Economic Security Planning, Inc.
Today's column addresses when someone might be deemed to have filed for spousal benefits after filing for retirement benefits, filing for spousal benefits before retirement benefits, widow's benefits and the GPO, disability benefits converting to retirement benefits and award letter language. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc, a company that markets Maximize My Social Security and MaxiFi Planner.
See more Ask Larry answers here.
Ask Larry about Social Security here.
Will I Be Deemed To File For My Social Security Spousal Benefit When My Husband Files?
Hi Larry, I was born in 1956. I began receiving early Social Security retirement benefits at 62. I know my benefit is already permanently reduced. My husband is one year older than I am and hopes to begin receiving benefits at his FRA of 66 and 2 months. If I am correct in understanding that I will be deemed as filing for spousal benefits once he files, I'd like to know how my spousal benefit will be calculated once my husband files. Does the date of my early retirement affect my spousal benefit, or does my age at the time my husband files determine the spousal benefit? Thanks, Pam
Hi Pam, Yes, you're correct that if you qualify for spousal benefits when your husband files for his benefits, you will be deemed to have filed for spousal benefits effective his first month of entitlement to benefits. You will only qualify for additional spousal benefits if 50% of your husband's primary insurance amount (PIA), which is the amount of a person's Social Security retirement benefit if they start drawing at full retirement age (FRA), is more than your own PIA. If it is, any reduction for age applicable to your spousal rate will be calculated based on your age at the time you become eligible for the spousal benefit.
For example, say Jane (DOB 1/15/1956) filed for her Social Security retirement benefits at 62. Jane's PIA was $800, but her benefit rate was reduced by 26.25% to $590 in return for starting her benefits at 62. Jane's husband files for his Social Security retirement benefits 12 months prior to Jane's FRA, and his PIA is $2,000. Jane's unreduced spousal rate would be calculated by subtracting her PIA from 50% of her husband's PIA, which in this case is $200. However, since Jane is deemed to have filed for spousal 12 months prior to FRA, her benefit rate would be reduced by 8.33% to $183. That would then be added to Jane's own reduced retirement benefit to give her a combined rate of $773.
You and your husband can use one of my company's two tools — Maximize My Social Security or MaxiFi Planner — to calculate your and your wife's potential benefit rates, and explore and compare all of your various filing options in order to determine your best overall strategy for claiming 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
Can I File For Divorced Spousal Benefits At FRA And Then Switch To My Own Benefits At Age 70?
Hi Larry, I was born before 1/2/1954, was married over 10 years and am divorced for eight years now. My ex-wife is 61. I will be 66 next month and would like to file a restricted application, collect 50% of her PIA and then at age 70 switch to my own retirement benefit after it's been increased by waiting.
Can I do this? Do I have to wait until my ex is 62 to do this? For me to do this, is it necessary that she applies for Social Security, as she prefers to wait until she reaches FRA? Thanks, Kent
Hi Kent, Yes, since you were born prior to 1/2/1954, it sounds like you would qualify to file a restricted application for divorced spousal benefits only starting at or after your full retirement age (FRA) of 66. But yes, your ex-wife must be at least age 62 or be drawing Social Security disability or retirement benefits in order for you to qualify for divorced spousal benefits. Since you've been divorced for more than two years it won't be necessary for your ex-wife to actually file for her benefits in order for you to qualify for divorced spousal benefits, but she would need to be at least age 62. Best, Larry
Would My Wife's Widow's Benefits Be Subject To The Government Pension Offset Provision?
Hi Larry, My wife is receiving Social Security reduced by the Windfall Elimination provision (WEP) because she taught for 20 years in a state that had its own retirement system for employees. In looking at future scenarios, it appears she would be subject to the Government Offset Provision on widow's benefits based on my record. Is that correct? If so, doesn't that seem a bit unfair to penalize benefits based on my earnings record? Thanks, William
Hi William, Yes, since your wife's pension is from a governmental agency, the Government Pension Offset (GPO) provision would likely cause any widow's benefits for which your wife would qualify to be offset by 2/3rds of the amount of her state pension. Whether or not the GPO provision is fair is the subject of much debate, but the provision was passed into the Social Security law by Congress, and only Congress has the authority to change the law. Best, Larry
What Will Happen When I Reach Age 62 If I'm Already Getting Disability Benefits?
Hi Larry, I am 56 and have been receiving disability income since I was 35 due to a chronic illness. What happens when I turn 62? Thanks, George
Hi George, Assuming that what you're drawing is Social Security disability benefits (SSDI), then nothing will change when you reach age 62. You'll continue for receive your SSDI benefits until your full retirement age of 67, at which time they will convert to standard Social Security retirement benefits at the same rate. Best, Larry
What Type Of Notice Language Is Used When A Restricted Application Is Filed?
Hi Larry, As I understand it, Social Security award letters often explain that the awarded benefit is the only one available. However, in the case of a restricted application the applicant has what I believe is called a "dual entitlement." Can you share with us the award notice language that a restricted applicant receives? Specifically, how does the award letter document that the restricted applicant is eligible to receive a different award in the future? Thanks, Taylor
Hi Taylor, I think that you misunderstand what filing a restricted application means. Filing a restricted application means that you are restricting one or more types of benefits from the scope of your application. In other words, you are excluding the possibility, at least for the time being, of claiming entitlement to more than one type of benefit.
For example, say that Bob was born prior to 1/2/1954 and when he reaches full retirement age (FRA) he files a restricted application for Social Security spousal benefits only. To do so, Bob would specifically state on the application that he does not want his application to be considered as an application for Social Security retirement benefits on his own record. Social Security applications are normally considered as applications for all types of benefits for which the person is eligible, so if Bob didn't restrict retirement benefits from the scope of his application then he would be claiming retirement benefits starting with the same month he claims spousal benefits. Bob would then only receive essentially the higher of the two benefit rates.
Since Bob is filing a restricted application for one type of benefit only (i.e. spousal), his award letter would then state that those benefits are the only benefit to which Bob is entitled. Bob would then be free to file for his own Social Security retirement benefits at any time, but he would need to file a separate application to do so. You can't use one application form to file for two different types of benefits to start at different times.
"Dual entitlement" refers to being entitled to two different types of benefits at the same time. An example of that would be a person who's receiving an excess spousal benefit in addition to retirement benefits on their own record. To become entitled to a particular type of benefit, you must apply for that benefit. So if you're eligible for more than one type of benefit but you file a restricted application for only one of those benefits, you would not be dually entitled. Best, Larry
