Today’s column addresses questions about spousal benefits, returning to work after disability benefits, retirement benefits before survivor benefits and decreasing what counts as substantial covered earnings due to the coronavirus shutdowns. 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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Can I Collect Social Security Spousal Benefits On My Wife’s Record?
Hi Larry, I just retired at 62 having worked for the Postal Service under the Civil Service Retirement System. I have 39 quarters under Social Security and I am working part time to secure my final and needed quarter. I realize my Social Security benefit will be reduced by the Windfall provision and also the Government Pension Offset. I can collect $500 a month under my work record now which will be reduced to about $250. I will be held harmless later when I take Medicare Part B. Can I collect under my wife’s work record or is that where the Government Pension Offset comes in? And since my pension is higher than her SSA benefit, I would not get anything from her record? She is 60 and still working. Thanks, Gene
Hi Gene, Just to clarify, the Windfall Elimination Provision (WEP) only affects Social Security retirement and disability benefits paid based on a person’s own Social Security earnings history. The Government Pension Offset (GPO), on the other hand, only affects auxiliary or spousal benefits payable on another person’s record, such as spousal or survivor benefits. The GPO reduces spousal and survivor benefits by 2/3rds of the amount of a person’s non-covered government pension.
You couldn’t file for spousal benefits until your wife starts drawing her benefits, and if you’re already drawing your CSRS pension at that time it sounds like your spousal rate would be almost certainly be reduced to zero.
Your own Social Security retirement benefit rate will likely be reduced due to the WEP assuming that you’re already drawing your CSRS pension, but neither the WEP or the GPO kick in until you actually start collecting your non-Social Security covered pension. The WEP never reduces a person’s own Social Security benefit rate to zero, though, so as long as you have at least 40 quarters of Social Security covered earnings, you’ll be able to draw at least some Social Security retirement benefits.
My company’s software — Maximize My Social Security or MaxiFi Planner — is fully programmed to handle computations involving both the WEP and the GPO, so you may want to us it to help with your Social Security planning. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry
If I Return To Work And Stop Collecting SSDI Can I Delay My Retirement Benefits Until 70?
Hi Larry, I am 58, and I have been collecting SSDI since 50. My full retirement age is 67. If I go back to work and stop collecting SSDI, am I eligible to delay my social security retirement benefits to 70? Thanks, Bob
Hi Bob, Yes. If your Social Security disability (SSDI) benefit entitlement is terminated prior to your full retirement age (FRA), you would be free to file for your Social Security retirement benefits whenever you wish.
However, even if your SSDI doesn’t terminate and converts to regular Social Security retirement benefits at FRA, you could voluntarily suspend your benefits at that point in order to earn delayed retirement credits (DRC). If you voluntarily suspended your benefits for the full 3 years between your FRA of 67 and 70, your benefit rate would then be 24% higher when your payments resume at age 70. Best, Larry
Could I File For My Own Benefits At Age 60 And Then Switch To Widower Benefits At 62?
Hi Larry, My wife, born in 1952, passed away in 2011. She was nine years older than me. I will be turning 60 in January of 2021. My Social Security is less than hers. I am wondering if I can draw on mine at 60 and then switch and draw on hers after I turn 62? Thanks, Arthur
Hi Arthur, I’m sorry for your loss.
The earliest that you could collect your own Social Security retirement benefits is at 62. The only way that you could draw benefits on your own record before then is if you’re disabled and you qualify for Social Security disability (SSDI) benefits.
Depending how much you’ll be earning if you’re working, and how much less your own benefit rate is compared to your potential widower’s rate, your best filing strategy is almost certainly either to file for reduced widow’s benefits at 60 or as soon as your earnings will permit at least some benefits to be paid, then switch to your own record at 70; or to file for reduced retirement benefits on your own record at 62 or as soon as your earnings will permit at least some benefits to be paid, then file for unreduced widow’s benefits at full retirement age (FRA). Best, Larry
Has Anyone At The Federal Level Considered Reducing This Year’s Substantial Earnings Amount Given The Current Economy?
Hi Larry, I continue to work, have a small monthly pension from a state retirement fund and am collecting Social Security benefits. My monthly SSA benefit checks are reduced somewhat with the WEP based on my state retirement pension.
I have been whittling that WEP deduction down each year by continuing to work and currently have logged 27 years of Substantial Earnings, with three to go before that WEP deduction is completely eliminated. I see that the published Substantial Earnings (SE) minimum for 2020 is $25,575. Due to the coronavirus shutdowns, I am going to be out of work for at least three months during 2020. That enforced downtime is going to make hitting that SE minimum problematic this year. I am sure I am not the only one in this situation. Has anyone at the federal level looked at that minimum and considered reducing it? I would think it’s only fair that consideration be given to those out of work who are going to have a harder time meeting the SE requirements that were put in place prior to the nationwide shutdown. Thanks, Carl
Hi Carl, Your point is well taken, but I’d be surprised to see a change in the substantial earnings amount currently set for 2020. It would require an act of congress to change the amount, and I assume that congress has their hands pretty full right now. I’m guessing they’d consider amending the substantial earnings amount to be rather low on their list of priorities, but I don’t actually know whether or not a change is being considered. You may want to try presenting your proposal to your representative in congress, or at least to someone in his or her office. Best, Larry
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