Ask Larry: Will We Be In Our 90s Before Breaking Even If We File For Social Security After 66?

Today’s column addresses questions about breakeven analysis and delaying filing, eligibility for divorced spousal benefits, suspending disability benefits at full retirement age and spousal benefit combined with foreign pensions. 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.


Will We Be In Our 90s Before Breaking Even If We File For Social Security After 66?

Hi Larry, I retired from a job in aerospace at 62 and my wife and I have been getting by living on savings and my company pension. She will continue to receive the same amount after I am deceased. We will both turn our full retirement ages of 66 before the end of the 2021. Her Social Security retirement benefits would be minimal compared to 50% of my retirement benefits at 66.

Given that her spousal benefits do not increase if I opt to wait even longer and earn delayed retirement credits, it seems that the 8% annual increase is not worth the wait. I have looked at various breakeven calculations and it seems that the breakeven point is way longer (close to 20 years or more) when you factor in both Social Security payments starting at age 66. Based on my calculations, even if I waited six months and filed at 66 ½, we would have to be over 90 years old before we came out ahead but I’m not sure if my calculations are appropriate. Could that correct? Thanks, Marc

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Hi Marc, If you’re just comparing the actual amount of benefits received, I don’t think that it would be possible for your breakeven point to be as late as when you’re in your 90s. In any case though, breakeven analysis should not be the only or the major factor you consider when deciding when to file.

For example, your wife’s unreduced benefit rate as a widow in the event that you die before her would be equal to the higher of either her retirement benefit rate or your retirement benefit rate. So if you start drawing your benefits at 66 instead of 70 for instance, your wife’s monthly survivor rate would be 32% lower than it would be if you had waited until 70 to start drawing your retirement benefits. For many couples, that is a bigger factor in their decision making than breakeven analysis.

One thing that I would say sounds likely in your case is that if your wife’s own full retirement age (FRA) retirement benefit rate, which is equal to her primary insurance amount (PIA), is minimal in comparison with 50% of your PIA, then she certainly wouldn’t want to wait past her FRA to claim her own Social Security retirement benefits.

The decision on when to start drawing benefits is up to you and your wife, but you may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to fully analyze your options so that you can make the best possible decisions for both of you. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry


Am I Eligible For Divorced Spousal Benefits?

Hi Larry, I’m looking into whether I’m entitled to a benefit from my ex-husband’s Social Security. Since we divorced, he has remarried. l am 65 and still work. Thanks, Claire

Hi Claire, The fact that your ex is remarried would have no adverse effect on your potential eligibility for divorced spousal benefits. You must be unmarried in order to claim divorced spousal benefits, and you could only qualify for divorced spousal benefits while your ex is living if 50% of his primary insurance amount (PIA) is higher than your own PIA. A person’s PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA).

Your ex must also either be at least 62 or drawing his benefits in order for you to be able to qualify for divorced spousal benefits, and your marriage to your ex would need to have lasted for at least 10 full years, which it sounds like it did. If you file for divorced spousal benefits, you’ll be deemed to also be filing for your own Social Security retirement benefits.

You could only be paid essentially the higher of the two benefit rates, and your benefit rate will be reduced if you start drawing before FRA. Also, if you file prior to FRA your benefits could be subject to withholding if you earn too much. If you wait until your FRA to file, your divorced spousal benefit won’t be reduced and you won’t be subject to the earnings test. Best, Larry


Have The Rules Changed On Voluntarily Suspending Benefits When Disability Benefits Convert To Retirement Benefits?

Hi Larry, My husband has been collecting disability. Later this month he turns 66, his full retirement age and his disability will convert to Social Security retirement benefits. After reading an article you published in Forbes, we called to suspend his Social Security payments and were told that he could not do so. Have the rules changed since you wrote that article in 2015? Thanks, Lisa

Hi Lisa, That rule has not changed and your husband absolutely can suspend his retirement benefits potentially starting as early as the month in which he reaches his full retirement age (FRA). However, you must request the voluntary suspension no later than the last day of the month prior to the month you want the suspension to start, so if you make your request for suspension in December then January is the earliest month that your benefits can be suspended. If your husband turns 66 this month and made a verbal request in November or before to Social Security to suspend his benefits, then Social Security should honor that request provided you can convince them that he did in fact make the request.

A written request for suspension isn’t actually required, but I would advise your husband to make his request in writing since he’s already been given misinformation on this subject by Social Security. If necessary, you can refer the Social Security representative with whom you speak to the third example in section A1 of GN 02409.110 in the Social Security operations manual. Best, Larry


Can My Wife Receive A Full Spousal Benefit On Top Of Her French Benefit?

Hi Larry, My wife has a French government pension from her teaching career, most of which was in the US. Some payment was also in USD and she has credits for US Social Security in her own right. I have applied for my Social Security retirement benefits at 69, and am interested if she is eligible for the full spousal benefit on top of her French benefit. She is 66 now. Thanks, Jeff

Hi Jeff, Yes, at least potentially. If the only other pension that your wife receives is a pension from a foreign government, that wouldn’t have any adverse effect on her Social Security spousal benefits.

Depending on how many US Social Security work credits your wife has earned, she may qualify for her own Social Security retirement benefits or a totalization benefit. Totalization benefits are a special type of benefit based on a combination of US work credits and work credits from other countries who have a totalization agreement with the US The US has a totalization agreement with France, so if your wife has at least six US Social Security quarters of coverage (QC) but fewer than 40 QCs, then she may qualify for a totalization benefit.

If your wife was born after 1/1/1954, she couldn’t file for spousal benefits without also filing for her own retirement benefits at the same time. In that case, she could only be paid the higher of her own rate or her spousal rate. However, if your wife was born prior to 1/2/1954, she could potentially file just for spousal benefits without also filing for her own retirement benefits.

I don’t have enough information about your and your wife’s benefit rates to be able to give you any advice about your filing options. You and your wife may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to fully analyze the options available to you in order to determine your best strategy for maximizing benefits. Note the software does not calculate totalization benefits, however. And as I noted above, Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry


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