Economic Security Planning, Inc.
Today’s column addresses questions about when spousal benefits can be filed for, how deeming affect people born in 1954 and later, how foreign pensions can affect Social Security benefits and how the lower earning spouse can maximize their benefits. 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.
Can My Wife Claim Social Security Spousal Benefits On My Record If She Files At 62?
Hi Larry, I am married and three years younger than my spouse, who’s 57. I’m also the higher income earner. She wants to retire and start collecting Social Security benefits as soon as possible at 62. What is the optimal way to file? Can she draw on my record since I’m the higher earner even though I am also the younger of the two? I’ve seen it the other way but not this way. Thanks, Joshua
Hi Joshua, Your wife can’t qualify for spousal benefits at least until you start drawing your retirement benefits. And if she files for her own benefits at 62, your wife will be stuck with the resulting reduction for age that would be applied to her benefit rate for as long as both of you are living. That’s true even if she qualifies for spousal benefits some time after starting her own benefits.
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For example, say Mary files for her Social Security retirement benefits at 62. Mary’s primary insurance amount (PIA), which is equal to her full retirement age (FRA) retirement benefit amount, is $800, but Mary’s benefit rate is reduced for age to $563.
Several years later Mary’s husband applies for his retirement benefits, and his PIA is $2,000. Mary’s unreduced excess spousal benefit would then be calculated by subtracting her PIA from 50% of her husband’s PIA, which in Mary’s case amounts to $200 (i.e. $2,000 / 2 – $800).
If Mary is at least full retirement age (FRA) when she becomes eligible for the spousal benefit, she would then be paid the unreduced excess spousal amount of $200 in addition to her own reduced rate of $563 to give her a combined rate of $763.
But if Mary becomes eligible for spousal benefits prior to FRA, her spousal rate would also be reduced for age.
You and your wife may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to understand the options available to you in order to determine your 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
Did I Receive The Correct Information From Social Security?
Hi Larry, I have been married for 15 years. My husband was born in 1954 and has started to draw his social security benefits a few months ago at full retirement age. I was born in1955 and I want to work and delay filing until I am 70 to increase my benefit.
I had planned on filing a restricted application for spousal benefits only on my husband’s record when I reach my full retirement age later this year. The Social Security office told me today that this is not possible since I was born after 1/1/1954. I am reading very confusing information about this online.
I am also reading about deemed filing which seems to suggest that if my husband is actively receiving benefits, I would be able to file the restricted application. The Social Security office employee seemed unsure about their answer and I am not sure that I received correct information from them. What do you think? Thanks, Randi
Hi Randi, What you were told by Social Security is correct. No one born after 1/1/1954 is allowed to file a restricted application for spousal benefits only, so there is no way that you could draw spousal benefits while waiting until later to claim your own retirement benefits.
Only people born prior to 1/2/1954 can file for spousal benefits without also being required to apply for their own Social Security retirement benefits at the same time, and even they can only do so if they apply for the spousal benefits at full retirement age (FRA) or later.
Deemed filing is precisely the reason that you cannot file a restricted application for spousal benefits only. Deemed filing means that when you apply for either spousal benefits or your own Social Security retirement benefits, your application is deemed, or considered, to be an application for both benefits.
So when you apply for benefits, you’ll be filing for both your own benefits and for spousal benefits, and you can only be paid essentially the higher of the two benefit rates. Best, Larry
Would My Pension From Greece Affect My Social Security Benefits?
Hi Larry, I am receiving a pension from Greece as a retired university faculty member. After moving to the US, I became a US citizen, worked again in academics and I have recently retired as university faculty member at a school here. I am eligible for Social Security benefits. Would my pension from Greece affect my Social Security benefits? Thank, Daniel
Hi Daniel, It’s highly probable. It sounds like your Social Security retirement benefit amount will be likely be lowered due to the Windfall Elimination Provision (WEP). If a person receives a pension that’s based on their work and earnings that were exempt from US Social Security taxes, the WEP provision can cause that person’s Social Security retirement benefit rate to be calculated using a less generous computation formula than the one that’s normally used to calculate benefits.
But because your pension is from Greece, your won’t be affected by the Government Pension Offset, which could otherwise reduce any Social Security spousal or survivor’s benefits you may be eligible for. The GPO only applies when it is a US local, state or federal pension. Best, Larry
How Can I Maximize My Benefit?
Hi Larry, In need of your expertise. My husband is 70 and has collected Social Security since his last birthday. I will be 65. Should I start collecting my own retirement benefits at 66 and two months, my FRA?
They are half of what my husband collects. Could I get a spousal benefit? How can I maximize my benefit? I will not wait until 70 to file, as we would like to increase our cash flow before then. Thanks, Becky
Hi Becky, Since you were born after 1/1/1954, you wouldn’t be able to file just for spousal benefits without also being required to file for your own benefits at the same time.
If you file for benefits at your full retirement age (FRA), what you’ll be eligible for is the higher of your own primary insurance amount (PIA), or 50% of your husband’s PIA. A person’s PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA).
You could potentially start drawing prior to FRA, but then your monthly benefit amount would be reduced for age for as long as both you and your husband are living.
ut regardless of when you start drawing your retirement or spousal benefits, if your husband dies before you, you would then be eligible for a survivor benefit equal to his full benefit rate plus the delayed retirement credits he earned by waiting until 70 to start drawing his benefits.
You wouldn’t receive both your own retirement benefit rate and your husband’s rate as a widow though, just the higher of the two amounts. Best, Larry