Economic Security Planning, Inc.
Today’s column addresses questions about when it would be best for a lower earning spouse to file for their own retirement benefits, what benefits can be available for a parent and a dependent disabled child and when survivor benefits might not be payable, at least not yet. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc, which markets Maximize My Social Security and MaxiFi Planner.
See more Ask Larry answers here.
Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.
Should My Wife Collect Retirement Benefits Now At 64?
Hi Larry, My wife is 64 and I am 65, I am waiting until 66 and two months to collect my full Social Security retirement benefit. It will be about $3,000 per month starting next April. My wife’s Social Security retirement benefit if she started collecting now would be about $500 per month. Should she start collecting now? Or should she wait until she reaches her full retirement age? When I start to collect my retirement benefit next April, how will this affect her if she is already collecting hers? Thanks, Peter
Hi Peter, Your wife must of course make her own decision on when to claim her benefits, but if she starts drawing either her own retirement benefits or spousal benefits before her full retirement age (FRA), her benefit rate will be reduced for age. If she files for her own retirement benefits at 64, the reduction for age applied to her retirement benefits will continue even if she later becomes eligible for spousal benefits based on your record once you file for your retirement benefit. And, her application for her benefits would be deemed to also be an application for spousal benefits, so she’ll be required to claim her spousal benefits as soon as you claim your retirement benefits. And if that’s before she reaches FRA, her spousal rate will also be reduced for age.
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For example, say Jan files for her benefits this year at 64. Jan’s FRA retirement benefit rate, or primary insurance amount (PIA), is $500, but her rate is reduced for age to $422. When Jan turns 65, her husband files for his retirement benefits with a PIA of $3,000. Jan’s unreduced excess spousal benefit would be calculated by subtracting her PIA from 50% of her husband’s PIA, which in her case is $1,000 (i.e. $3000 / 2 – $500). But, since Jan is only age 65, her excess spousal rate is reduced for age to $888. Jan would then receive both reduced benefits for a combined rate of $1,310 (i.e. $422 + $888).
You and your wife might benefit from using my company’s software — Maximize My Social Security or MaxiFi Planner — to analyze your options so that you can determine the best strategy for maximizing your benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry
Can I Collect Full Benefits At 62 Instead Of 67 If My Disabled Child Lives With Me?
Hi Larry, I have a disabled adult child. Am I able to collect full benefits at 62 instead of 67 because my disabled child lives with me and is my dependent? Thanks, Richard
Hi Richard, You can potentially qualify for unreduced child-in -are spousal or survivor benefits at any age if you have a child in your care who is under age 16 or disabled, although benefits are sometimes reduced due to the family maximum benefit.
However, if you’re referring to receiving unreduced Social Security retirement benefits based on your own earnings history at 62, that is not possible. Even if you have a disabled child in your care who could qualify for benefits on your record, if you start drawing Social Security retirement benefits prior to your full retirement age (FRA) your benefit rate is reduced for age. You would also be subject to the earnings test if you’re still earning income and it’s over the exempt amount, which could reduce or eliminate benefits otherwise available on your record until you reach FRA and are no longer subject to the earnings test. Your child might be eligible for a Supplemental Security Income (SSI) benefit as well and this would not be subject to the earnings test. Best, Larry
Is It True That My Friend Can’t Receive Any Widow’s Benefits?
Hi Larry, I am asking for my friend, Anne. She lived in NV when her husband passed away, a year ago. She now resides in Kansas. She is 64 and was told she could not receive any widow’s benefits until she was 66. Is that true and if so why? Thanks, Rebecca
Hi Rebecca, I don’t enough information to know if what your friend was told is correct or not. A person can potentially be eligible for widow’s benefits as early as 60, so your friend meets the age requirement. The only reason I can think of why she might be able to draw benefits at age 66 and not at age 64 is if she’s working and earning too much. Social Security’s earnings test can limit a person’s ability to draw benefits prior to their full retirement age (FRA) depending on their work and earnings.
Another factor is whether or not your friend is receiving her own Social Security retirement benefits. If she is, she could only collect widow’s benefits if her widow’s rate is higher than her own retirement benefit rate. Anne should qualify for at least a onetime death benefit of $255 if she and her husband were living together, so she should probably apply for that benefit if she hasn’t already done so. Best, Larry