Social Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.
Today’s column examines how widow(er)’s benefits are calculated, how spouses might sequence benefits, the calculation of spousal benefits, restricting an application after a divorce and filing options for a married couple with a significant age difference. 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:
What Will My Wife’s Widow’s Benefit Be?
Hi Larry, I am 60 and receiving Social Security disability of $2,200. My wife makes $10,000 a year and is 60. If she claims early, her benefit will be about $600 dollars. If she claims reduced spousal benefits, it will be approximately $750. When I die, assuming it’s after age 66, will her widow’s benefit equal my benefits of $2,200 or will they be reduced because she claimed her retirement benefits early? Is there a better strategy. Thanks, Gary
Hi Gary, If you die after your wife has reached full retirement age, she would receive your full benefit rate regardless of whether or not she took reduced retirement and/or spousal benefits. She wouldn’t get both her own benefit rate and yours as a widow, however, just the higher of the two. Before your wife’s files for benefits, you may want to run an expert Social Security benefits calculator, whether my company’s Maximize My Social Security or another sophisticated program so you can explore all of her options and decide which is best based on your set of circumstances. Best, Larry
Should My Wife Suspend Her Benefits And Collect On My Record?
Hi Larry, I’m 71 and my wife is 70. We both started collecting at 65 based on our individual work records. I collect $,2000 and she collects $500. Can she suspend her retirement benefits and collect on her spousal benefit based on my record instead? I as I now realize that we made a terrible mistake by not doing so originally. Thanks, Jon
Hi Jon, Your wife can’t suspend her own retirement benefits and she most definitely wouldn’t want to anyway. However, she can file for an excess spousal benefit on your record. What she could then receive is the difference between a) her own full retirement age (FRA) retirement benefit amount), and b) 50% of your FRA retirement benefit amount. Assuming the difference is positive, this additional benefit would then be added to the payment that she already receives on her own record.
Benefits after full retirement age can be paid retroactively for no more than 6 months, so your wife will probably want to contact Social Security to apply for spousal benefits, or make an appointment to file, before the end of the month. Even if she only makes an appointment to apply, it will establish a protective filing date and prevent a further loss of potential benefits. Best, Larry
How Will My Wife’s Spousal Benefit Be calculated?
Hi Larry, I will turn 70 next December and my wife will turn 66 the following September. I plan to file for my retirement benefits at 70 and my wife will file for spousal benefits at age 66 and let her own retirement benefits grow till 70. I have continued working after my FRA and this added 4 years with high income to my earnings record and increased my benefit. Which amount will be used to calculate the spousal benefits: my benefit before my continued income or including the continued income? Thanks, Ted
Hi Ted, Your wife’s initial spousal benefit rate will be based on 50% of your full retirement age (FRA) retirement benefit amount at the time she becomes entitled to her spousal benefits. So, she will benefit from any increases in your FRA retirement benefit amount that result from your earnings after you reached full retirement age. Best, Larry
How Do I Restrict My Application To Divorced Spousal Benefits Only?
Hi Larry, I will reach FRA in July. My ex-spouse is same age. We’ve been divorced for more than two years and were married for more than 10 years. I’ve never remarried. I intend to filed for my divorced spousal benefits and to not claim my retirement benefits on my record until 70. I have seen your various comments about the notations to make in the application Remarks section, but still have some uncertainty. Does application make it crystal clear that I am “suspending” my retirement benefits? Our incomes were about the same, over the same working years. Does this affect my eligibility? Can I apply ahead of time, but state a future date for the benefit? And does the online application provide for this type of benefit and, if so, is there risk to doing so online? Thanks, Kevin
Hi Kevin, First off, to follow your proposed strategy, you absolutely don’t want to suspend your own benefits when you file for divorced spousal benefits. That would entirely defeat the purpose of filing a restricted application and be about the single worst thing you could do. What you want to do instead is to restrict retirement benefits on your own record from the scope of your application for divorced spousal benefits. You may then file a separate application for retirement benefits when you reach age 70. Virtually all Social Security applications state in their heading that the application is for ALL benefits to which the applicant may be entitled. Thus the need to restrict retirement benefits from the scope of your application when you apply for divorced spousal benefits.
Your earnings and potential benefit rate in relation to your ex-wife’s earnings and benefit rate will not affect your eligibility for divorced spousal benefits, unless and until you file for your retirement benefits. You can apply up to 4 months prior to the month that you wish to claim benefits, and you should be able to file online. Just be sure to specify the month that you reach age 66 as your month of election to become entitled to divorced spousal benefits. And, be sure to make it clear that you do not want your application to be considered as an application for retirement benefits on your own record. In the remarks section, you can include a statement such as ‘I wish to restrict retirement benefits on my own record from the scope of this application.’, or ‘I wish to restrict the scope of this application to divorced spousal benefits only.’ Best, Larry
Do You Have Any Strategy Suggestions For Us?
Hi Larry, My husband is about to turn 62. I am about to turn 30. We have been married for almost 6 years and we have a child together who just turned 5. I have worked very little and I am currently a stay at home mom. From Social Security, my husband’s estimated benefit is about $2,700 per month if he were to retire at his FRA of 66 and 2 months. Could you please let me know your strategy suggestions given our large age difference? Thanks, Christina
Hi Christina, There’s no absolute best strategy. Your husband could file for reduced benefits at age 62, which would also make you and your child eligible for auxiliary benefits on his record. However, all of your benefits would be subject to the Social Security earnings test until your husband reaches full retirement age. Another potential downside to your husband taking early benefits is that most or all of the reduction in his benefit rate would carry over to the potential widow’s rate that you could receive on his record in the future. You should strongly consider using an expert Social Security benefits calculator, such as my company’s software or another top notch program so you can compare all of your filing options and decide which strategy is best for you and your family. Best, Larry
To learn more about your Social Security options, visit Economic Security Planning, Inc.
