Today’s Social Security column addresses questions about taking Social Security benefits while earning income before full retirement age, potential effects of foreign pensions on US Social Security benefits and determining whether an ex has passed away. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc.
See more Ask Larry answers here.
Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.
Can I Collect Social Security Benefits Now While I’m Still Working?
Hi Larry, I am 65 and still work. Someone told me I could collect my Social Security benefits now I want to retire next year. How can I know how much will I get a month and can I collect now or should I wait until I retire? Thanks, Tim
Hi Tim, Until you reach your full retirement age (FRA), there is a limit on how much you can earn and still be able to collect all of your Social Security benefits. Unless you reach FRA before the end of this year, Social Security would need to withhold $1 of your benefits for each $2 that you earn in excess of $19,560 in 2022.
However, in the year you reach FRA you can earn more without losing any benefits, and there’s no limit on how much you can earn and still be paid all of your benefits starting with the month you reach FRA.
Your FRA would be age 66 and four months if you were born in 1956, or 66 and six months if you were born in 1957. So whether or not you could work and still be paid benefits depends on your month and year of birth, how much you’re earning and your benefit rate. Even if your earnings permit you to start collecting benefits before your FRA though, your benefit rate would be permanently reduced for age for any months that you’re paid benefits prior to FRA.
Your monthly benefit rate depends on your earnings history. Social Security retirement benefits are based on an average of a person’s highest 35 years of Social Security covered wage-indexed earnings, and the higher than average is, the higher your benefit rate will be. You may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to ensure your household receives the highest lifetime benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry
Why Did My Social Security Benefit Go Down?
Hi Larry, I’ve worked and lived in the US for 10 years before collecting SSDI. I recently turned 65 and then applied for spousal benefits. Then started receiving my CPP benefits and my US Social Security benefit has been docked by more than my Canadian benefits. Social Security is calling it a non-covered pension. Why? Thanks, Ariana
Hi Ariana, It sounds like the reduction in your benefit rate is likely due to the Windfall Elimination Provision (WEP). The WEP provision causes a person’s Social Security retirement or disability (SSDI) benefit rate to be calculated using a less generous calculation method if the person is also receiving a pension based on their earnings that were exempt from US Social Security taxes.
So if you started collecting a Canadian pension based on your work in Canada, that pension could cause your SSDI benefit rate to be reduced.
There is a WEP guarantee provision that limits any reduction in your US benefit rate to no more than 50% of the gross amount of your non-covered pension. I don’t have enough information to know whether or not your benefit rate is correct, but if you think that it may not be you might want to consider filing an appeal. Best, Larry
How Do I Know If My Ex Has Passed Away?
Hi Larry, Not to be indelicate, but how do I know if my ex has passed away? I assumed Social Security would tell me. I can supply his full name, DOB and SSN. But in Get What’s Yours (revised edition), Larry writes that Social Security might not know whether an ex died and that I might need to inform them.
I am 67 and my ex is 65, and we were married for 13 years. We’ve been divorced more than 20 years and I never remarried. We have no children together and no mutual friends, and live in different parts of the country — in other words, no contact. Knowing whether I could receive divorced survivor’s benefits could make a big difference in maxing out my benefits. Thanks, Monica
Hi Monica, In most cases Social Security does in fact know if a person has died. Death information is reported to Social Security by funeral homes and via interfaces with the death registries in many states.
However, it’s possible that Social Security wouldn’t be aware of a person’s death, and in many cases the privacy act prevents Social Security from sharing the information that they do have in their records with anyone other than the individual themselves.
So in other words, you can’t necessarily rely on Social Security to have information about the death of an ex. But if you’re potentially eligible for benefits on the record of an ex, Social Security should in the majority of cases be able to explain your options in a manner that would let you know whether or not your ex is living or deceased.
For one thing, the privacy act basically doesn’t apply once an individual is deceased, so if Social Security’s records show that your ex is deceased then they should be able to share that information with you. Best, Larry