Ask Larry: Will Social Security Replace Past Years Of Zero Earnings With What I’m Currently Making?

Today’s column addresses questions about whether continuing income can replace earlier years with low or no income taxed by Social Security, whether to file for lower retirement benefits after spousal benefits and potential benefits based on a deceased parent’s record. 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 Social Security Replace Past Years Of Zero Earnings With What I’m Currently Making?

Hi Larry, I am 67 and I have applied for spousal benefits based on my wife’s earnings record. I am currently working at my highest pay ever but I have past quarters that are $0 income. Does Social Security fill in those years with no income with what I’m currently making and paying Social Security taxes on now even though I am of full retirement age? Thanks, Rafael

Hi Rafael, Yes. Your Social Security retirement benefit rate is based on an average of your highest 35 years of wage-indexed earnings. If you continue working and paying Social Security taxes, you can potentially increase your Social Security retirement benefit rate by replacing earlier lower earnings years with higher earnings years. It doesn’t matter how old you are when you produce the earnings, or whether or not you’re already drawing benefits on either your record or your wife’s record. Your Social Security retirement benefit rate will only increase though, if you earn more in a year than you did in one of your previous highest 35 years of wage-indexed earnings.

My company’s software — Maximize My Social Security or MaxiFi Planner — will account for this and other factors used to determine your benefit amount so you can model different current and future income to see what effects it may have on your benefit amounts. 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 Reason To Switch From Spousal Benefits To My Own Benefits?

Hi Larry, Are there any reasons I should switch from getting my spousal benefit to my own retirement benefit? At my FRA of 66 in 2016, I took a spousal benefit and have been earning DRCs on my own retirement benefit. I’ll be 70 later this year, but MMSS calculations show that even with the DRCs through 70, my retirement benefit amount will still be less than my current spousal benefit. My understanding is that if I did switch from my current spousal only benefit to applying to receive my retirement benefit at 70, SSA would still pay me the same amount I am currently receiving (calculated as my retirement benefit, inclusive of 4 years of DRCs + a small amount of excess spousal benefit). So are there any advantages I should consider at 70 switching from receiving my current spousal benefit to instead receiving my retirement benefit that includes the DRCs plus an excess spousal? Thanks, Cara

Hi Cara, If your own age 70 benefit rate would be less than your spousal rate, then you wouldn’t receive a higher total benefit amount if you file for your own benefits. The only way that it might be beneficial to file for your own benefits would be if you had other family members who are eligible for benefits and the family maximum benefit (FMB)

FMB
was involved. But if it’s just you and your spouse getting benefits on their record, then the FMB wouldn’t be a factor. So it sounds like you wouldn’t gain anything by filing for your own retirement benefits. Best, Larry

Can A Deceased Person’s Son Claim His Social Security?

Hi Larry, My father died in 1969. He was 48 at the time of his death. Can I as his son claim his Social Security for what he paid in? My father worked two or three jobs for many years and paid in a lot of Social Security taxes. Thanks, Jake

Hi Jake, Social Security taxes that people pay go into a trust fund, not an individual account that can be claimed by an heir. The only way that a surviving family member can collect anything based on what a worker paid into Social Security is if they qualify for survivor benefits. A surviving child of a worker can only qualify for benefits if they are either a) under age 18, b) 18 to 19 and still in high school, or c) they are disabled and became disabled prior to age 22. Therefore, assuming that you’re well over age 19, the only way that you could potentially collect benefits from your father’s Social Security record is if you’re unmarried and you’re disabled based on an impairment that began prior to age 22. Best, Larry