Ask Larry: Will Social Security Widow’s Benefits Now Reduce My Retirement Benefit At 70?

Today’s column addresses questions about whether taking Social Security survivor’s benefits now would reduce retirement benefits taken as late as 70, whether and when Social Security recalculates benefits based on income and retirement benefits before divorced spousal 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.

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Will Social Security Widow’s Benefits Now Reduce My Retirement Benefit At 70?

Hi Larry, My full retirement age is 66 and 2 months, however I plan on working until I turn 70. I had a long term first marriage and divorced after 13 years. Shortly after the divorce my first husband died. I know I can collect my widow’s benefit before I turn 70 but will collecting it have a negative affect on my retirement benefit I’ll collect at 70?

I waited and remarried after 60. When I take retirement at 70, my younger husband will have to wait 2 years to collect his spousal benefit. He has been employed in jobs that really never paid into Social Security. So we will be collecting my retirement benefit plus his spousal benefit long term so I do not want to mess this up. Thanks, Carol

Hi Carol, Drawing Social Security survivor benefits from your ex-spouse’s record would have no adverse effect on your own Social Security retirement benefit rate. You can’t draw both benefits at the same time, but you could collect one of the benefits first and then switch to receiving the higher benefit later.

Your current husband could potentially collect spousal benefits if and when you start drawing your Social Security retirement benefits, but he’d need to be at least 62 or have a child in care who is under age 16 or disabled and who qualifies for benefits on your record.

If your husband files for spousal benefits at full retirement age (FRA) or later, he could be paid up to 50% of your primary insurance amount (PIA), assuming that he’s not eligible for higher benefits on his own record. A person’s PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA).

However, unless your husband has an eligible child in care, if he starts drawing prior to FRA, his benefit rate will be reduced for age.

Your best filing strategy depends on the relative amounts of your survivor rate vs. your own rate, and how much you’ll be earning prior to FRA. Usually it’s best to start drawing the lower benefit as soon as possible and then switch to the higher benefit when it reaches it’s highest rate, but the fact that your current husband may be able to collect spousal benefits could also factor into your decision making.

My company’s software — Maximize My Social Security or MaxiFi Planner — could help sort all of this out for you 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

Will My Benefit Rate Be Recalculated?

Hi Larry, I filed for my retirement benefits at 66 and they became effective in February 2020. I am still working and exceeding the FICA limit. Since I am still working, will my benefits be recalculated which could allow me to see an increase in my benefits beyond the yearly COLA? Thanks, Leah

Hi Leah, Yes, Social Security will automatically increase your benefit rate to include your 2020 earnings, assuming that your earnings in 2020 are higher than one of the previous highest 35 years of wage-indexed earnings on which your current benefit rate is based.

Those automated recomputations are normally done annually in the fall, so you likely won’t actually see the increase until the latter part of next year. However, Social Security would pay you any back pay that you’re due retroactive to January 2021.

Alternatively, you could submit proof of your 2020 earnings (i.e. W-2 for wages or Schedule SE for self-employment) to Social Security along with a written request for a manual recomputation. Best, Larry

Can I Start Collecting My Retirement Benefits Now And Then Change To Divorced Spousal Benefits?

Hi Larry, I am a 67 year old divorcee. I was married to my ex-husband for 35 years and neither one of us has remarried. My Social Security retirement benefit that I could collect on my own record is very minimal compared to my ex’s.

I am still working and would like to start collecting my retirement benefit but want to know if I start collecting my Social Security retirement benefit, could I then change to collecting my divorced spousal benefit based on my ex’s record or will I have to stay with my retirement benefit?

My ex probably won’t start collecting his retirement benefit until he turns 70 in 2 years. Thanks, Lora

Hi Lora, You could start out drawing your own retirement benefits now and file for divorced spousal benefits later, but that may not be your best option.

If you’ve been divorced for at least two years, you can potentially start collecting divorced spousal benefits now, even if your ex-husband hasn’t started drawing his benefits. And assuming that you were born prior to 1/2/1954, you could then opt to file now just for divorced spousal benefits only, and wait until 70 to start collecting your own retirement benefits.

However, you wouldn’t really gain anything by waiting until 70 to start collecting your own benefits unless your own Social Security retirement benefit rate would be higher at 70 than your divorced spousal rate would be then.

If you haven’t been divorced for at least two years though, then the earliest that you could qualify for divorced spousal benefits is the earlier of a) the second anniversary of your divorce, or b) when your ex starts drawing his benefits. In that event you could start drawing your own benefits now and then file for divorced spousal benefits later.

You wouldn’t actually switch from drawing your own retirement benefits to drawing just divorced spousal benefits if you did that though. Instead, you’d continue to draw your own retirement benefits plus the difference between your retirement benefit rate and 50% of your ex’s primary insurance amount (PIA), which is equal to his full retirement age (FRA) retirement benefit amount, assuming that 50% of his PIA is higher than your own rate.

Bottom line, once you’re eligible for divorced spousal benefits, you can be paid the higher of a) your own benefit rate or b) 50% of your ex’s PIA. Best, Larry