Today’s column addresses questions about different ways benefit amounts can increase, whether to delay or collect now, the availability of spousal benefits, potential effects of the WEP and GPO on spousal benefits and whether benefits can increase even without working. Larry Kotlikoff is the founder and president of Economic Security Planning, a company that markets Maximize My Social Security, a Social Security benefits calculator referred to in this post.
See more Ask Larry answers here.
Ask Larry about Social Security:
Can My Social Security Retirement Benefit Increase By More Than 8% Yearly?
Hi Larry, I took my Social Security spousal benefit at 66. He is 77 and has been collecting since he was 64 due to health reasons. I believe they awarded me half of what would have been his full retirement since I filed at my full retirement age. I will be switching at 70 to my own retirement benefit. These last four years of work have been my highest ever: from three to 5 times what I ever made in any previous year. I know my amount will rise 8% each year by delaying past 66, but could it rise more due to my earnings? Thanks, Anna
Hi Anna, Sure. The calculation of your base retirement benefit rate, your Primary Insurance Amount (PIA), which is equal to your full retirement age (FRA) retirement benefit amount, is separate from the 8% per year increases that result from delayed retirement credits (DRCs). When you file for your retirement benefits, Social Security will first calculate your PIA based on your highest 35 years of earnings adjusted for wage inflation. Assuming your continued high earnings knock earlier lower earning years out of these 35 computation years, your PIA will be higher than it otherwise would have been. Social Security will then increase that amount by 32% (i.e. PIA x 1.32) assuming that you wait until age 70 to start drawing your retirement benefits. Best, Larry
Should My Wife And I Start Collecting Now Or Delay?
Hi Larry, I am turning 66 in June and my wife turning 66 in July. I don’t think I’ve received an account statement for a couple of years. The last statement from 2015 indicated I would receive $2,409 per month at 66 and my wife would get $921 per month at 66. Has it not increased since then?
I understand the gain if we wait until age 70 to begin the process, and we do not need the money now. However, I’m afraid the law could change over these next few years to anything. They could move back the dates for claiming by years. Do you suggest we start collecting or delay? Thanks, Aaron
Hi Aaron, Your rates may have increased some since your last statement, but probably not substantially.
It could be that a good strategy would be for your wife to file for her retirement benefits in either June or July, and for you to file a restricted application for spousal benefits only on her record at the same time. That would permit you to receive spousal benefits for roughly 4 years while still allowing your own rate to grow until age 70. You could then switch to your own record at age 70, at which time your wife could file for additional spousal benefits.
Note though that my opinion is based only on the limited information in your question, so your actual best strategy may be different. You can use an expert Social Security benefits calculator, such as my company’s software or other accurate software, to compare all of your options and determine the optimal filing strategy for you and your wife. Best, Larry
Can I Collect Spousal Benefits?
Hi Larry, I have been trying to understand the options for spousal benefits for Social Security but I have been very confused by what I have read. My husband is 66 and is not collecting Social Security. I am 63 and have not filed for any Social Security benefits. Can I collect spousal benefits based my husband’s record? If so, would it change the amount of his retirement benefit? And can my husband collect spousal benefits based on my record and if so, would it affect my retirement benefit? If one or both of us can, is there any negative to collecting a spousal benefit? Thanks, Michelle
Hi Michelle, You couldn’t collect spousal benefits at least until your husband starts drawing his benefits, and if you file for spousal benefits, you’ll be deemed to also be applying for your own retirement benefits since you were born after 1/1/1954. In that case you would only receive the higher of the 2 rates, and your rate would be reduced for age if you started drawing prior to your full retirement age (FRA).
Your husband couldn’t draw spousal benefits until you file for your retirement benefits. But since he was born prior to 1/2/1954, he could potentially file just for spousal benefits only without being deemed to also be filing for his own retirement benefits.
Your best strategy likely depends largely on your and your husband’s relative benefit rates. You might want to consider an expert Social Security benefits calculator as described in other answers to compare your options and determine your best overall strategy for claiming benefits. Best, Larry
Will My Spousal Benefit Be Less Than 50% Of My Husband’s If I’m Affected By WEP?
Hi Larry, My husband and I will both be affected by the WEP reduction. I have fewer than 20 years of substantial contributions and he has closer to 30. Will my spousal benefit be less than 50 % of his reduced benefit because I have fewer years of substantial contribution? Thanks, Stephanie
Hi Stephanie, The Windfall Elimination Provision (WEP) only affects benefits payable on a person’s own record, not spousal benefits. However, the spousal rate is derived from 50% the worker’s primary insurance amount (PIA), so it that’s reduced due to WEP, then it would also lower the spousal rate payable on that worker’s record. The PIA is essentially equivalent a worker’s full retirement age benefit rate.
If your own PIA will be lower than 50% of your husband’s PIA after any applicable WEP adjustments, then you may also qualify for spousal benefits. However, if the non-covered pension causing your WEP is from a government agency (federal, state, county or local), then your spousal benefits may be subject to offset due to the Government Pension Offset (GPO) provision. You can use an expert Social Security benefits calculator, such as my company’s software or other careful and comprehensive software that accounts for both the WEP and GPO, to determine your best overall strategy for claiming Social Security benefits. Best, Larry
Is This True?
Hi Larry, Social Security told me I could draw benefits based on my deceased wife’s record. I’m 64. When I’m full retirement age at 66, they say I can then draw my own retirement benefits. Is it true that my benefit will increase just by waiting even though I’m not working? Thanks, Gregory
Hi Gregory, I’m sorry for your loss. It’s true that the longer you wait to claim your own benefits until age 70, the higher your monthly retirement benefit rate would be. This is true regardless of whether or not you’re still working. However, widower benefits don’t get any higher if you wait past full retirement age to claim them. An expert Social Security benefits calculator as described in other answers can help determine your best strategy for claiming benefits. Best, Larry
To learn more about your Social Security options, visit Economic Security Planning, Inc.