Ask Larry: Will My Social Security Retirement Benefit Rate Go Down When I Stop Working?


Today’s Social Security column addresses questions about how stopping working before filing might affect benefit rates, when it can be possible to begin spousal benefits on a spouse’s record and becoming independently entitled to divorced spousal benefits before an ex files. 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.

Will My Social Security Retirement Benefit Rate Go Down When I Stop Working?

Hi Larry, I’m 68 and applied for retirement benefit recently but there’s been no decision yet from SSA. Once SSA decides my benefit amount, will it be set for the rest of my life?

Can I stop the payments and go back to work until 70 to earn delayed retirement credits? Will my benefit then be higher for the rest of my life? Or when I stop working at 70 with no other income, will it go back to the lower amount from before? Thanks, Betty

Hi Betty, Social Security retirement benefit rates can potentially be increased after any year in which a person has Social Security covered earnings or earns delayed retirement credits (DRCs).

Any such increases are permanent. You can’t earn additional DRCs after you reach 70, and if you stop working at that time your benefit won’t increase due to additional earnings. So your benefit amount would then stay the same after except for cost of living (COLA) increases. Your benefit rate wouldn’t go down or revert back to a prior benefit rate simply because you stop working.

By the way, Social Security retirement benefits are based on an average of a person’s highest 35 years of Social Security covered wage-indexed earnings, so additional years of earnings will only increase your benefit rate if the new earnings are higher than one or more of the 35 years currently being used to calculate your current benefit rate.

If your new earnings aren’t among your highest 35 earnings years after indexing for inflation, the new earnings are simply disregarded and your benefit rate stays the same. Best, Larry

Can My Wife File For Spousal Benefits From My Account Even Though I’m Not Old Enough For Benefits?

Hi Larry, My wife turned 62 this year and started taking her Social Security retirement benefits of about $800. I’m 55 so I won’t be taking benefits for at least another seven years. I am retired, lucky me, so I have no wage income currently. Can and should she file for spousal benefits?

My FRA benefit is currently calculated at about $3,000 so even if she only gets the difference between her benefit and 50% of mine, that’s still an extra $700 she could be getting, if I understand spousal benefits, which is a big if. Or is she only eligible for spousal benefits after I start drawing my own retirement benefits? Thanks, Lucas

Hi Lucas, Your wife couldn’t qualify for spousal benefits at least until you start drawing your benefits, and even then she’ll only qualify for spousal benefits if your primary insurance amount (PIA) is more than twice as much as her 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).

Her potential spousal benefit would be 50% of your PIA minutes 100% of her PIA, not of her reduced retirement benefit taken at 62. You and your wife may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to fully analyze your options so you can make informed decisions about your best strategy for maximizing your benefits and avoid unknowingly leaving money on the table. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry

Why Must I Wait For My Ex To Retire To Qualify For Divorced Spousal Benefits?

Hi Larry, I have recently started to receive SSDI at 63. I was told by an acquaintance that I must I wait for my ex, who is 65, to retire to to receive divorced spousal benefits based on her record. Is this really true? We were married over 30 years. Thanks, Harvey

Hi Harvey, You don’t have to wait until your ex starts drawing benefits to potentially be eligible for divorced spousal benefits, provided that your ex is at least age 62 and your divorce has been final for at least two years.

However, you’ll only qualify for divorced spousal benefits if your ex’s primary insurance amount (PIA) is more than twice as much as your own 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), or their full unreduced Social Security disability (SSDI) benefit rate.

And if you do qualify for divorced spousal benefits and if you start drawing them prior to your FRA, your divorced spousal rate will be reduced for age. So you may want to wait until your own FRA or as close to it as you can before you file for divorced spousal benefits. Best, Larry

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