Ask Larry: Can I Delay My Retirement Benefit After An Early Spousal Benefit?

Forbes - Ask Larry - Barbara SSA logo - front page cropSocial Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.

Today’s addresses how benefits can and can’t be sequenced, filing with a disabled child, divorced spousal benefits, filing in a financial crunch and widow’s benefits. column 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 Delay My Retirement Benefit After An Early Spousal Benefit?

Hi Larry, I am 63 and my wife is 61. If she files at age 62 (her amount would be $750/mo), can I file for spousal benefits at the same time and then wait to file on my work record until age 70? In addition, when I turn 70, can she then file for her spousal benefits (she would be 68) at my full retirement benefit amount which should have compounded at 8% annually since I turned 66? Thanks, Dom

Hi Dom, No because if you file for your spousal benefit early ––– before your full retirement age (FRA) ––– you’ll be deemed to have also filed for your retirement benefit at that time and both will be permanently reduced. So not only would you not be able to earn delayed retirement credits (DRCs) by waiting until past your FRA to file for your retirement benefit, it would be reduced below what it would have been at your FRA. Also, be aware that if you do delay past your FRA to file for your retirement benefit and it’s increased above the FRA amount due to DRCs, your wife’s spousal benefit won’t be 50% of your increased benefit. Instead, it will be 50% of your FRA retirement benefit amount as long as she doesn’t file for it until she’s at or past her own FRA. If she files for her spousal benefit before her FRA, it will be reduced below 50% of your FRA retirement benefit amount. Expert software, such as my company’s software or other very precise programs, can help you determine how to maximize your lifetime household benefit amount. Best, Larry

How Should We File With A Disabled Adult Child?

Hi Larry, I will reach my full retirement age (FRA) of 66 soon and my retirement benefit will be approximately $2,400. My spouse will be 65 soon after me. We have a 37 year old disabled daughter, who collects $600 Supplemental Security Insurance (SSI), who lives with us and will continue to live with us as long as it is viable. My wife worked very little and her retirement benefit at FRA is approximately $550. I could defer to age 70 when my monthly benefit will be approximately $3,200. What scenario and ages would give us the maximum benefit? And when my wife or I file will my daughter be entitled to a benefit based on our benefit? Thanks, Carl

Hi Carl, It may be best for your wife to file for her retirement benefit at her FRA which would then allow you to file for your spousal benefit and your daughter to file for her child’s benefit on her record. Then, when you reach 70 and your retirement benefit is as high as it can be, your wife can file for her spousal benefit based on your record and your daughter can switch to a child’s benefit based on your record, which will be higher than the child’s benefit she can collect based on your wife’s record. I know this is a common theme in my responses, but I really would encourage you to look into expert software, either my company’s or another exactingly engineered program that also accounts for not only the family maximum but also the combined family maximum that will be invoked once both you and your wife have filed for your retirement benefits. Your situation is actually quite complex. Hence the need for advanced software. Best, Larry

When Can I Receive My Divorced Spousal Benefit?

Hi Larry, I am currently receiving Social Security disability benefits and I am 59 yrs old. I am divorced, single and was married to my ex for more then 10 yrs. What age do my ex and myself have to be for me to start collecting spousal benefits based on his work record? Thanks, Anne

Hi Anne, you’ll clearly have been divorced for at least 2 years once you reach 62, so if your ex is also at least 62 then, you can become independently eligible for a divorced spousal benefit whether your ex has filed for his retirement benefit or not. If your ex is younger, you’ll have to wait until he turns 62. However, if you file for it before your full retirement age (FRA), your divorced spousal benefit will be reduced. it may be better to continue collecting your disability benefit until your FRA and then switch to your divorced spousal benefit if it would be larger. At your FRA your disability benefit will automatically convert to a standard retirement benefit, but unfortunately, it’s no longer possible for you to withdraw your retirement benefit ––– which is not the same as suspending it. It used to be able to do so and in the process earn delayed retirement credits (DRCs) of 8% per year up to age 70 while collecting your spousal benefit beginning at FRA and then switching to what would then be your increased retirement benefit at 70. The best you could do now is suspend receipt of what will be your retirement benefit at FRA to earn the DRCs but you wouldn’t be able to receive your divorced spousal benefit while your retirement benefit is suspended. Last and most important point. Given the new SS law and your age, whenever you file for your divorced spousal benefit you will need to file as well for your own retirement benefit. This will transform your divorced spousal benefit into your excess divorced spousal benefit, which could be very small if not zero. So, for example, taking your divorced spousal benefit at 62 could leave you simply with a reduced retirement benefit and no divorced spousal benefits whatsoever. Best, Larry


Published at Mon, 17 Apr 2017 14:11:00 +0000