Ask Larry: Will My Wife Get 50% Of My FRA Benefit Or 50% Of My Age 70 Rate?

Today’s column addresses questions about how spousal benefits are calculated, a potential way to reverse a benefit reduction due to a temporary circumstance and paying Social Security taxes when self-employed. 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.

Will My Wife Get 50% Of My FRA Benefit Or 50% Of My Age 70 Rate?

Hi Larry, I was born in October, 1951. My wife was born in November, 1952. We both turned 62 before January 1, 2016. Because we both have had well paying careers, her Social Security benefits will be only slightly lower than mine.

I want to start collecting my Social Security retirement benefits when I turn 70 in October, 2021. My wife would like to file for spousal benefits at that time. Will her spousal benefit be 50% of my FRA retirement benefit or 50% of the delayed and therefore increased benefits I receive at 70?

Also, when she turns 70 in November, 2022, she would like to file for her own delayed retirement benefits. Will her retirement benefits continue to increase until 70 while she is collecting spousal benefits? Thanks, Gerald

Hi Gerald, The maximum spousal benefit rate is equal to 50% of the record holder’s primary insurance amount (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). So the amount that your wife can be paid as a spouse is 50% of your PIA, not 50% of your increased age 70 rate.

Your wife can file a restricted application for just spousal benefits alone in your first month of entitlement to retirement benefits, which of course are drawn on your own record. That will allow your wife to collect spousal benefits while allowing her own retirement benefit rate to grow until 70. I should note for other readers that the only reason your wife is allowed to file for spousal benefits without filing for her own benefits simultaneously is because she was born before 1/2/1954.

You and your wife may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — so you can find the strategy that maximizes your benefits and also model alternative what-if strategies, allowing you to make well informed decisions about which strategy will best work for you. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry

Is There Any Way To Fix The Reduction In My Social Security Payment?

Hi Larry, Good morning, I have been receiving social security for over 20 years and in 2018, my husband passed away. The following year, I took distributions from his IRA and other accounts in lump sum, rather.

My income shot up to over $200,000 and I just received a letter from Social Security telling me that my benefits are going down by $305 per month. Is this something that can be fixed, either this year or in subsequent years? I’m an 85 year old widow. Thanks, Mia

Hi Mia, I’m sorry for your loss. Your income wouldn’t affect your actual Social Security benefit rate, so I’m assuming that the reason that your Social Security payment amount is being reduced is because of an increase in your Part B Medicare premium rate.

Part B premium rates are variable depending on a person’s income, so the higher income reported on your previous tax return is likely responsible for the reduction in your net payment amount.

It sounds like the income in your taxable income was a one-time event resulting from a life changing event (LCE), that being the death of your spouse. I can’t be sure without more details, but it sounds like you can probably ask Social Security to reevaluate your case to see if you qualify for a lower Part B premium.

You should be able to contact Social Security and ask them to use a more recent year’s tax return to base your Part B premiums on. Best, Larry

Where Do I Pay My Monthly Premium For Social Security?

Hi Larry,I was told that I am now a considered self-employed. But I still continue working. Since my employer stopped paying for my Social Security insurance, where do I pay for my monthly taxes for Social Security? Thanks, Ben

Hi Ben, The tax on self-employment earnings, which substitutes for the Social Security taxes withheld from wages, is technically payable when you file your tax return. However, to avoid a penalty, you may need to file estimated taxes.

Estimated taxes are paid on a quarterly basis throughout the year for which you will owe the tax. In other words, you would pay your estimated taxes quarterly during 2021 to cover the taxes you anticipate owing on your 2021 tax return, for which the filing deadline is 4/15/2022. Best, Larry