Today’s column addresses filing early in anticipation of potential future benefit cuts, who can still file restricted applications, potential effects of pensions on Social Security benefits, the availability of survivor benefits and exact timing of filing a restricted application. 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.
Should We File For Our Benefits Now In Case Social Security Cuts Them Later?
Hi Larry, My wife and I are still working and planning to retire soon. She is 66 and I will soon turn 69. My goal was to wait until 70 so as to be entitled to the maximum allowable benefit and have my wife, at the same time file for a restricted spousal benefit. The intent is for her to take the spousal benefit until she turns 70. The unknown is whether Social Security will have the funds to pay us for our patience. Our finances are comfortable such that in the event Congress elects to go with means testing, we might lose and could be better off filing for benefits now. It’s impossible to know the future, so if you were in ours shoes, what would you do given what we know and don’t know? Thanks, Ralph
Hi Ralph, I can’t predict the future, but if I were you I would definitely not alter my Social Security plans due to concerns about future funding of benefits or possible amendments that congress may or may not make to the Social Security program in the future.
It sounds like your current plan may be the best strategy for you and your wife, but I can’t say for sure without additional information. Your best strategy depends in large part on the comparative rates of your and your wife’s Social Security retirement benefits. Best, Larry
Was My Wife Born Too Late To File For Spousal Benefits While Letting Her Own Benefit Grow?
Hi Larry, My wife born in 1955. My understanding is that this was a year too late to file for her spousal benefits before then switching to her retirement benefit at seventy. Is this correct? I filed at seventy and she just turned sixty four. Thanks, Dermot
Hi Dermot, Yes, that’s correct. Since your wife was born after 1/1/1954, she could never file a restricted application for spousal benefits only. Instead she’d be deemed to also be filing for her own retirement benefits. This is due to the Bipartisan Budget Act of 2015.
Your wife’s best filing strategy depends largely on the amount of her retirement benefit rate as it relates to your benefit rate. She may want to use one of my company’s two tools — Maximize My Social Security or MaxiFi Planner — to help maximize your lifetime household 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
Would The Fact That I’m Receiving My Ex-Husband’s Pension Have Any Effect On My Social Security Benefits?
Hi Larry, In my divorce after 27 years of marriage I have been receiving my ex’s pension. I am now thinking of collecting Social Security. Since this pension isn’t based on income I earned and was part of the divorce decree, will it affect my Social Security benefits? Thanks, Vickie
Hi Vickie, Receipt of a pension based on your ex’s work and earnings would not have any effect on your Social Security benefits or options. Even if it’s a pension based on income your ex didn’t pay Social Security tax on, a survivor’s benefit for you based on that pension would not affect your benefits. Only a pension based on income you earned and that you didn’t pay Social Security tax on could affect your benefits at this point. Best, Larry
Would I Get My Husband’s Higher Benefit Amount If He Dies Before Me?
Hi Larry, Both my husband, 73, and I, 70, receive Social Security benefits. Both have been affected by the Windfall Elimination Provision. His Social Security retirement benefit is much higher than mine. If he predeceases me, can I receive a widow’s benefit based on his record? Thanks, Helen
Hi Helen, That depends on the type of pension you receive that’s causing your own retirement benefit to be affected by the Windfall Elimination Provision (WEP). If it’s a government pension from a US entity, e.g. federal, state, local, then any widow’s benefits for which you would otherwise qualify would likely be subject to offset due to the Government Pension Offset (GPO) provision.
If your husband dies before you, your widow’s benefit would be calculated by subtracting your benefit rate from your husband’s adjusted benefit amount. His adjusted rate would be the amount that he would have been receiving if his benefits would not have been reduced by WEP. That difference would then be paid to you in addition to your own retirement benefit rate unless your widow’s benefits are subject to GPO. If they are, then 2/3rds of the amount of your government pension would be deducted from your widow’s benefit. That could reduce your widow’s rate to zero if 2/3rds of the amount of your government pension amounts to more than your widow’s benefit. Best, Larry
When Can I File A Restricted Application For Spousal Benefits Only After My Husband Applies?
Hi Larry, Can I submit my restricted application for my spousal benefit at the same time my husband applies for Social Security or do I have to wait until sometime after his application is approved? If I have to wait, how long is the waiting period before I can file for my spousal benefit on his record? Thanks, Carolyn
Hi Carolyn, Yes, you can apply for spousal benefits at the same time that your husband files for his benefits and before his claim is approved. You can only file a restricted application for spousal benefits effective with the month that you reach full retirement age or later, but you could submit your application up to four months before then. Best, Larry
To learn more about your Social Security options, visit Economic Security Planning, Inc.