Ask Larry: Will My Wife’s Social Security Spousal Benefit Be Higher If I Wait Until 70 To File?

Today’s column addresses questions about whether filing at 70 increases spousal and survivor’s benefits payable to a spouse, when the combined family maximum applies and whether previous COLAs are included in delayed retirement benefit rates. 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.

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Will My Wife’s Social Security Spousal Benefit Be Higher If I Wait Until 70 To File?

Hi Larry, My wife’s own Social Security retirement benefit based on her earnings is less than half of mine at our FRAs. She is about two years older than I am. My FRA is 67 and my wife’s FRA is 66 and 10 months. I am currently 59 and plan to retire next year. I plan to delay claiming my retirement benefit as long as possible, preferably till 70.

Assuming we both live until 70, I file at 70 and my wife waits until her FRA to file for her retirement benefit but I then die after 70, is my wife’s spousal benefit based on what my benefit would have been at my FRA or what my actual benefit is having filed at age 70?

If my wife files early for her retirement benefit, her spousal benefit is reduced and deeming is involved, correct?

If my wife waits till after her FRA to file for her retirement benefit and then I die after filing for my benefit at 70, that does not increase her spousal benefit, correct? Delaying her claim for her retirement benefit beyond her FRA does not impact her spousal benefit, right? Thanks, Justin

Hi Justin, Your wife’s potential survivor rate would be higher if you wait until 70 to start drawing your retirement benefits, but her spousal rate while you’re living would be based on 50% of your primary insurance amount (PIA), not 50% of your age 70 rate. A person’s PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA). If you wait until 70 to start drawing your retirement benefits and subsequently die before your wife, she would be eligible for your full age 70 rate as a survivor. She wouldn’t get your full age 70 rate and her own rate, though, just the higher of the two amounts.

If your wife files for her own retirement benefits at full retirement age (FRA) and if your PIA is more than twice as much as your wife’s PIA, she could file for an excess spousal benefit when you start drawing your retirement benefits. Her excess spousal benefit would be calculated by subtracting her PIA, or her PIA augmented by delayed retirement credits (DRC), from 50% of your PIA. That would then be paid in addition to her own benefit rate to give her a total monthly benefit equal to 50% of your PIA, assuming that’s higher than her own benefit rate.

However, if your wife files for her own benefits prior to FRA, her benefit rate will be reduced for age and that reduction will continue for as long as both of you are living.

Waiting past FRA to start her own benefits would, in fact, affect your wife’s excess spousal rate, because the amount subtracted from 50% of your PIA is the higher of a) her PIA, or b) her PIA increased by DRCs. So it likely wouldn’t be advantageous for your wife to wait past FRA to claim her own benefits if half of your PIA is significantly more than your wife’s PIA. You and your wife may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to learn about the options available to you so you can choose the best possible strategy to maximize 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

Does The Combined Family Maximum End When There’s No Longer A Simultaneously Entitled Child?

Hi Larry, I get SSDI and I have three children who get benefits on my record. My oldest is simultaneously entitled under myself and my ex husband. I have the higher earning record so she is paid based on mine. However it gave us the combined family max and each child was awarded a higher equal benefit.

My oldest just turned 18 and her benefit has stopped. I was told her benefit would be rolled out to the younger two children. However this month it was not and they actually took money away from each of the younger two kids. I have read a ton of information but I cannot find anywhere that states what happens to the benefit and combined family max when a simultaneous entitled child turns 18.

When a simultaneously entitled beneficiary causes a CFM allowing other beneficiaries to get a higher benefit amount turns 18, does the CFM actually stop as well? Thanks, Joy

Hi Joy, Yes. The family maximum benefit (FMB)

FMB
amounts from two different accounts can only be combined if there is a child who is entitled to benefits on both accounts. If there’s no child who is entitled to benefits on both records, the FMBs on those records can’t be combined.

Therefore, if your oldest child was the only one of your children who was simultaneously entitled to benefits on another parent’s account, then the combined family maximum would no longer apply when that child’s entitlement terminates. Best, Larry

Should My Age 70 Benefit Have Included Delayed Credits Plus COLAs From 66 To 70?

Hi Larry, My full retirement age was 66 in 2014. I used the file and suspend strategy and was able to take spousal benefits for four years and received COLAs based on that amount. Then in 2018 began taking my own retirement benefit at 70 . I received the 8% per year in delayed retirement credits, which totaled 32% for waiting, which is what my current benefit is based on. Should my retirement benefit at 70 have included the delayed credits plus COLAs from the four years between 66 and 70? Thanks, Jesse

Hi Jesse, The short answer is yes. If you started drawing your Social Security retirement benefits at 70, your benefit rate should be 32% higher than your primary insurance amount (i.e. PIA x 1.32). A person’s PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA).

A person’s PIA is automatically updated to reflect all Social Security cost of living (COLA) increases that occur after they reach 62, regardless of whether or not they’ve claimed their benefits. So your PIA undoubtedly reflects all of the appropriate COLAs. As long as you received the proper percentage of delayed retirement credits (DRC), you must be receiving your correct benefit rate. Best, Larry