Will Social Security early retirement benefits reduce my wife’s future spousal benefits?


Today’s Social Security column addresses questions about how early retirement benefits may affect spousal benefits taken after full retirement age, if earning $2 above the limit may disrupt disability benefits and being able to receive retirement benefits after survivor benefits. Larry Kotlikoff is a professor of economics at Boston University and founder and president of Economic Security Planning, Inc.

Will Social Security early retirement benefits reduce my wife’s future spousal benefits?

Hi Larry, I have your (revised) book Get What’s Yours and it is excellent. I have a question about spousal benefits because I’m getting conflicting advice.

I was born in 1958 and my wife was born in 1959. She was a homemaker and has a much smaller projected PIA than me, so when I take retirement benefits, her spousal benefit will be larger than her retirement benefit. retirement. I will defer my retirement benefits until I turn 70 to maximize my benefits and those of my wife’s widow if she survives me.

We had planned to have him take his retirement benefits early at 62 just to have some benefits in the next seven years, although we could also delay his with no problem. I won’t take spousal benefit on his retirement benefit because I don’t want to be famous. I expected that she could take a retirement benefit on her own file, from age 62 and when I file at age 70 she will then take spousal benefits.

I expected she could get 50% of my PIA. However, an adviser said if she takes her own retirement benefit earlier, then when she takes a spousal benefit at 69, that will also be reduced.

If my wife takes early retirement on her own, when she gets her spousal benefit seven years later, will that also be reduced or will she get the full 50% of my PIA? Thank you Charles

Hi Charles, The short answer is that if your wife starts collecting her pension benefits early, she will not receive 50% of your Primary Insurance Amount (PIA) when you start collecting your pension benefits.

The reason for this is that your wife cannot actually switch from her own benefits to spousal-only benefits. Once a person files for their own Social Security retirement benefits, those benefits continue for the rest of their life. If they later become eligible for a higher spousal or survivor benefit, they can apply for an excess spousal or survivor benefit, but they cannot simply switch to the other benefit.

The good news is that even if your wife starts collecting her own benefits early, she can still get 100% of your benefit rate as a widow if she is at least FRA when she starts collecting widow’s benefits. So if you wait until age 70 to start collecting your retirement benefits, your wife could get your full age 70 rate as a widow even if she starts collecting her own benefits earlier. She would not get both her own benefit amount and yours, but only the higher of the two.

You might want to consider using my company’s software – Maximize My Social Security or MaxiFi Planner – to make sure your household gets the highest benefits for life. Social Security calculators provided by other companies or nonprofit organizations may provide appropriate suggestions if constructed with extreme care. Best, Larry

If I earned $1,312 in a month, does that exceed the SGA limit of $1,310?

Hi Larry, I am on Social Security Disability and for the first time recently exceeded the allowable amount per month of $1310 by just $2. Will this interrupt my disability benefits? Thank you, Beth

Hi Beth, The answer is yes, but whether or not this will affect your benefits depends on a number of factors. Even if you have completed your nine-month Work Trial Period (TWP), as long as your disability period has never ceased and never resumed because you are in an Extended Qualifying Period (EPE ), then a single month of gainful activity level (SGA) would not stop your SSDI benefits as long as your average monthly earnings are below the SGA level.

Also, Social Security counts how much you earn in a month, not how much you get paid. So if the reason your earnings exceeded the SGA guideline was due to an extra payday during the month, that’s probably not a problem. What I would advise you to do, however, is notify Social Security as soon as possible to explain the circumstances so that you can provide all necessary documentation such as payslips etc. Sincerely, Larry

Can I draw on my own file instead of continuing to collect survivor benefits?

Hello Larry, I am receiving survivor benefits from my deceased wife who did not work much. Am I stuck on my widower’s pension or can I switch to my larger old-age pension? Thank you Roger

Hello Roger, The answer to your question depends on your age. You must be at least 62 years old to qualify for Social Security retirement benefits, and your benefit rate would be reduced by age if you start drawing before full retirement age (FRA) .

For your information, however, the mere fact that you earned more than your spouse does not necessarily mean that you would be entitled to a higher benefit rate on your own account. Social security benefits are calculated on the basis of the average earnings of the worker during the years used to calculate the amount of his benefits.

Basically, the higher the average, the higher the benefit rate. Social Security retirement benefits are based on an average of the best 35 years of earnings indexed to Social Security-covered wages, while survivor benefits can be based on as little as 2 years of a worker’s earnings according to his age at the time of his death.

Therefore, survivorship rates can be quite high in some cases, even when the deceased worker only worked for a short time. In addition, Social Security Cost of Living (COLA) increases are added to survivor benefit rates beginning in the year following the worker’s death.

Also, your retirement benefit rate would continue to increase until you reach age 70 if you wait until then to claim your own benefits. Best, Larry

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