Today’s column examines whether restricted applications reduce retirement benefits, potential effects of foreign pensions, whether SSA’s benefit estimates include reductions due to the WEP, maximizing widow(er)’s benefits and when during the month checks arrive. 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.
Will Social Security Spousal Benefits Now Reduce My Retirement Benefit Later?
Hi Larry, My wife started receiving Social Security retirement benefits on her record at 62 when she retired. I was born in December 1952 and plan on retiring at 68. Can I file for my spousal benefit based on her record and delay my retirement benefit until 68 without any penalties to either of our benefits going forward? Thanks, Victor
Hi Victor, Yes, since you were born before 1/2/1954, you could have filed for just your spousal benefits only on your wife’s record at your full retirement age (FRA) of 66. You can now file for six months of retroactive benefits going back to 3/2019. Drawing spousal benefits would have no adverse effect on your future Social Security retirement benefits nor your wife’s current or future benefit rate. Your own retirement benefit rate would still continue to grow by 8% per year from age 66 to age 70, even if you’re drawing spousal benefits during that time.
It sounds like filing for spousal benefits only effective with your month of FRA attainment would likely be your best option, but you should at least consider waiting until age 70 rather than age 68 to switch to your own record. That would maximize both your own monthly benefit rate as well as the widow’s rate that your wife could potentially receive if you die before her. Best, Larry
Would My Canadian Pension Be Deducted From My US Social Security Spousal Payment?
Hi Larry, I am a Canadian citizen who twelve years ago, I moved to the US and married a US citizen. I have just started to receive a spousal pension from Social Security. I am also now eligible to apply for my Canadian pension, having paid into the Canada Pension Plan my whole whole working life. If I start to collect my Canadian pension, will US Social Security deduct the amount of my earned Canadian pension payment from my spousal Social Security payment? Thanks, Doug
Hi Doug, Foreign pensions are excluded from counting as government pensions for purposes of the Government Pension Offset (GPO) provision, so your Canadian pension would have no effect on the spousal benefit you receive from the U.S. Social Security system. Best, Larry
Do The Yearly Benefit Estimates Sent By Social Security Take WEP Into Account?
Hi Larry, My Social Security will ultimately be subject to the WEP. When I get my yearly estimate of benefits in the mail, do they take into account the WEP? Thanks, Becky
Hi Becky, Benefit estimates listed on the Social Security statements that Social Security periodically sends do not account for any potential reduction that may be caused by Windfall Elimination Provision (WEP). You may want to use one of my company’s two tools — Maximize My Social Security and 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. Our software is fully programmed to account for both the WEP and the Government Pension Offset (GPO). Best, Larry
What Does My Wife Need To Do To Maximize Her Benefits When I Die?
Hi Larry, My wife began taking her benefits when she reached her FRA of 66. I am 18 months older than she is; once she reached her FRA and filed for her benefits I began taking my spousal benefit on her account. As a result, I delayed taking my own retirement benefit until I was 70 years old. Once I began taking my increased retirement benefit, she began to take her spousal benefit on my account which, when combined with her benefit, took her monthly benefit payment up to 50% of my PIA.
What happens when I die? I do not understand all the nuances of the benefits which widows are eligible to receive. If she is sure to maximize her benefit how much is she eligible to receive all in? And, importantly, what does she need to do to assure she gets what’s coming to her? Are there pitfalls she’ll need to avoid? Thanks, Roger
Hi Roger, It sounds like you and your wife have already done all that you can to maximize your benefits. If you die first, your wife’s spousal benefit will automatically convert to a widow’s benefit which will bring her combined benefit rate up to your full benefit amount (inclusive of the delayed retirement credits you earned by waiting until 70 to start drawing your benefits). Your wife wouldn’t need to do anything in that event other than notify Social Security of your date of death.
Your wife would also likely be due a one-time death benefit of $255 in the event of your death, but that too would be paid automatically since she’s drawing spousal benefits on your record. However, if your wife dies first you would need to file an application with Social Security in order to be paid the $255 death benefit. Best, Larry
Can I Change My Social Security Payments To The 1st Of The Month?
Hi Larry, Can I change my payment to the 1st of the month because sometimes I don’t get it till the second week of the month. This is very inconvenient for managing rent and bills. Thanks, Brian
Hi Brian, The date on which you are paid your Social Security benefits isn’t optional. Except for a few uncommon circumstances, the only people who are still paid benefits on the 3rd of the month are people who filed for benefits prior to 5/1997, and people who also receive Supplemental Security Income (SSI). SSI is a needs based benefit administered by the Social Security administration. No one receives their Social Security benefits on the 1st of the month unless the 3rd happens to fall on a weekend or holiday.
People who filed for benefits after 4/1997, other than for the exceptions noted above, are paid either on the second Wednesday, the third Wednesday or the fourth Wednesday of the month depending on their birthday or the birthday of the worker whose record they are being paid benefits on. Best, Larry
To learn more about your Social Security options, visit Economic Security Planning, Inc.