Today’s column addresses questions about whether it’s possible to opt out of contributing to Social Security, Social Security benefits for veterans and filing options when an older spouse dies before the younger spouse reaches full retirement age (FRA). 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 Husband Pull His Social Security Contributions And Invest Them?
Hi Larry, My husband is approaching 60 and Social Security has been weighing on his mind. What he is thinking about is pulling his Social Security and then what ever that amount is, taking an equal amount out of his paycheck and putting it in his 401k pre tax.
I am trying to get him to wait till he is 65 or 67 but he is afraid of waiting too long to take that advantage. Can he legally do this and if so when should he start? Thanks, Carissa
Hi Carissa, I’m not sure what you mean by your reference to your husband “pulling his Social Security.” Your husband couldn’t elect to withdraw his Social Security contributions in return for forfeiting his rights to benefits, nor could he opt to start collecting reduced Social Security retirement benefits prior to 62.
If your husband does start drawing his benefits at 62, though, it wouldn’t adversely affect your options with regard to spousal benefits for as long as your husband is living. It would, however, reduce the amount that you could potentially receive as a widow if your husband dies before you.
And of course your husband’s retirement benefit would be reduced below his full retirement age (FRA) rate if he files at 62. It sounds like you and your husband 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
What Do I Need To Know About Social Security Benefits For Veterans?
Hi Larry, I have been reading about Social Security benefits for veterans and options for getting a widower’s benefits from my wife’s record after she has passed. Is there anything I should investigate? Thanks, Jeffrey
Hi Jeffrey, Veterans can qualify for Social Security benefits just like anyone else can by paying Social Security taxes on their earnings. You must have a minimum of 40 quarters of coverage (QC), or roughly the equivalent of 10 years of Social Security covered earnings, to potentially qualify for Social Security retirement benefits.
The only special provisions involving veterans in the Social Security law are with regard to earnings credits. US military veterans can be credited with Social Security earnings credits for periods of active duty from September 1940 through December 1956, even though military wages were exempt from Social Security taxes in those years.
Military wages have been subject to Social Security tax withholding from 1957 to the present, and in addition to the veteran’s actual wages in those years they can be credited with deemed (i.e. extra) military wages for periods of active duty from 1957 through 2001.
The above described earnings credits can be used when calculating a veteran’s Social Security retirement or disability benefits, potentially giving them a somewhat higher benefit rate than they would otherwise have received. Aside from that though, there’s no such thing a a special type of Social Security benefit for veterans, and veterans must meet the same age requirements for benefits as anyone else would.
If your wife has passed away, it’s possible that you could qualify for Social Security survivor benefits, but the eligibility requirements for those benefits are no different for veterans and the widower’s benefit rate would be the same as it is for people who aren’t veterans. Best, Larry
Do I Understand This Correctly?
I just want to see if I understand something correctly.
Hi Larry, If everything continues as planned, my husband plans to take his Social Security in two years at 70. I will turn 62 about that time and will file also. I believe my spousal benefit will be larger than my own, so I will received half of his full retirement age amount minus reductions for taking it early.
What I want to know is if he dies, will I continue to received my spousal benefit as is until I request survivor benefits, and as long as I don’t file for survivor benefits until 66 and 10 months will I receive the full amount he will be receiving when he files at age 70? Thanks, Shari
Hi Shari, That’s not quite right. Spousal benefits can only be paid on the record of a living spouse. If your husband dies before you reach full retirement age (FRA), your options would be to either delay filing for widow’s benefits until you reach FRA, or to elect to convert your reduced spousal benefits to reduced widow’s benefits.
If you choose the first option, you could potentially be paid just your own Social Security retirement benefits until you reach FRA, at which time you could then file for unreduced widow’s benefits.
Your unreduced widow’s rate would be equal to your husband’s full benefit rate including the delayed retirement credits (DRC) he’ll earn by waiting until age 70 to apply. You couldn’t be paid both your own benefit rate and your husband’s rate though, just the higher of the two amounts.
If you choose the second option, your widow’s rate would be permanently reduced for age. The applicable percentage reduction would depend on your age at the time you start receiving your widow’s benefit. Best, Larry