Ask Larry: Can I File And Suspend My Social Security Retirement Benefit Before FRA?
Today’s column addresses questions about filing and suspending before full retirement age, how remarriage after 60 can affect the availability of different benefits and how the WEP and GPO are applied when a public pension is taken as a lump sum. 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.
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Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.
Can I File And Suspend My Social Security Retirement Benefit Before FRA?
Hello Larry, I’m 64 and considering filing for reduced benefits now. If I do this, would I be able to suspend and then reinstate my retirement benefit — the start-stop-restart strategy you’ve written about — down the road in order to collect full benefits at FRA? Thanks, Brian
Hi Brian, If you start drawing benefits prior to full retirement age (FRA), you can’t voluntarily suspend your benefits until you reach FRA. And your benefit rate will be permanently reduced for any months that you are paid benefits prior to your full retirement age (FRA). Your benefits could be involuntarily suspended prior to FRA if you work and earn too much, but you wouldn’t be able to pick and choose when to stop and start your benefits until you reach FRA.
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The start-stop-restart strategy is normally used to describe starting benefits prior to FRA, then voluntarily stopping them at FRA before later restarting them, usually at 70. That can sometimes be an advantageous strategy for people with a spouse or child(ren) who are eligible to receive auxiliary benefits on the worker’s record.
However, the potential advantages of that strategy were hindered in many cases by the Social Security amendments that were passed by Congress in 2015. That legislation mandated that auxiliary benefits payable on a worker’s record can’t be paid for any months that the worker voluntarily suspends their benefits.
Suffice to say that if you collect any Social Security retirement benefits prior to FRA, you’ll permanently retain the applicable reduction for age that’s assessed to your benefit rate. You could still voluntarily suspend your benefits between FRA and 70 in order to accrue delayed retirement credits (DRCs) though. DRCs increase a person’s Social Security retirement benefit rate by 2/3rds of 1% for each month that they don’t collect benefits between FRA and 70, but that percentage increase would be applied to your reduced benefit rate if you start drawing benefits prior to FRA.
It sounds like you should might want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to understand all of your filing options and explore how to maximize your lifetime household benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry
Will I Be Eligible To Collect On My New Husband’s Social Security Record After We’re Married For A Year?
Hi Larry, I am 63 and currently collecting a Social Security benefit based on my ex-husband’s record. I plan on getting married soon. My future husband has not started collecting his Social Security retirement benefit as of yet because he wants to wait until he’s 69. He is 67 years old now.
Will I be eligible to collect on his Social Security record after we’re married for one year? Thanks, Julie
Hi Julie, There’s no way that you could collect benefits from your new husband’s Social Security account at least until he starts drawing his retirement benefits.
Also if you’re getting a divorced spousal benefit, it would end the month your new marriage occurs. However, if you’re getting a surviving divorced spousal benefits, it would continue in spite of your new marriage since you’re already over 60. Best, Larry
Can I Avoid The Windfall Elimination Provision By Taking A Lump Sum Instead Of A Lifetime Payout?
Hi Larry, I am a teacher in Texas and do not pay into Social Security. Am I able to avoid the Windfall Elimination Provision by taking my contributions into my pension in one lump sum instead of the lifetime payout? I do meet the 40 quarter minimum of paying into Social Security.
Also, can I start by taking my Social Security retirement benefits and then when my spouse passes, take widow’s benefits? I realize that I cannot take both at the same time. Thanks, Rebecca
Hi Rebecca, If you opt for a lump sum payment in lieu of a monthly pension that’s based on your earnings that were exempt from Social Security taxes, your Social Security retirement benefits could still be subject to the Windfall Elimination Provision (WEP).
Social Security prorates lump sum payments of that type into a monthly amount, and applies WEP on that basis.
You could potentially apply for your own Social Security retirement benefits initially and then file later for widow’s benefits if your husband dies before you, but your widow’s benefits would likely be subject to at least a partial offset due to the Government Pension Offset (GPO) provision. WEP doesn’t apply to survivor benefits, but the GPO provision does.
If a person filing for survivor benefits is drawing a pension based on government work in the US that was exempt from Social Security taxes, the GPO can cause their survivor benefits to be offset by 2/3rds of the amount of their government pension.
A pension, or lump sump in lieu of a pension, from the Texas Teachers Retirement System would be classified as a government pension for GPO purposes. And a lump sum in lieu of a pension would be prorated for GPO purposes in the same manner used for WEP. Best, Larry