Ask Larry: Will My Wife Be Eligible For Social Security Spousal Benefits When I File?

Forbes Finance 1 week ago
Ask Larry logo with a generic Social Security card.

Today’s column addresses the calculation and availability of spousal benefits, the timing of a restricted application, spousal benefits for someone who's not eligible for retirement benefits, the earnings test and child's benefits and how spousal benefit rates are determined. 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.


Will My Wife Be Eligible For Social Security Spousal Benefits When I File?

Hi Larry, I am just turned 69. My wife is also 69 and is coming up on 70. She started getting her Social Security retirement benefit when she turned 65 at a reduced rate. When I turned 66, I decided to take my Social Security spousal benefit on her record. By delaying my own benefit, I will be getting 32% more when I start my own benefit at 70. When I begin my own retirement benefit at 70, and am no longer getting my spousal benefit, will my wife be able to get a greater monthly benefit by filing for her spousal benefit based on my record? My estimated benefit at 70 is $3,227 per month before the Medicare deduction. My wife will be still getting her usual $916 before the Medicare deduction. Thanks, Julian

Hi Julian, In order for your wife to qualify for additional spousal benefits when you start drawing your retirement benefit on your record, your primary insurance amount (PIA) must be more than twice as much as her PIA. A person's PIA is the amount of their Social Security retirement benefit if they start drawing at full retirement age (FRA).

If your age 70 benefit is $3,227, your PIA must be roughly $2,445 (i.e. $3,227 / 1.32). If your wife started drawing her Social Security retirement benefits the month she turned 65 and her reduced rate is $916, then her PIA must be roughly $982. Therefore, assuming that the amounts shown in your question are accurate, it would appear that your wife should qualify for an excess spousal benefit of about $240 (i.e. 50% of your PIA, or $1222.50 – your wife's PIA of $982) when you switch to drawing on your own record. That would then be added to her own reduced retirement benefit to give her a combined benefit rate of around $1156. Best, Larry


When Should I File My Restricted Application For Spousal Benefits?

Hi Larry, My wife will be retiring this year at 65 and will begin to draw social security benefits this month. I fall into the grandfathered age group and can claim a restricted application for spousal benefits only. When should I apply for those benefits? Do I need to wait until my wife has actually received her first check or is any time after she has applied for her social security benefits okay? Thanks, Stan

Hi Stan, You could potentially apply for spousal benefits as early as the same day that your wife applies for her benefits. But, you can't elect to start drawing spousal benefits in any month prior to the month that you reach full retirement age (FRA) without being deemed to have also filed for your own Social Security retirement benefits. And you can only file a restricted application for only your spousal benefits if you were born prior to 1/2/1954.

Before filing, you and your wife can use one of my company's two tools — Maximize My Social Security or MaxiFi Planner — to fully explore and compare all of your various options in order to determine which filing strategy would likely best serve your family's needs. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry


Shouldn't My Brother Be Eligible For Benefits?

Hi Larry, My brother is blind after he lost his sight in 1982 in a car accident. He does not have 40 credits and he is 68 years old. He collected SSI for a few years and then it was stopped due to some change in the law. His wife is now 66 years and filed for her Social Security retirement benefit. According to Social Security, my brother is still not entitled to any benefits. Is this true? Thanks, Jackie

Hi Jackie, Assuming that your brother and his wife have been legally married for at least a year and if he isn't already drawing Social Security benefits, then it certainly sounds like he should be eligible for spousal benefits on his wife's record as soon as she starts drawing her Social Security retirement benefits. Since your brother is already over full retirement age (FRA), he could qualify for unreduced spousal benefits even if he wasn't blind or disabled.

Regardless of what your brother has been told by Social Security, he has a right to apply for spousal benefits in order to get a formal determination of his eligibility. He should be able to apply either online or by phone or in person at a Social Security office. If his claim is denied for some reason, the disallowance notice should explain the reason for the denial and your brother would then have appeal rights. Best, Larry


Is My Non-Disabled Son Subject To An Annual Earnings Limitation?

Hi Larry, My non-disabled son receives child benefits on my record. I receive SSDI. Is his benefit subject to an annual earnings limitation based on his own earnings? Section 1801.3 (b) of the Social Security handbook says that beneficiaries are not subject to an earnings test if they are entitled to benefits based on a disability. This is not clear to me if it means "their" disability or my disability. It seems odd to say they are not subject to an earnings test if they are disabled, as if they were entitled to benefits based on their disability, then it would make more sense that they be subject to an earnings test. Can you also clarify substantial gainful activity? Thanks, Charles

Hi Charles, Yes, if your son is not disabled and he's receiving child's benefits because he is under age 18 or age 18 to 19 and still in high school, then he would be subject to the regular Social Security earnings test. That's the test referred to in section 1801 of Social Security's handbook, which is the first link that you posted in your question. Your son could earn up to $17,640 in 2019 without losing any benefits, but he'd lose $1 of benefits for each $2 that he earns in excess of that amount.

Individuals who are disabled and receiving either Social Security disability (SSDI) benefits, disabled adult child's benefits or disabled widow's benefits are not subject to the regular Social Security earnings test, but are instead subject to a different work test. Disabled beneficiaries generally get a one-time 9 month trial work period, after which their benefits could be terminated if they earn more than the substantial gainful activity (SGA) limit. The monthly SGA limit for 2019 is $1220. That's the test referred to in the second link posted in your question, and it's the test that would apply to you if you work while receiving SSDI benefits. Best, Larry


Would My Wife Receive Half Of My Age 70 Rate If I Wait Until Then To Start Drawing?

Hi Larry, I am 66, my wife is 63 and we are both retired. According to our most recent Social Security statements, my wife would receive $615 at 66 and $836 at 70. I would receive $2,462 at 66 and $3,250 if I wait until 70. Would my wife receive spousal benefits of $1,625 if we waited until I was 70 or is she limited to 50% of my PIA at 66 or $1,231? Thanks, Ahmed

Hi Ahmed, The most that your wife could receive as a spouse is 50% of your primary insurance amount (PIA), not 50% of your age 70 rate. But, if she starts drawing her own Social Security retirement benefits before she reaches full retirement age (FRA), then her total spousal benefit rate would be somewhat less than 50% of your PIA.

For example, say Jane is has a PIA of $600 and files for her own Social Security retirement benefits at 63. Jane's retirement rate would then be reduced to $470. Four years later when Jane is past age FRA, her husband files for his benefits with a PIA of $2,400. Jane's unreduced spousal rate would be calculated by subtracting her PIA from 50% of her husband's PIA, which in this case would be $600 (I.e. $2,400 / 2 – $600). That amount would then be added to Jane's own reduced retirement rate to give her a combined benefit amount of $1,070. If Jane had instead waited until FRA to file for her retirement benefits, her combined rate would have been $1,200 (i.e. $600 + $600), or a full 50% of her husband's PIA.

However, if you wait until age 70 to start drawing your benefits and you subsequently die before your wife does, she could be paid your full age 70 rate as a widow. She wouldn't get that amount plus her own retirement benefit rate, though, just the higher of the 2 amounts. And, her combined retirement and survivor rate would add up to your full age 70 rate even if she started drawing her own retirement benefits before FRA.

One strategy that you may want to at least consider is for your wife to apply for reduced retirement benefits effective with the month you reach your FRA. Since you were born prior to 1/2/1954, you could then draw spousal benefits equal to 50% of your wife's PIA while still allowing your own benefit rate to grow until age 70. It's of course not possible to know for sure if this is your best strategy without more information. Best, Larry


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