Ask Larry: Are Social Security Spousal Benefits Still Available?

Today’s column addresses questions about whether the 2015 changes in the Social Security law actually ended spousal benefits for everyone, suspending a retirement benefit after it converts from a disability benefit and whether delaying makes sense with significant assets. 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.

Are Social Security Spousal Benefits Still Available?

Hi Larry, Are spousal benefit still available? I will be 66 in August 2021. I’m planning to claim my Social Security retirement benefit at 70. Can I claim spousal benefits on my wife’s record without filing for my own Social Security retirement benefit?

I know this used to be possible but I’ve been told by friends and neighbors that spousal benefits have been terminated for everyone. Is this actually true? Can no one get spousal benefits now? Thanks, Arthur

Hi Arthur, Yes, Social Security still pays spousal benefits. However, no one born after 1/1/1954 is able to file for spousal benefits without also filing for their own retirement benefits at the same time unless they have an eligible child in their care.

So since you were apparently born after 1954, the only way that you could file just for spousal benefit while waiting until 70 to file for your own retirement benefits is if you have a child in your care who is eligible for benefits on your wife’s record and who is either under age 16 or is disabled.

You and your wife may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to fully analyze 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

Can I Suspend My Retirement Benefits In Order To Get A Higher Benefit Later?

Hi Larry, I have been on disability for a number of years. I turn 66 next month and received a letter stating my benefit will convert from disability to retirement. It said I will continue to get the same payment. Can I choose to suspend my retirement payments in order to increase the benefit payment when it resumes, say at 70? Thanks Sylvia

Hi Sylvia, You could elect to voluntarily suspend your benefits between full retirement age (FRA) and 70 in order to earn delayed retirement credits (DRCs), but you couldn’t be paid disability benefits while your retirement benefits are suspended. You are not allowed to simply defer the conversion of your disability benefits to retirement benefits. That conversion is mandatory effective with the month you reach FRA.

But you are able to suspend what will then be your retirement benefit at or after your FRA. While you can’t receive any benefits while your retirement benefit is suspended, your retirement benefit will increase at a rate of 8% per year for each month after FRA you suspend receipt of your retirement benefit. The increases stop being accrued the month you turn 70 so there’s no benefit to delaying past then. Best, Larry

What Do You Think The Best Option Would Be In My Circumstances?

Hi Larry, I have read many articles with most advisors recommending waiting until 70 to start Social Security retirement benefits for longevity insurance, and I agree that the correct answer by default is to wait until 70 if longevity insurance is your main goal. But for those who have significant assets and are not worried about longevity insurance, how do you decide whether to start at FRA vs 70?

I plan to retire at FRA in late 2021 with no debt and I have rental properties which I don’t plan to sell along with significant stock investments earning anywhere from 4% to 6% in dividends.

All are long-term investments with substantial gains, so if I delay my Social Security retirement benefits until 70, I would need to sell a portion each year of my stock investments to make up for the retirement benefit I would not be taking for those four years and I would need to pay taxes on those gains and would lose the 4% to 5% in dividend income permanently.

So how does that factor into my decision on whether to start at FRA or wait until 70? I’m not talking about taking my retirement benefit and investing it. I’m talking about having to sell existing income earning assets to use the money to live on when I retire this year because I would be delaying my Social Security retirement benefits. Please let me know what you think the best option would be. Thanks, Nick

Hi Nick, All of the things you mention would obviously factor into your decision of when to start collecting your Social Security benefits. All I can tell you is that if you were born in 1955, then your Social Security retirement benefit rate would be roughly 30.66% higher if you wait until 70 to start collecting your benefits vs. starting at your full retirement age (FRA).

You don’t mention your marital status, but that higher rate could also potentially be passed along to a widow(er) in the form of survivor benefits.

The bottom line is that no one knows what the future holds, so the decision on when to start drawing your benefits is always a judgment call. If you knew when you were going to die, the decision of when to start drawing your benefits would be greatly simplified. So each person must consider all of the factors involved in their unique set of circumstances to make the best decision possible.

I think the longevity insurance nature of Social Security benefits is always an important factor, even for people with significant assets because, as we agree, no one knows just what the future may hold. Having maximized your Social Security retirement benefit by delaying until 70 would ensure the highest possible income floor if your other assets were somehow diminished or even depleted. Best, Larry