Ask Larry: Is Filing For Social Security Retirement Benefits Before Spousal Benefits A Good Plan?

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Today’s column addresses questions about how retirement benefits before spousal benefits might be beneficial, about reduced retirement benefits before a survivor’s benefit and whether moving to a US territory would prohibit payment of benefits. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc, which 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.

Is Filing For Social Security Retirement Benefits Before Spousal Benefits A Good Plan?

Hi Larry, I plan to take my social security at my full retirement age of 66 and two months. In three years, when my spouse is 70 and files for his retirement benefit, I plan to file for spousal benefits which will be greater than my retirement benefits. Is there any problem with this plan? Would my collecting benefits on my own impact the ability of my spouses’s social security to grow at 8% until he collects at 70? I understand that my spousal benefit will be only 50% of his primary insurance amount. Will the benefits we each receive when he is 70 be the same whether I ever collect on my own or not? Thanks, Teresa

Hi Teresa, There’s nothing necessarily wrong with your plan, but I can’t say whether or not it’s your best possible plan given the limited information in your question. You definitely wouldn’t want to wait past full retirement age (FRA) to start collecting your own Social Security retirement benefits, assuming that your own rate would be less than 50% of your husband’s primary insurance amount (PIA) even if you waited until age 70 to start drawing your benefits.

If you start drawing your own benefits at FRA and you later become eligible for a higher spousal rate, you’ll continue to be paid your own benefit plus an excess spousal rate equal to the difference in your PIA and 50% of your husband’s PIA. A person’s PIA is equal to their Social Security retirement benefit rate if they start drawing at FRA. The net result would be that you’d then get a combined benefit amount equal to a full 50% of your husband’s PIA.

Thus, you wouldn’t gain anything by not collecting your own benefits starting at FRA. And, your drawing your benefits would have no effect on your husband’s ability to accrue DRCs that would increase his benefit rate by 8% per year between his FRA and age 70. In other words, drawing your benefits won’t have any adverse effect on your husband’s rate.

By the way, if your husband was born prior to 1/2/1954, he could file a restricted claim for spousal benefits when you file for your benefits. Doing so wouldn’t keep him from accruing DRCs on his own record, so he could potentially collect spousal benefits while still allowing his own retirement benefit rate to grow until 70. Only people born prior to 1/2/1954 are allowed to file for spousal benefits without being forced to file for their own benefits at the same time though, so that wouldn’t work if your husband was born after 1/1/1954.

It sounds like you and your husband have a lot of potential options available to you so you might want to use my company’s software — Maximize My Social Security or MaxiFi Planner — to look further into what filing options you have and determine which strategy would be best for you. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry

Can I Take My Reduced Benefits Now And Switch To My Widow’s Benefit Later?

Hi Larry, I’ve recently retired at 64. My FRA is 66 and four months. My husband passed away in 2017 at 64 and he hadn’t applied for retirement benefits. I have spoken to two people from SSA regarding my application for benefits and got two different answers. The first said that I should take my own reduced retirement benefits first and then switch to survivors benefit from my husband after it had increased.

My husband’s benefit is significantly higher. But the second time I was told that I had to take survivors benefit first because my husband’s was higher than my retirement benefits. I was told that if I wait until May of 2021 to apply, my survivors benefits would be higher than my own retirement benefits at age 70. Can I take my reduced benefits now and switch to my widow’s benefit in May 2021 or later? Thanks, Brenda

Hi Brenda, I’m sorry for your loss.

The answer to your question is a qualified yes. You couldn’t actually file for your own Social Security retirement benefits now and then switch to drawing just widow’s benefits later, but you could accomplish essentially the same result. Once you file for your own Social Security retirement benefits, that becomes your primary benefit for life. If you later qualify for a different type of Social Security benefit (e.g. spousal, survivor) that’s higher than your own benefit rate, Social Security would continue to pay you your own benefit plus a portion of the other benefit to which you’re entitled.

If you file for your own reduced benefits now and then file for higher widow’s benefits in 5/2021, you’ll still get the higher widow’s rate. It would just be paid as two separate benefits that would be combined into one payment. The fact that you took a reduced Social Security retirement benefit wouldn’t reduce your total benefit rate when you file for your widow’s benefits, since your partial widow’s rate would be calculated by subtracting your own reduced rate from the full widow’s amount for which you’d be eligible. The total amount payable would add up to the higher widow’s rate. However, if you start drawing your widow’s benefits prior for your full retirement age (FRA), your widow’s rate will be reduced for age and that reduction would be permanent.

Based on your description I’m confused as to why you’d want to file for your widow’s benefits in May 2021 instead of at FRA. If your husband didn’t draw reduced Social Security retirement benefits prior to his death, then your highest possible widow’s rate would be payable if you wait until FRA to start drawing your widow’s benefits. It sounds like your best strategy would almost certainly be to file for reduced widow’s benefits now, then switch to your own record at age 70; or to file for reduced retirement benefits on your own record now, then file for unreduced widow’s benefits at full retirement age (FRA). Best, Larry

Will My Wife And I Forfeit Our Future Social Security Benefits If We Move Outside Of The U.S.?

Hi Larry, Both my wife and I are US citizens. I am 50 years old and have been working in the US and meet the 35 year contribution target but we’re considering making a change in our status and becoming American nationals residing in the US Virgin Islands and was wondering how that may impact our future Social Security benefits. Will will we forfeit our Social Security that was paid into the system by making this change? And can we live in any other countries as US citizens and still collect our Social Security benefits while living overseas? Thanks, Allen

Hi Allen, Since you and your wife are U.S. citizens, moving to another country or to a US territory such as the US Virgin Islands wouldn’t affect either your or your wife’s benefit eligibility or your benefit rates. However, there are a few countries to which Social Security benefits can’t normally be sent, which currently are limited to Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. Also US Treasury Department rules prohibit Social Security benefits from being paid to people residing in Cuba or North Korea. Best, Larry

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