Ask Larry: Will My Social Security Retirement Benefit Really Be Lower If I Resume Work At Lower Pay?


Social Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.

Today’s column examines potential effects of returning to work at lower pay before filing, suspension of benefits before FRA, the earnings limits for those who’ve filed for benefits in 2019, effects of pension survivor benefits and the possibility of undoing a reinstatement. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc, a company that markets Maximize My Social Security and MaxiFi Planner. Both tools maximize lifetime Social Security benefits. MaxiFi also finds retirement account withdrawal strategies and other ways to lower your lifetime taxes and raise your lifetime spending. Most important, it suggests how much to spend and save each year to enjoy a stable living standard through time.

See more Ask Larry answers here.

Ask Larry about Social Security here.

Will My Social Security Retirement Benefit Really Be Lower If I Resume Work At Lower Pay?​​

Hi Larry, I worked for 28 years under Social Security. I stopped working at 52 and have not worked in over 10 years. I was told that if I go back to work now, after have no Social Security credits for over 10 years and take a job at less than half my former pay, my Social Security retirement benefits would be permanently reduced and it is better to have no credits on your record than take a job at half your former pay. Is this correct? Thanks, Karl

Hi Karl, That’s not correct. You can’t reduce your Social Security benefit rate by working, regardless of how little you earn.

Social Security retirement benefits are based on an average of a person’s highest 35 years of wage indexed earnings. If you have fewer that 35 years of earnings, zero income years are used in the average, which of course lowers your average and your resulting benefit rate. Therefore, returning to work could only either increase your benefit rate or not have any effect if you already have 35 years with higher wage indexed earnings. Best, Larry

Can I Suspend My Social Security Benefits Until Age 66?​​

Hi Larry, I will turn 63 in November of this year. I started taking my social security in October 2018. I currently have it going to a high yield savings account. I have a small C corp business which I make enough to live on. I am also planning on getting married to a 77 year old man who is also working and collecting Social Security. I am beginning to think after reading some of your responses that maybe I should have waited until at least age 66. Can I suspend my Social Security benefits until 66? Also, will getting married affect my benefits? Thanks, Estelle

Hi Estelle, You can’t voluntarily suspend your benefits prior to reaching your full retirement age (FRA), although if you earn too much to be due benefits because of Social Security’s earnings test, your benefits could be involuntarily suspended. Social Security would need to withhold $1 of your benefits for each $2 that you earn in excess of $1,7640 in 2019.

What you could do instead, though, is withdraw your application. However, you would then have to repay all of the benefits that you’ve received so far, and you would have to request the withdrawal within a year of when you started drawing your benefits. You may want to use one of my company’s two tools — Maximize My Social Security or MaxiFi Planner — to help maximize your lifetime Social Security benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care.

Getting married won’t affect your current benefits assuming that you’re drawing benefits based on your own work record, but if you or your new husband have a primary insurance amount (PIA), which is equal to his FRA retirement benefit amount, that’s less than half of the other spouse’s PIA, the spouse with the lower PIA could potentially be eligible for additional spousal benefits. Best, Larry

How Much Money Can I Earn In 2019?​​

Hi Larry, I filed early retirement at 62 in 2019. My birthday is in 6/57. How much money can I earn in 2019? I get a 1099. Does my limitation on income include the full calendar year, or is it calculated and prorated from June? Thanks, Liam

Hi Liam, Since you receive a 1099 rather than a W-2 form, I assume that your earnings are reported as self-employment. Therefore, your net earnings from self-employment would need to be $17,640 or less for the calendar year of 2019 in order for you to be due all of your benefits this year. The annual earnings test exempt amount is based on your calendar year earnings, and it’s not prorated even if you only claim benefits for the last part of a year.

However, there is an alternate monthly retirement test which could be used if it’s more advantageous to you. That test would permit you to be paid for any month in which you devote no more than 45 hours to your self-employment, regardless of how much you earn in the calendar year. Either the annual earnings test or the monthly test may be used in the first year that you claim benefits, and Social Security would end up using whichever test would enable you to be paid more benefits for the year. Best, Larry

Can Income Received From My Husband’s Pension Affect My Disability Benefits?​​

Hi Larry, I receive Social Security disability and have done so for almost 30 years. I also work part time but am still able to claim my disability income. My husband passed away last August and I was his beneficiary on his retirement. He didn’t pay into Social Security at his job. Can this income affect my disability income? Thanks, Mona

Hi Mona, I’m sorry for your loss. The survivor pension won’t affect your disability benefit. Only your earned income (i.e. wages or self-employment) could potentially affect your Social Security disability (SSDI) benefits. Any income that you receive from your husband’s pension plan would have no impact on your SSDI benefits. Best, Larry

Does A Reinstatement Count As An Application For Benefits That Can Be Withdrawn?​​

Hi Larry, After receiving Social Security disability benefits, I suspended retirement benefits starting the month I reached full retirement age, to earn delayed retirement credits. Well under a year ago, I reinstated my benefits for two months and then suspended them again.

Does the reinstatement count as an application for benefits for the purpose of filing a form SSA-521? If possible, I would be interested in repaying the two months of benefits received and earning the additional delayed retirement credits. Thanks, Brent

Hi Brent, A request for reinstatement of benefits that are in voluntary suspense is not an application. Therefore, you can’t retroactively withdraw the request like you potentially could with an application. Unfortunately, it doesn’t sound like there’s any way for you to undo your past reinstatement of benefits. Best, Larry

To learn more about your Social Security options, visit Economic Security Planning, Inc.

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