Economic Security Planning, Inc.
Today's column addresses questions about filing a restricted application for spousal benefits only after filing for and suspending a retirement benefit, effects of low income before filing, survivor's benefits, conflating filing and suspending with restricted applications and the earnings test. 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.
See more Ask Larry answers here.
Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.
Can I File A Restricted Application For Spousal After Suspending Retirement Benefits?
Hi Larry, I am 67 and my husband is 64. I was born before 1/1/1954. I collect my Social Security retirement benefits while my husband does not. I had suspended my retirement benefits once but have since restarted. I have just learned about restricted applications for spousal benefits only. Can I suspend my benefits again and participate file a restricted application for spousal benefits only? Thanks, Clara
Hi Clara, You can't file a restricted application for spousal benefits only if you've already applied for your own Social Security retirement benefit, even if you voluntarily suspend your Social Security retirement benefit. Filing a restricted application means filing for only one benefit while eligible for more than just that benefit. Since you've already filed for your retirement benefit, you cannot by definition file a restricted application for just your spousal benefit.
The only way that you could potentially file a restricted application for spousal benefits is if you withdraw your application for Social Security retirement benefits. But Social Security only allows you to withdraw an application for retirement benefits if you originally became entitled to benefits within the past 12 months. Also, you could not claim spousal benefits unless and until your husband starts drawing his Social Security retirement benefits. You and your husband may want to consider using well programmed software, such as one of my company's two tools — Maximize My Social Security or MaxiFi Planner — to explore and compare her options so that she can choose the best possible strategy for claiming her benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry
Would It Be Smarter Financially To Not Work At All?
Hi Larry, I retired early at 48 from a well-paying job at around $100,000 year for the last five years of work, so I didn't have 35 total years in the workforce. I'm now 52 and took a part-time, minimum wage job as a AVID Tutor not because I need the money, but because I want to give back for my education. Will this low-paying job reduce my Social Security Benefit when I take the retirement benefit as planned at 67? Would it be smarter financially to not work at all? Thanks, Brian
Hi Brian, It you have fewer than 35 years of earnings that you paid Social Security taxes on, then any additional earnings would be better than no earnings. Your Social Security retirement benefit rate will be based on an average of your highest 35 years of wage-indexed earnings. If you have fewer than 35 years of Social Security covered earnings, then zero earnings years will be included in the average, which would obviously drag down your per year average and your resulting benefit rate. Replacing those zero years with even a small amount of earnings will help, not hurt, your benefit rate. Best, Larry
What Will Happen If My Wife Dies Before Me?
Hi Larry, I am 69 now. Because I have a small pension, I have been collecting Social Security since age 62. My wife, now 67, retired and filed a restricted application for her spousal benefit at 66. Assuming all goes as planned, she will increase her monthly payment by almost $500 when she finally starts collecting her retirement benefit at 70. As her Social Security will be much more than mine is now, we know she will be secure after I pass. But if she precedes me, what will happen? Would I get her Social Security amount, which is already much more than mine? Or is my rate, reduced by early retirement, fixed for life? Thanks, Justin
Hi Justin, If your wife dies before you, as her widower you would be eligible for the higher of your wife's full benefit rate or your benefit rate. The fact that you took your Social Security retirement benefits early would not reduce the amount of your potential widower's rate on your wife's account.
By the way, your widower's rate would be based on your wife's full rate inclusive of any delayed retirement credits (DRC) that she earns by waiting until 70 to start drawing her retirement benefits. So if she dies after starting her benefits at 70, you would be eligible for her full age 70 rate as a widower. You would not get both that amount and your own benefit rate though, just the higher of the two.
One caveat since you mention that you have a small pension, though. If you receive a pension based on your work for a governmental agency in the US (e.g. federal, state, local) where your earnings were exempt from Social Security taxes, then any widower's benefits that you would otherwise qualify for would likely be offset by 2/3rds of the amount of your government pension. But if you paid Social Security taxes on the income your pension is based on, this will not affect you. Best, Larry
Is It Worth It For Us To Claim Benefits Now?
Hi Larry, My wife and I were born before 1/1/1954. I am 67, she is 68. Neither of us have claimed Social Security benefits yet. We currently live off my pension from my job. We both also still work a bit yet and earn a small income per year. Currently I have an estimated Social Security retirement benefit of around $2,000 per month and my wife around $300 per month. Should I file a restricted application for just spousal benefits now or just wait until we decide to claim my Social Security retirement benefits and her spousal benefits when I'm 70? Thanks, Tom
Hi Tom, It certainly could be worth it. Based on the benefit amounts listed in your question, it would almost certainly be smart for your wife to file for her Social Security retirement benefits now and for you to file a restricted application for just spousal benefits only. You could both claim the benefits for up to 6 months retroactively, which is likely your best option.
If your wife claims her retirement benefits now and you claim spousal benefits, you can continue to let your own Social Security retirement benefit grow until age 70. You could then apply to switch from spousal benefits to your own retirement benefits when you reach age 70 (or before then), and your wife can then apply for spousal benefits on your record. Your wife would then end up receiving a combined rate equal to 50% of your primary insurance amount (PIA), which is the same amount she'd receive if she had filed for spousal benefits only.
Just don't make the common mistake of conflating filing a restricted application for just your spousal benefits with the completely separate act of filing for and suspending your own retirement benefit. These are mutually exclusive — if you do one, you can't do the other. Best, Larry
Will My Husband's 2019 Income Affect His Ability To Start Drawing Now?
Hi Larry, My husband will reach full retirement age in 7/2020. He would like to start receiving his retirement benefits effective in 12/2019. So how would his 2019 income affect that? What month should be the starting month? He will be working until 3/2020, so will his income for 2020 be approximately $12,000. Thanks, Gina
Hi Gina, In order for your husband to be paid his entire reduced benefit payment for December 2019, either a) his earnings for the calendar year of 2019 must be no more than $17,640, or b) his gross wages in the month of December must not exceed $1,470. If he's self-employed, the time he devotes to his trade or business in December could not exceed 45 hours (or 15 hours in certain professions) in December unless his net earnings for the calendar year are $17,640 or less.
But note that he can't file retroactively back to 12/2019 now since no one can file a retroactive application before their full retirement age (FRA). Unless he already submitted his application last month, 1/2020 is the earliest he can file. Best, Larry
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