Ask Larry: How Can We Keep My Husband’s Ex From Tapping Into His Social Security?

Today’s column addresses questions about divorced spousal benefits and what they mean for other benefits available on a person’s record, when continuing income is counted, disability and retirement benefit amounts and a possible reason for extra payments. 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.


How Can We Keep My Husband’s Ex From Tapping Into His Social Security?

Hi Larry, My spouse, who turned 62 this year, is seven years younger than I am. He is not ready to retire and I am still working too. He has an ex, who he was married to for 12 years. The divorce decree stipulates she cannot collect on his Social Security. How is that recorded so that she cannot draw on his record? Thanks, Kimber

Hi Kimber, Social Security is not bound by anything people agree to in a divorce settlement. So Social Security would have no need to record anything agreed to in your husband’s divorce settlement. I’m not a lawyer so I don’t know whether or not the agreement you reference is enforceable by other means, but Social Security law wouldn’t prevent your husband’s ex from potentially claiming divorced spousal or divorced survivor benefits on his account provided that she meets the requirements for entitlement.

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Just to clarify, though, a person who draws divorced spousal or survivor benefits on the Social Security record of an ex-spouse is not “tapping into” their Social Security.

Divorced spousal benefits are an auxiliary, or extra, benefit that can be paid to eligible individuals. Auxiliary benefits have no adverse effect on the benefits or benefit rates of the worker on whose record the auxiliary benefits are paid. Nor does the payment of divorced spousal or survivor benefits cause any adverse effect to the benefit rates of other eligible family members, such as a current spouse or child. So if your husband’s ex-wife does qualify for divorced spousal or survivor benefits at some point, it won’t reduce your husband’s benefit rate or your benefit rate as a spouse or widow. Best, Larry


Is It True That My 2020 Earnings Won’t Be Used To Calculate My Benefit Amount If I Retire Early In 2021?

Hi Larry. I am planning to retire in February 2021 at 65 and five months, which is a bit less than a year from my full retirement age. My earnings in 2020 will be among my highest over 35 years. I have been told by someone who purports to know about these things that my earnings for 2020 will not factor into my benefit calculation since I plan to retire at the beginning of the year, and these 2020 wages may not be reported to Social Security in time. Is this true? Thanks, Gus

Hi Gus, What you were apparently told is false.

Also, note that Social Security doesn’t necessarily use only the last 35 years of income to calculate benefit rates available on a person’s record. Instead, they use the highest 35 years of income after indexing for inflation, whenever those years were in a person’s work history.

Your 2020 Social Security covered earnings can be used to calculate your Social Security retirement benefit rate regardless of when you retire. 2020 earnings can be used to calculate a person’s retirement benefit rate for their benefit payment for the month of January 2021. However, if you apply for benefits before proof of your earnings is available, Social Security may need process your claim without using the earnings and then recalculate your benefit rate once proof of the earnings is received. You wouldn’t lose any benefits if that happens though, because Social Security would reimburse you for any amount of underpaid benefits.

It’s true that there’s a lag time before earnings get posted to a person’s Social Security earnings history, but the earnings can still be used once proof of the earnings is received. Wages are usually posted to a person’s earnings history by around April of the year following the year of the earnings, but the posting of self-employment earnings can take longer depending on when a person’s tax return is filed.

Social Security can give you credit for earnings even before your earnings are posted to your earnings record if you submit proof of the earnings though, so if you file your application in the first part of 2021 you can get immediate credit for your 2020 earnings as long as you submit proof of the earnings to Social Security (e.g. W-2 for wages, tax return schedule SE for self-employment).

My company’s software — Maximize My Social Security or MaxiFi Planner — works with the same formula that Social Security uses and it allows you to plug in projected current and future earnings, so you may want to consider using it to understand how your income can affect your eventual 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 Switch From Social Security Disability To Retirement Benefits Now That I’m 62?

Hi Larry, I’m 62 and have been on Social Security disability since 2016. Can I change over to my retirement benefit at my age? Or do I have to wait till 66 and two months? Thanks, Rick

Hi Rick, You could, but you probably wouldn’t be happy with the results.

Social Security disability (SSDI) benefits are calculated in essentially the same manner as your full retirement age (FRA) Social Security retirement benefit is calculated. The only material difference is that fewer years of earnings are sometimes used to calculate SSDI rates than the 35 years used to calculate retirement benefits.

When you qualify for SSDI benefits, your full SSDI rate is basically the same as your unreduced Social Security retirement rate. So drawing SSDI benefits is like drawing your FRA rate early. In fact, if you continue to qualify for SSDI benefits until you reach FRA, your SSDI benefits are automatically converted to unreduced retirement benefits at the same rate as your SSDI benefits.

If your FRA was 66 and two months and if you elected to switch to drawing reduced retirement benefits at 62, your full SSDI rate would effectively be reduced by roughly 25.5%. But, if you were born in 1958, then your actual FRA would be 66 and eight months, and the percentage reduction that would be applied to your full SSDI rate if you switch to drawing retirement benefits at age 62 would be more like 28%.

So if you do elect to switch to drawing Social Security retirement benefits now, you’ll probably just be taking a substantial benefit rate cut. The only way that it would likely be advantageous for you to switch from drawing SSDI benefits to retirement benefits prior to FRA is if a) you aren’t receiving your full SSDI rate because your benefits are being offset due to the receipt of workers compensation or public disability benefits, or b) if you have a wife and/or child(ren) who could qualify for a higher benefit rate if you switched to retirement benefits. Best, Larry


Why Did I Get An Extra Deposit This Month?

Hi Larry, I got extra deposit from Social Security this month in addition to regular amount. Can you offer any suggestions why they sent this extra payment? Thanks, Tina

Hi Tina, You are the second person recently that’s mentioned receiving an extra payment. I specifically say why you may have been paid extra this month, but this is roughly the time of year that Social Security processes automated earnings recomputations. So if you had earnings last year that were high enough to increase your benefit rate, that may explain the extra payment.

Whatever the cause, you should receive a notice from Social Security within 2 weeks that should explain the payment. Otherwise, you’ll need to ask Social Security for an explanation since only they have access to your records. Best, Larry


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