Today’s column responds to questions about suspending a retirement benefit to allow a spousal benefit, how spousal benefit amounts are determined, foreign pensions, survivor benefits on multiple records and filing a few months early. 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 I Suspend My Retirement Benefits To Allow Spousal Benefits?
Hi Larry, I will be 62 in November and my husband will be 67 next March. My estimated Social Security retirement benefit benefit is less than my spousal (he plans to retire at 70). If I retire January 2019 and start collecting my Social Security retirement benefits, can I later suspend them when my husband turns 70 and collect spousal? Thanks, Louise
Hi Louise, Once you start drawing your own retirement benefits you can’t later suspend your retirement benefit and get your spousal benefit instead. You could, however, potentially receive additional spousal benefits when your husband files for his benefits.
For example, say Jane has a Primary Insurance Amount (PIA), which is equal to her full retirement age (FRA) retirement benefit amount, of $800. She starts drawing at age 62 and receives a reduced rate of $600. After Jane reaches full retirement age (FRA), her husband John files for his retirement benefits. John’s PIA is $2,000, so Jane’s spousal benefit is calculated by subtracting her PIA from 50% of John’s PIA, or $200 (i.e. $2,000 / 2 – $800). The $200 spousal benefit is then added to Jane’s reduced retirement rate of $600, giving her a combined benefit of $800.
However, if you do decide to file for reduced benefits at age 62 you will be deemed to have also filed for spousal benefits as soon as your husband files for his benefits. If you’re under FRA at that time, your spousal rate will also be reduced for age. Also, if you file for your benefits at age 62 your husband would have the option of filing for just spousal benefits only on your record while allowing his own benefit rate to grow until age 70. Best, Larry
How Much Will My Wife Get As Her Spousal Benefit?
Hi Larry, I turned 67 this July. If I start taking my Social Security retirement benefit in January, what will her spousal benefit be? She will turn 66 next month. But she started taking her Social Security retirement benefits at 62. Will she get of half of my amount or some other amount. Also, how many years will it take to recoup all fund collected if I start collecting next January versus January 2022. Thanks, Jerome
Hi Jerome, Your wife’s spousal benefit will be calculated as 50% of your Primary Insurance Amount (PIA), which is equal to your full retirement age (FRA) retirement benefit amount, minus her own PIA. That excess amount, if any, will then be added to the reduced retirement benefit she receives on her own record.
I gather from your second question that you are trying to determine what your break-even point would be between starting benefits January 2019 vs. January 2022. However, since you turn age 70 in July 2021, you wouldn’t want to start drawing any later than that since you stop receiving delayed retirement credits at age 70. I also don’t recommend using breakeven analysis to decide when to start drawing benefits. This doesn’t allow for the fact that Social Security is best thought of as not another asset that can be depleted but rather as longevity insurance that will be available as long as you’re alive. You can use an expert Social Security benefits calculator, such as my company’s software or other top notch software, to determine the best overall filing strategy for you and your wife. Best, Larry
Will My Canadian Pension Reduce My Spousal Benefits?
Hi Larry, I worked for 13 years in Canada when I was a Canadian citizen. Now I would like to take spousal benefits based on my husband’s Social Security work record. My Canadian Pension monthly payments would be about $250 per month. Will Social Security reduce either my husband’s benefit or my benefit because of WEP or GPO? Thanks Shanya
Hi Shanya, Your Canadian pension wouldn’t subject you to GPO (Government Pension Offset) since foreign pensions are exempted from that provision. Nor would your pension have any effect on your husband’s Social Security benefit rate. If you’ve paid enough into the US Social Security system to get retirement benefits based on your own work record, your Canadian pension would probably reduce that. My company’s software or another highly accurate and expert Social Security benefits calculator that also accounts for the WEP can help you and your husband decide what strategy to follow. Best, Larry
Could I Collect Survivor Benefits On One Ex’s Record And Later Receive A Higher Rate On Another Ex’s Record?
Hi Larry, I was married to two different husbands, each for more than 10 years. I’m 62 and I’m not collecting any Social Security retirement benefits or other Social Security benefits. If one of my exes passes away, would I be able to collect survivor’s benefits on his record and then, if the other dies later and there is a larger amount to collect, would I be able to switch to a survivor’s benefits based on his record? Thanks, Linda
Hi Linda, Yes, assuming that you meet all of the other requirements for entitlement to widow’s benefits, you can receive benefits based on their record. And because you were married at least 10 years, you could file based on either of their records, obviously opting for whichever is higher if they both become simultaneously available. Best, Larry
When Would Be The Optimum Time To File?
Hi Larry, I turn 66 at the end of the year and my husband turns 66 early next year. We have been advised to file for my retirement benefit in in December and then for my husband to file a restricted application for his spousal benefit also in 12/2018. I get the strategy but why would we wait until 12/2018? Wouldn’t it be better to file earlier? Thanks, Bette
Hi Bette, The only potential reason for waiting until 12/2018 to file would be that it would increase your monthly benefit rate by 8% as a result of delayed retirement credits. That may not be your best strategy, though, depending on your and your husband’s relative benefit rates. You and your husband may want to take advantage of an expert Social Security benefits calculator as described in other answers to compare your options and determine your best overall filing strategy. Best, Larry
To learn more about your Social Security options, visit Economic Security Planning, Inc.