Ask Larry: Will My Current Income Increase My Social Security Benefits?

Social Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.

Today’s post whether continued income can increase benefits amounts, delaying past FRA, sequencing survivor and retirement benefits and the potential effects of other retirement systems on Social Security benefits. Larry Kotlikoff is the founder and president of Economic Security Planning, a company that markets Maximize My Social Security, a Social Security benefits calculator referred to in this post.

See more Ask Larry answers here.

Ask Larry about Social Security:

Will My Current Income Increase My Social Security Benefits?​​

Hi Larry, Will The $40,000 I Earned Last Year Increase My Benefit Rate? I’m 69 and still working and filed three years ago. Thanks, Donny

Hi Donny, Maybe but maybe not. Your Social Security retirement benefit rate is based on your highest 35 years of wage-indexed earnings. If the $40,000 you earned last year is higher than one of your previous highest 35 years of indexed earnings, then your rate should go up. Social Security should automatically increase your rate if an adjustment is due, but you can request a manual recalculation by contacting Social Security and submitting proof of your 2016 earnings (e.g. W-2 form). Best, Larry

Is There Any Reason For Me To Delay Filing For My Own Benefits Past FRA?​​

Hi Larry, I am going to be 66 soon so I am not subject to the extended deeming rule. I was thinking of filing for my Social Security retirement benefits at FRA. However, they are very low since I didn’t earn much money over my working life. They will be about $559 per month. My husband will be 66 six months later He will then file for his retirement benefit which will be about $2,569 a month. I will already be 66 by then. Is there any benefit in my filing for my spousal benefit, when he files? Should I file on my record first and then for spousal benefits? Thanks, Mona

Hi Mona, Yes, it sounds like you should file on your own record at age 66 and then file for an excess spousal benefit on your husband’s record when he starts drawing his benefits. There almost certainly wouldn’t be any reason to wait past age 66 to start drawing your retirement benefits since your spousal rate would exceed your own rate even if you waited until age 70 to start drawing on you own record.

An alternative strategy to consider would be for your husband to file just for spousal benefits only on your record when he reaches FRA and then switch to his own record at age 70. That would provide him with a 32% higher benefit rate for as long as he lives beyond age 70, and would also provide you with a 32% higher widow’s rate should he die first.

You and your husband can use an expert Social Security benefits calculator, such as my company’s software or other top shelf software to compare all of your options and determine your best overall strategy. Best, Larry

Can I File For Widow’s Benefits Next Year And Then Switch To My Record At Age 70?​​

Hi Larry, I am 64. My husband passed away in 2012 at age 76. He was retired at 65 and collected social security of $1,183 per month; mine on my record would be $2,035 per month if I wait to retire at FRA of 66. Instead, I hope to retire next year at 65. Can I file for my widow’s benefit next year while still allowing mine to grow, then switch to mine at age 70? Thanks, Lucia

Hi Lucia, I’m sorry for your loss. Yes, you can file for widow’s benefits first and then switch to your own record at age 70. The best time to file for your widow’s benefits depends on your work and earnings, but you would likely want to file for widow’s benefits as soon as your earnings will permit benefits to be paid. Expert Social Security benefits calculators as described in other answers can help you determine your best filing strategy. Best, Larry

Will My Husband’s FERS Retirement Affect My Ability To Receive Widow’s Benefits At Age 60?​​

Hi Larry, My husband is a federal firefighter and qualifies for special category retirement. We are currently preparing for him to retire in the next 18 months. We have some concerns because he will be retiring early and need to make sure in the event he does pass away I would qualify for widow’s benefits at 60 even though I would be getting a 25% benefit from his FERS annuity. Will the annuity or the fact he retires special category have any effect on me receiving widow benefits at age 60 if they are needed. Thanks, Carolyn

Hi Carolyn, Since your husband paid Social Security taxes on his wages while working under FERS, his annuity will have no effect on his Social Security benefits regardless of when he starts drawing it nor what category he retires under. Nor would any of that affect your Social Security widow’s or retirement benefits even if you receive a FERS survivor annuity.

What could affect your Social Security widow’s rate is when your husband chooses to start taking his Social Security retirement benefits. If he files when he’s first eligible at age 62, the highest possible widow’s rate that you could receive would be 82.5% of his full retirement age rate (PIA). And, if you become entitled to widow’s benefits at age 60, your widow’s rate would only be 71.5% of his PIA.

Conversely, if your husband waits until age 70 to start drawing his Social Security benefits and you become entitled to widow’s benefits at full retirement age or later, your widow’s rate could be as much as 132% of your husband’s PIA depending on his year of birth. Best, Larry

What Is The Impact Of Spousal RRB Benefits On Social Security?​​

Hi, Larry, My husband is 72 and draws Railroad Retirement Board (RRB) benefits. I have turned 62 and am now eligible to receive spousal benefits from the RRB. If I choose to have the RRB pay me spousal benefits, will that somehow trigger my own Social Security retirement benefit? I don’t want that to happen. I need to wait until full retirement age to begin accessing my Social Security retirement benefits. What I’m worried about is this provision by the SSA (since I was born in 1956):

If your birthday is January 2, 1954 or later, the option to take only one benefit at full retirement age no longer exists. If you file for one benefit, you will be effectively filing for all retirement or spousal benefits.

Thanks, Genevieve

Hi Genevieve, You don’t have to worry about this. Applications for Social Security benefits are not considered to be applications for Railroad Retirement benefits, and vice versa. So cross-program deeming doesn’t apply. Best, Larry

To learn more about your Social Security options, visit Economic Security Planning, Inc.

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