Today’s column explore when you can, and cannot, file a restricted application for spousal benefits only, when retirement benefits can be claimed after restricting an application, lasting effects of filing early, public pensions and spousal benefits and remarriage after 60. 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.
When Can I File My Restricted Application For Social Security Spousal Benefits?
Hi Larry, I will be turning 66 later this year. At FRA my retirement benefit will be $2,300 per month. My wife will reach her FRA in August 2020 with FRA retirement benefit will be $2,600 per month. If I file for my retirement benefit at my FRA, can I restrict my application to apply only for my spousal benefits and delay filing for my own retirement benefit in order to earn delayed retirement credits? Do we have to wait till her FRA for me to claim my spousal benefit? And does she have to apply for her retirement benefit first in order for me to claim my spousal benefit? Thanks, Rod
Hi Rod, You can’t qualify to receive spousal benefits unless your wife is drawing her Social Security retirement benefits. You could potentially file a restricted application for just spousal benefits starting as early as the month you reach full retirement age (FRA), but only if your wife claims her retirement benefits by then. And if your wife is still working, both her retirement benefits and your spousal benefits could be subject to full or partial withholding until the month she reaches FRA based on Social Security’s earnings test. The amount of your wife’s earnings prior to FRA is just one of a number of factors that could affect your optimal filing strategy though so 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
Am I Locked Into Retiring At Age 70 Because Of What I Wrote In The Remarks Section Of My Application For Spouse’s Benefits?
Hi Larry, I will turn 68 near the end of March next year after my wife will turn 69 next January. She filed for benefits at her FRA in 2016. She currently receives $428 per month. I filed for spousal benefits at my FRA last March.
At my FRA, I did not file for my retirement benefits and wrote in the remarks section:
I wish to restrict the scope of this application to spousal benefits only. I am not filing for my retirement benefit. I want my retirement benefits to start on my 70th birthday.
I am still only receiving my spousal benefit. Am I locked into holding off on taking my retirement benefit till my 70th birthday because of the comment I wrote? Or can I take my retirement benefit at 68 instead? I would prefer to retire then, I have run the analysis with your helpful software and all things considered, 68 is a good time for me to switch to my retirement benefit even without all the increases I could earn by waiting till 70. Thanks, Rick
Hi Rick, You’re not locked in to waiting till 70. You could still choose to start your Social Security retirement benefits at age 68 regardless of what you wrote in the remarks section of your application for spousal benefits. The only purpose of that remark was to restrict your own Social Security retirement benefits from the scope of your spousal benefit application. And, since you’ve only filed for spousal benefits so far you are free to file for your retirement benefits whenever you so choose.
Even though your remark indicated that you wanted to start your Social Security retirement benefits effective at age 70, that’s not considered as an application for those benefits. You would still be required to file a new application even if you didn’t want to start your retirement benefits until age 70. Best, Larry
Does The Fact That I Took My Benefits Early Affect My Total Benefit Rate?
Hi Larry, I was under the impression that my Social Security benefit would be automatically adjusted to be the same as half my husband’s. Would the fact that l took mine a year early affect that, or did l misunderstand? Thanks, Cindy
Hi Cindy, Yes, if you start drawing your own Social Security retirement benefits before full retirement age (FRA) you’re stuck with the resulting rate reduction even if you later become entitled to an additional spousal benefit.
For example, say Jane starts drawing her retirement benefits at 64. Jane’s full retirement age rate, or primary insurance amount (PIA), would be $1,000, but she receives a reduced rate of $866. Jane’s husband files for his benefits after Jane reaches FRA, and his PIA is $2,500. Jane’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. $2,500 / 2 – $1,000). That partial spousal benefit would then be added to Jane’s reduced retirement rate of $866 to give her a combined benefit amount of $1,116. Best, Larry
What Is The Formula For Computing My Wife’s Spousal Benefit If She’s Getting A Government Pension?
Hi Larry, My wife and I are both retired, She was a government employee and receives a pension. I am 72 and she is over the FRA. What is the formula for determining her spousal benefit? Do I subtract two thirds of her pension from my Social Security and she gets the balance, or is the formula different? Thanks, Ted
Hi Ted, I’m assuming that your wife’s government earnings were exempt from Social Security taxes and that she would therefore likely be subject to the Government Pension Offset (GPO). In that case, if your wife filed for spousal benefits on your record while you’re living, her benefit rate would be calculated by subtracting 2/3rds of her government pension amount from 50% of your primary insurance amount (PIA). Your PIA is the gross amount that you would now be receiving if you started receiving your Social Security retirement benefits at full retirement age (FRA). If the resulting amount would be zero or less, your wife would not be eligible to draw spousal benefits.
The same basic rule would apply to your wife’s widow’s benefits should you die before her, except in that case, 2/3rds of her government pension amount would be subtracted from the full amount of your benefit instead of 50% of your PIA. So, depending on the amounts involved, it’s possible that your wife may be eligible for some benefits as a widow even if she’s not currently eligible to receive any spousal benefits. Best, Larry
How Would A Remarriage Affect My Widow’s Benefits?
Hi Larry, I’m 67, will be 68 soon. I’m wanting to remarry but I don’t know if or how it will it affect my current widow’s benefit. Can you shed some light on this? Thanks, Marie
Hi Marie, Good news: a remarriage occurring at age 60 or later has no effect on a person’s eligibility for Social Security widow’s benefits (or surviving divorced spouse’s benefits) on a previous spouse’s record. Nor would a remarriage adversely affect your benefit rate. So if you get married, it will have no effect on the Social Security widow’s benefits that you currently receive. Best, Larry
To learn more about your Social Security options, visit Economic Security Planning, Inc.