Ask Larry: If I File Six Months Retroactively, What Benefit Rate Will I Get?

Today’s column addresses questions about how retroactive filing affects benefit rates, when spousal benefits may be available and whether it’s possible or advisable to take a retirement benefit before a survivor’s benefit. 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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If I File Six Months Retroactively, What Benefit Rate Will I Get?

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Hi Larry, I will be 69 in January 2021. If I take six months of retroactive retirement payments, what payment amount will I get going forward from January 2021? Will it be my age 68.5 or age 69 rate? Thanks, Brian

Hi Brian, If you turn 69 in January 2021 and if you apply in that month and request six months of back pay, you’ll get the monthly benefit rate that you would have received if you’d started drawing your benefits in July 2020. So in other words, you’d get your age 68.5 rate. Asking for retroactive benefits after reaching full retirement age (FRA) simply results in losing the delayed retirement credits (DRC) that you would otherwise have received for those months.

Between FRA and the month you turn 70, you earn DRCs at the rate of 8% per year. These are actually applied by the month. So if you file six months retroactively, you’ll get the benefits you would have received if you had filed in 7/2020 but to do so, you’ll have to permanently give up a 4% increase in your benefit amount that would have applied as long as you live. It sounds like you may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to analyze your various options in order to 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

Should I Ask For Spousal Benefits?

Hi Larry, My wife is 62, retired and so is earning no salary currently. If she asks for her reduced Social Security retirement benefits, I know her benefits won’t be affected by my salary no matter what it is. I’m 64 — should I ask for spouse benefits? Thanks, David

Hi David, Because of your age, you can’t file for spousal benefits without also being required to file for your own Social Security retirement benefits at the same time. You could then only be paid essentially the higher of your own benefit rate or your spousal rate, and your benefit rate would be reduced for age if you claim benefits prior to your full retirement age (FRA). Furthermore, whether you qualify for retirement benefits and/or spousal benefits, if you claim benefits prior to FRA they could be subject to full or partial withholding if you earn more than the Social Security earnings test exempt amount.

Only people born prior to 1/2/1954 are allowed to file for spousal benefits without also being deemed to be filing for their own benefits at the same time. And, they can only do so if they file for the spousal benefits at FRA or later, not prior to FRA. Best, Larry

Could I Take My Social Security Retirement Benefit Now And My Widow’s Benefits When I Turn 66?

Hi Larry, I am 63 and my husband passed away two years ago at 62, he never collected Social Security. I was wondering if I could go ahead and apply for my Social Security retirement benefit now and then when I turn 66 apply for my widow’s benefit from my deceased husbands work history? I really need his higher benefit in retirement, so I don’t want to make a mistake. Thanks, Hollie

Hi Hollie, I’m sorry for your loss. Yes, you could potentially file now for your own Social Security benefits and then file for widow’s benefits later, or you could file for widow’s benefits now and file for your own benefits later. However, if you’re working and if you earn too much, then at least some of your benefits would need to be withheld until you reach full retirement age (FRA). In 2020, Social Security would withhold $1 of your benefits for each $2 that you earn in excess of $18,240.

Your best filing strategy is could be either filing for reduced widow’s benefits early and then switching to your own record at 70, or filing for reduced retirement benefits on your own record early and then filing for unreduced widow’s benefits at full retirement age (FRA). Normally, you would want to start out drawing the lower benefit first and then switch to the higher record when it reaches its highest potential rate. Best, Larry

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