Ask Larry: Shouldn’t I Be Getting Increased Social Security Retirement Benefits?

Today’s column addresses questions about whether continuing to work ensures increased benefits, filing for reduced spousal benefits before a spouse passes away and the differences between restricted applications and filing for and suspending a retirement 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.

See more Ask Larry answers here.

Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.


Shouldn’t I Be Getting Increased Social Security Retirement Benefits?

Hi Larry, I have received benefits for over ten years I also work full time. That’s full time now and over the entire past decade but my benefits have only seen COLA increases. Shouldn’t I be getting increased benefits from continuing to work? Thanks, Phil

Hi Phil, Social Security retirement benefits are based on an average of a person’s highest 35 years of Social Security covered wage-indexed earnings, so additional years of earnings only increase a person’s rate if the earnings are higher than one or more of the 35 inflation adjusted years of income currently being used to calculate the person’s benefit rate. So I can’t tell you whether or not your benefit rate should have increased without knowing your full earnings history.

MORE FOR YOU

Social Security is supposed to automatically recalculate a person’s benefit rate following any year in which they had earnings that were high enough to increase their benefit rate. So you shouldn’t need to do anything to receive any benefit increases that you might be due. However, you can submit a written request for a manual recomputation of your benefit rate, and if you do so you should include proof of your most recent year of earnings (e.g. W-2 for wages, tax schedule SE for self-employment). Best, Larry


If I Start Drawing Reduced Spousal Benefits And My Husband Dies Before I Reach FRA, Can I Wait Until FRA To Get An Unreduced Survivor Rate?

Hi Larry, My spouse took his Social Security retirement benefit at his full retirement age. If I decide to take my spousal benefit at 63, I realize I’ll be receiving a reduced benefit. If my spouse then dies before I reach my full retirement age, will my survivor’s benefit be reduced automatically because I’ve opted for a spousal benefit instead of my own retirement benefit or do I have the option to remain on my spousal benefit amount and delay survivor’s benefit until I reach full retirement age? Also, if I take a spousal benefit early as outlined above and my spouse dies after I’ve reached full retirement age, will my survivor’s benefit be reduced because I took spousal benefit early? Thanks, Catherine

Hi Catherine, If your spouse dies, you wouldn’t have the option to continue receiving spousal benefits as opposed to survivor’s benefits. However, assuming that you have enough credits to qualify for your own Social Security retirement benefits, you could continue to draw those benefits and wait until later to file for survivor benefits. But if you don’t have enough work credits to qualify for Social Security retirement benefits and if you’re collecting reduced spousal benefits when your spouse dies, your spousal benefits will be automatically converted to survivor benefits in the month of his death. And if that’s prior to your full retirement age (FRA), your survivor rate would be reduced for age.

If you do have enough credits to qualify for Social Security retirement benefits, then you can’t file for spousal benefits without also being required to file for your own benefits at the same time. Only people born prior to 1/2/1954 were allowed to do that. So whenyou file for benefits, you’ll be deemed to be filing for both your own retirement benefits and spousal benefits, and you can only be paid essentially the higher of the two benefit rates. And you rate will be reduced for age if you start drawing prior to FRA. You may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to explore what filing options you have and which strategy will be best for you. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry


Is It True That If I Do This, My Wife Won’t Be Able To Take Spousal Benefits?

Hi Larry, I was born in 1953 and plan on working until I am 70. My spouse was born in 1954 and is not taking on as many clients in her sole proprietorship business where she works out of the house. I was told I can file a “restricted application” now where I would not collect my retirement benefit at this time but then my spouse could file for her spousal benefit at this time. But I’ve also heard that I should file for spousal benefits on my wife’s record now after she files for her retirement benefits now.

When I file now for my spousal benefit, am I or am not filing a “restricted application” allowing my wife to take her spousal benefits? I’m so confused. It appears she can not apply for her spousal benefits until I file for retirement benefits, which I plan to do in 2023. Also, at this time, should my wife file first for her retirement benefits and then I file for my spousal benefits, or should I file for my spousal benefit first and only then she files for her retirement benefits? Thanks, Will

Hi Will, First note that you’re conflating filing a restricted application with filing for and suspending your own retirement benefits. When you file a restricted application, it means that you are restricting the scope of your application to a specific type of benefit, such as spousal or survivor benefits. That can allow a person to potentially collect spousal or survivor benefits while allowing their own retirement benefit rate to keep growing. They can then later file an unrestricted application when they want to start drawing their own retirement benefits.

Filing for and suspending benefits is used when someone wants to become entitled to their own Social Security retirement benefits at full retirement age (FRA) or later, but doesn’t want to start drawing their benefits right away. Prior to 4/30/2016, many people filed for and suspended their benefits in order to allow their spouse to be paid spousal benefits. But starting on 4/30/2016 however, spousal benefits can no longer be paid if the worker whose record the benefit is based on has voluntarily suspended their benefits. That means that your wife couldn’t be paid her spousal benefits if you file for your own retirement benefits and suspend them. The soonest that she could potentially collect spousal benefits is when you actually start drawing your retirement benefits.

The second option you describe is for your wife to file for her Social Security retirement benefits, and for you to file a restricted application for your spousal benefits only. By restricting your application to your spousal benefits, you won’t be filing for your own retirement benefits and can thus continue to accrue delayed retirement credits (DRCs) until 70. Your wife couldn’t claim spousal benefits at least until you subsequently apply for your retirement benefits. You can file your restricted application for spousal benefits on the same day that your wife files for her retirement benefits, but not before her application is filed. Best Larry


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