What’s Yours says, don’t trust everything the folks at Social Security tell us. Thanks, Carl
Hi Carl, Regardless of when your wife files for her benefits, her doing so won’t have any effect on your filing status. You wouldn’t be deemed to be filing for anything simply because your wife files for benefits.
What the deeming provision means for you and your wife is that it will prevent either of you from filing just for spousal benefits only without also being required to file for your own Social Security retirement benefits at the same time. Only people born prior to 1/2/1954 are permitted to restrict the scope of their application to spousal benefits only, and they can only do so if they file for spousal benefits at full retirement age (FRA) or later. Unfortunately, that filing strategy isn’t available to you or your wife because you were both born after 1/1/1954.
The bottom line is that both you and your wife are free to file for your own benefits whenever you choose to do so. Neither of you could be eligible for spousal benefits unless and until both of you are drawing your retirement benefits on your own records, and only if one of you has a Primary Insurance Amount (PIA), which is equal to your full retirement age (FRA) retirement benefit amount, that’s more than double the amount of the other spouse’s PIA. 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
Will My Benefits Off Of My Ex-Husband Be Reduced If I Start Drawing At Age 62?
Hi Larry, My ex will be 66, which is his full retirement age, in a year and a half. I’d like to start my divorced spousal benefits at 62. Will it be reduced since I’d be filing early before my FRA? Thanks, Anna
Hi Anna, Yes, if you start drawing divorced spousal benefits any time prior to your full retirement age (FRA) your benefit rate will be reduced for age. Furthermore, whenever you file for divorced spousal benefits you’ll be deemed to also be filing for your own retirement benefits if you have enough work credits to qualify for those benefits. In that case you’ll only receive the higher of the two benefit rates, and the rate you receive will be reduced for age if you file prior to FRA. Best, Larry
Why Would I Have Received Unexpected Payments From Social Security?
Hi Larry, I received two small unexpected Social Security deposits. This has never happened before. Also, my husband transfers money into my account constantly, to pay bills thru me — does this look like income? I cannot work at all. Thanks, Angie
Hi Angie, At best I can only speculate as to what may have happened. Social Security performs a number of different automated processes that can result in adjustments to a person’s benefit rate. When there is such an adjustment, it sometimes results in back pay being due to the beneficiary. Social Security usually pays the back pay as soon as possible rather than adding the back pay to the person’s next regular payment.
So the payments that you received may represent back pay due to an adjustment in your benefit rate. Or Social Security may have underpaid you at some point in the past and they are now refunding that to you. Either way, you should get a written notice by mail that explains the payments within two weeks of when the deposits were made. If you don’t receive a written notice explaining the payments within that timeframe, you may want to check with Social Security to see if they can provide an explanation. Best, Larry
How Much Can I Earn This Year?
Hi Larry, How much can I earn in 2019? I turned 66 in 2018. Thanks, Scott
Hi Scott, If you turned age 66 in 2018, there’s no limit on how much you could earn and still receive all of your Social Security benefits in 2019 because the earnings test doesn’t apply after your full retirement age (FRA). Best, Larry
To learn more about your Social Security options, visit Economic Security Planning, Inc.