Today’s column addresses questions about when to file to allow for larger benefits for a spouse, how spousal benefits are determined, how survivor benefits are calculated, when it is possible to file a restricted application and correcting gaps in an earnings record. 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.
How Can I File To Maximize My Spouse’s Social Security Benefits?
Hi Larry, I am 64. I reach full retirement age next June and make $175K. My wife reaches full retirement age in October this year, makes $50K and will retire at FRA. I will retire in December. When should I file for Social Security to maximize the my spouse’s benefits? Thanks, Stan
Hi Stan, I can’t give you a definitive answer based simply on your and your wife’s current earnings levels. Your Social Security retirement benefit rate is based on an average of your highest 35 years of wage indexed earnings, so your full earnings histories are needed in order to determine your and your wife’s Social Security retirement benefit rates. And, without knowing that it’s not possible to know whether or not your wife would even qualify for additional spousal benefits.
What I can tell you is that since you were born after 1/1/1954, you couldn’t file just for spousal benefits only without filing for your own Social Security retirement benefits at the same time due to the deeming provision. Your wife would have that option since she was born prior to 1/2/1954, but you would have to be drawing your retirement benefits in order for her to qualify for spousal benefits. And if you filed for benefits prior to your full retirement age (FRA), both your retirement benefits and any spousal benefits for which your wife may qualify could be subject to full or partial withholding until you reach FRA due to Social Security’s earnings test.
Another factor to consider is that if you die before your wife, what she would likely receive as a survivor is the higher of your benefit rate or her own retirement benefit rate. So, if you wait until 70 to file for your retirement benefits, you will be maximizing not only your own monthly retirement benefit rate but you’ll also maximize the monthly survivor amount that your wife could end up receiving. Best, Larry
What Determines My Wife’s Social Security Rate?
Hi Larry, When my wife reach her full retirement age for Social Security, she will collect her retirement benefit while I plan to postpone my Social Security retirement benefit until 70.5. What determines my wife’s Social Security benefit at that point? What happens to our benefits when I retire at 70.5? Thanks, Brent
Hi Brent, First of all, your benefit rate won’t be any higher at age 70.5 than it would be at 70, so there’s probably no reason for you to wait past 70 to claim your Social Security retirement benefits.
If your wife starts drawing her retirement benefits and you are at least full retirement age and were born prior to 1/2/1954, you could claim spousal benefits only while allowing your own benefit rate to grow until 70. You could then switch to your own retirement benefits at 70 if your retirement benefit rate is higher than your spousal rate. If you are able to claim spousal benefits only at full retirement age (FRA) or later while letting your own benefit rate grow, you would receive 50% of your wife’s Primary Insurance Amount (PIA), which is equal to her full retirement age (FRA) retirement benefit amount.
Your retirement benefit rate is based on an average of your highest 35 years of wage-indexed earnings that were subject to Social Security taxes, and your wife’s retirement benefit rate would be based on her highest 35 years of wage-indexed earnings. If you file for retirement benefits at FRA, you would receive 100% of your PIA. If you wait past FRA to claim your retirement benefits you can accrue delayed retirement credits (DRCs) that would raise your rate by 8% per year up until 70. So if your FRA is age 66 and you wait until age 70 to start drawing your retirement benefits, you’ll benefit rate will be equal to 132% of your PIA.
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.
Is It True That My Wife’s Widow’s Rate Would Be Based On My FRA Rate Even If I Delay Until 70?
Hi Larry, I will not start benefits 70 and I’m 68 now. I was told by Social Security that when I pass, my wife’s widow benefit would be based on my full retirement age of 66, not 70. Is this true? Thanks, Paul
Hi Paul, That’s not true. If you wait until 70 to start drawing your benefits and you die anytime after that, your wife would get your full age 70 rate, inclusive of subsequent COLAs, as a survivor as long as she’s at least full retirement age when she starts drawing her widow’s benefits. She couldn’t get your full rate plus her own Social Security benefit, though, just the higher of the two amounts.
If you were to die before filing for your benefits and before you reach 70, your wife’s unreduced widow’s rate would be based on the amount that you would have received if you had started drawing your benefits in your month of death. In other words, her widow’s rate would include credit for any delayed retirement credits that you had accumulated up to the month of your death. Best, Larry
Can My Husband File A Restricted Application For Spousal Benefits While I’m Not Claiming My Benefits?
Hi Larry, My husband was born in 1952 and is grandfathered under the law passed by Congress in 2015. He intends to stop working within six months. I was born in1956 and at this time, I continue to work full time. Can my husband file a restricted application for spousal benefits on my record, allowing his retirement benefit to grow until he is 70 while I am not claiming my retirement benefits? Thanks, Callie
Hi Callie, You would actually have to be drawing your retirement benefits in order for your husband to potentially receive spousal benefits. And if you’re still working, both your benefits and your husband’s spousal benefits could be subject to full or partial withholding based on Social Security’s earnings test until you reach your full retirement age (FRA). That means it’s possible that neither you or your husband could be paid any benefits on your record depending on how much you earn prior to your FRA. Best, Larry
Is It Too Late To Get Credit For My Earnings In Years That My Employer Didn’t Pay Into Social Security?
Hi Larry, The company I worked 28 years did not paid into Social Security for 11 years and now the IRS closed them down. How can I get my Social Security straight or is it too late. Thanks, Art
Hi Art, It’s not necessarily too late to get credit for your missing wages if you have proof of your earnings that shows that Social Security taxes were withheld from your wages. The ideal type of proof would be a copies of your W-2 forms, so hopefully you kept those for the years in question. Documents other than W-2 forms could be used for proof of wages (e.g. wage slips), but evidence other than W-2 forms are less likely to show your yearly earnings and the fact that Social Security tax was withheld.
If you have proof of your earnings for any years that aren’t posted to your Social Security earnings history, you can submit the evidence to Social Security and ask them to correct your record. Best, Larry
To learn more about your Social Security options, visit Economic Security Planning, Inc.