Today’s column addresses whether filing and suspending is still a viable option, when spousal benefit can be available, when delayed retirement credits are applied to retirement benefit checks, survivors eligibility for Medicare and retirement benefits before spousal benefits. 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.
Was The Ability To File And Suspend Social Security Benefits Abolished?
Hi Larry, I am confused about the file and suspend rule. Was it abolished by congress in 2015, or can I still use it when I turn 66 in late 2019? I was born 1953 and am single, never married. I have no dependents. Am I still allowed to do this? Thanks, Scott
Hi Scott, The file and suspend strategy wasn’t abolished by the Bipartisan Budget Act of 2015, but it was changed to eliminate many of its advantages. However, since you’ve never been married and have no dependents, it’s unlikely that you would ever have benefitted from using the strategy.
Prior to the 2015 amendments, the file and suspend strategy was used mainly to enable family members such as eligible spouses and children to draw auxiliary benefits even when the benefits of the worker on whose record they were drawing were voluntarily suspended. That allowed a worker to earn delayed retirement credits (DRCs) from full retirement age (FRA) until age 70 while still permitting benefits to be paid to eligible family members. Starting with voluntary suspension requests filed on or after 4/30/2016, though, if a worker suspends his or her benefits, any auxiliary benefits payable to eligible family members other than divorced spouses are also suspended.
If you wish to delay drawing your benefits for the purpose of earning DRCs starting at FRA, you can still do so. You could either file for and suspend your benefits when you reach FRA, or you could simply not apply for your benefits until you actually want to start drawing them. Either way, you’ll earn DRCs that will increase your benefit rate by 2/3rds of 1% for each month, or 8% per year, that you don’t draw your benefits from FRA until you reach age 70. But filing for your retirement benefit and suspending it doesn’t give any special advantages over simply delaying it. Best, Larry
Am I Eligible To Draw Benefits Based On My Wife’s Record Now?
Hi Larry, My wife has been collecting Social Security retirement benefits since 62, in 2012. I turn 66 in December and I won’t file for my retirement benefits until 70. Am I eligible to draw a benefit off her record now while I am waiting on my own FRA? Thanks, Norm
Hi Norm, If you file for spousal benefits prior to reaching your full retirement age (FRA), you’ll be deemed to also be applying for your own benefits. You would then only receive essentially the higher of the two rates, and your benefit amount would be reduced for age. Since you were born prior to 1/2/1954, what you could do instead is file a restricted application just for your spousal benefits only when you reach FRA and let your own benefit rate continue to grow until you reach age 70. Best, Larry
When Should I See My 2018 Delayed Credits Added To My Monthly Payments?
Hi Larry, I was born in 1951 and I applied for Social Security retirement benefits this past fall and received my 1st check in 12/2018. That first check only appeared to include my delayed credits accrued through 12/2017.
I have read on the Social Security website that “If you retire before age 70, some of your delayed retirement credits will not be applied until the January after you start benefits.” I don’t see my 10 delayed credits for 2018 in my January 2019 payment. When should I see my 2018 delayed credits added into my monthly payments? Thanks, Tom
Hi Tom, Any delayed retirement credits (DRCs) that you accrued in 2018 prior to your month of entitlement to benefits would be creditable effective with your benefit payment for the month of 1/2019. Social Security benefits are paid a month behind, though, so your 1/2019 benefit is the payment that you received in 2/2019.
However, when you apply for benefits between full retirement age (FRA) and age 70 and effective with any month other than January, the computation used by Social Security to credit partial year DRCs is done on an automated schedule. My understanding is that such automated recomputations are only scheduled for every other calendar year, so you may not see any increase until sometime in the year 2020. You would also then be paid any back pay due starting with your payment for 1/2019 and following. Best, Larry
Is A Survivor Entitled To Medicare At Age 65 Even If They Never Paid Into Social Security Or Medicare?
Hi Larry, If a retiree claiming retirement benefits at the full retirement age dies, my understanding is the survivor is entitled to 100% of the FRA amount of the deceased at the survivor’s FRA. Is the survivor entitled to Medicare benefits at age 65 even though the survivor never worked under SSA or Medicare? Is the Medicare entitlement by nature of being a survivor? Thanks, Sean
Hi Sean, Yes, a person who is potentially eligible for Social Security benefits as a surviving spouse could enroll in Medicare at age 65 without also filing for survivor benefits.
Anyone who is a US citizen or a non US citizen who has been legally admitted to the US for permanent residency and has resided here for at least five years can enroll in Parts A & B of Medicare at 65. However, only people who have worked and paid into Social Security long enough to be insured, or a qualified spouse or surviving spouse, including divorced spouses, of an insured worker, can receive Part A (inpatient hospital) Medicare coverage without having to pay a monthly premium. Everyone must pay a monthly premium for Part B coverage.
People aren’t required to apply for monthly Social Security benefits as a condition for Medicare eligibility. Therefore, a person who is potentially eligible for benefits as a surviving spouse could file for Medicare only at age 65 while waiting until full retirement age in order to receive an unreduced survivor’s benefit rate. And even if the surviving spouse has no Social Security work credits themselves, they could still receive premium free Part A coverage based on their deceased spouse’s insured status. Best, Larry
If My Wife Starts Drawing Her Benefits Now, Can She Still Get A Spousal Benefit When I Start Drawing?
Hi Larry, If my wife starts drawing on her Social Security retirement benefit now at about $1,300 per month, can she still get a spousal benefit when I start drawing my retirement benefit at 70 at about $3,400 per month? Her spousal benefit, at 50% of my benefit, will be higher than hers. Thanks, Richard
Hi Richard, Maybe, but only if 50% of your primary insurance amount (PIA) is higher than your wife’s own PIA. A person’s PIA is equal to the amount that they’d receive based on their own work record if they started drawing at full retirement age (FRA). Her spousal benefit is 50% of your PIA, not 50% of your increased benefit at 70.
For example, say that your PIA is $2,600 and your FRA is 66. In that case if you waited until age 70 to start drawing you could receive a retirement benefit rate of $3,432 (i.e. $2,600 x 1.32), however, your wife’s spousal benefit rate would still be computed based on 50% your PIA of $2,600. And if she’s already drawing her own Social Security retirement benefits her PIA would be subtracted from that 50% in order to determine whether or not she qualifies for an additional spousal benefit. So if your PIA was $2,600 and your wife’s PIA is at least $1,300 and she’s already drawing on her own record, she wouldn’t be eligible for any additional spousal benefits when you start drawing your retirement benefit.
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
To learn more about your Social Security options, visit Economic Security Planning, Inc.