Economic Security Planning, Inc.
Today’s column addresses questions about potential increases due to continuing to work after filing, eligibility for spousal benefits, filing on the record of a younger spouse and whether the WEP and the GPO will be invoked by a foreign pension. 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.
Will Continuing To Work After Filing Increase My Social Security Retirement Benefit?
Hi Larry, This year I will be 65 and I am planning to continue to work. My wife has never worked. She is not in great health. If I get my Social Security retirement benefit at 68 years and continue to work, will my Social Security payout increase? Thanks, Mick
Hi Mick, If you continue working, your additional earning could further increase your rate if your new yearly earnings are among your highest 35 years of wage-indexed earnings, known as your computation years. Increases resulting from additional earnings can occur following any year with higher earnings, regardless of your age at the time you produce the earnings and whether or not you’re already drawing benefits. If you have years with no income in your 35 computation years, the increase will be even more significant.
Also, your monthly Social Security retirement benefit rate would get progressively higher for each month that you delay starting your benefits until 70. Your rate would increase by at least 2/3rds of 1% for each month that you delay starting benefits between your full retirement age (FRA) and age 70 due to delayed retirement credits (DRCs).
Another factor to consider is that if you were to die before your wife, waiting until 70 to start your retirement benefits would provide her with her highest potential survivor rate possible. However, your wife could not be paid spousal benefits at least until you start drawing your benefits. So depending on her age, she might be able to draw spousal benefits sooner if you start drawing your benefits prior to age 70. You may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to compare the options available to you and your wife so that you can determine the best strategy for maximizing your benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry
Would My Husband Be Eligible For Spousal Benefits?
Hi Larry, I am 52 and my husband is 62. I have been on disability for 10 years. If my husband took his retirement, he would get next to nothing. Would he be eligible for a spousal benefit under my record? If so, what percentage of my check would he received? Thanks, Robin
Hi Robin, If your husband files for spousal benefits, he’ll be deemed to also be filing for his own Social Security retirement benefits and he could only be paid essentially the higher of those two rates. Plus, the benefit amount would be reduced for age if he files prior to his full retirement age (FRA).
Your husband’s unreduced spousal benefit rate would be calculated by subtracting his primary insurance amount (PIA) from 50% of your PIA. A person’s PIA is equal to their full SSDI rate, or their Social Security retirement benefit rate if they start drawing at FRA. So your husband will only qualify for spousal benefits if 50% of your PIA is higher than his own PIA.
Furthermore, Social Security uses a special family maximum benefit (FMB)
FMB
formula to determine the amount of auxiliary benefits (e.g. spousal, child) that can be paid on a disabled worker’s record, and that formula can cause the auxiliary benefits to be reduced to zero. I can’t tell you whether or not that formula would limit your husband’s potential spousal rate without knowing your SSDI rate. Best, Larry
What Options Does My Wife Have?
Hi Larry, My wife is 16 years and four months older than I am. We are just lost. I don’t even know how to ask the right questions. She will be 67 in late August, and I am 50 and still working. She is and has been a homemaker most of our 27 years of marriage. Thanks, Reg
Hi Reg, Assuming that your wife has fewer than 40 quarters of Social Security coverage (QC), she likely wouldn’t be eligible for any benefits based on her own work record. And she can’t qualify for spousal benefits until you start drawing your benefits. So unless you become eligible for Social Security disability (SSDI) benefits before 62, that would likely be the earliest that you could file for benefits and your wife could claim spousal benefits.
If you die before your wife, she would already be old enough to qualify for unreduced widow’s benefits. Her widow’s rate would be equal to 100% of your primary insurance amount (PIA), which is equal to your full retirement age rate, assuming your die before applying for benefits and prior to your full retirement age (FRA).
Since your wife has already reached 65, she could potentially apply for Medicare, but she’d have to pay premiums for that coverage. As long as she has health insurance coverage through your employer’s group health plan, though, she can likely delay signing up for Medicare until you retire without being subjected to any late-filing penalties. Best, Larry
Does the WEP Or the GPO Apply In My Case?
Hi Larry, I will be applying for Social Security benefits on my ex-spouse’s record at 67. My ex will then be 62. I receive a small Canada Pension Plan (CPP) benefit ($460 in Canadian dollars) which I took at 60 and I will defer my Old Age Pension (OAS) until 67. I will buy in to Medicare between 65 and 67. I will not have enough credits to apply on my own record. As I am not applying on my own record, does the WEP or the GPO apply in my case? Thanks, Doug
Hi Doug, The WEP (Windfall Elimination Provision) can only apply to Social Security retirement or disability benefits based on a person’s own US earnings history. So if you don’t have sufficient credits to qualify for US Social Security benefits on your own record, the WEP won’t be involved.
The Government Pension Offset (GPO) provision can only apply to auxiliary or survivor (e.g. spousal, widow) benefits payable based on someone else’s Social Security earnings history. However, foreign pensions are excluded from the definition of a government pension for purposes of the GPO provision. So since the WEP does not apply to spousal benefits and, because your only government pension is from Canada and so exempt from the GPO, your US Social Security divorced spousal benefits will not be affected by either provision. Best, Larry