Do I Need To Take Social Security In 2021 To Get The 2022 5.9% COLA?

Today’s Social Security column addresses questions about filing options given the 2022 COLA, when survivor’s benefits can be available and determining the best options for taking spousal benefits. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc.

See more Ask Larry answers here.

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

Do I Need To Take Social Security In 2021 To Get The 2022 5.9% COLA?

Hi Larry, My FRA was in October and I was going to wait until next year to collect my Social Security retirement benefit to pick up a few months of delayed filing credits. Should I instead file in 2021? Would I need to do so to take advantage of the expected 2022 COLA? Thanks, Frank

Hi Frank, You don’t need to file in 2021 to get the 2022 cost of living allowance (COLA).

All Social Security COLA increases that occur after a person turns age 62 are added to their Social Security retirement benefit rate whether or not they are drawing benefits. So if there is a COLA starting next year, it will be included in your benefit rate no matter when you start drawing your benefits.

Though you’d get a few months more of benefits, you’d give up the permanent delayed retirement credits (DRCs) you’d other wise accrue and you’d get the 2022 COLA either way.

You may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to fully analyze your options so you can make informed decisions about your best strategy for maximizing your benefits and avoid unknowingly leaving money on the table. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry

Can I Draw Widow’s Benefits And If So When?

Hi Larry, My husband passed away at age 56, due to cancer. He worked full time up until three months before his death. I was 48 when he passed away and our son was 18. I work as a cafe manager with the school district and I am in a teachers retirement program.

We do not pay into Social Security. I have been in this job for 26 years. I worked at jobs that paid into Social Security from 1984-1994 and then off and on with second job since 2015. Can I draw Social Security widow’s benefits, if so at what age? Thanks, Ana

Hi Ana, I’m sorry for your loss. It sounds like you could qualify for widow’s benefits as early as 60, but once you start drawing your pension from the school system your widow’s benefits will almost certainly be offset by 2/3rds of the amount of your pension due to the government pension offset (GPO) provision.

That could reduce your widow’s benefit amount to zero unless your widow’s rate is more than 2/3rds of the amount of your teacher’s retirement pension.

You may be able to file for widow’s benefits before you start drawing your teacher’s retirement pension, in which case no offset would be applied to your widow’s benefits until you file for your teacher’s retirement pension.

However, if you claim widow’s benefits prior to your full retirement age (FRA), your benefit rate would be reduced for age and your benefits could be subject to full or partial withholding due to Social Security’s earnings test.

Your best filing strategy depends on a number of factors. Best, Larry

What Are Our Spousal Benefit Options?

Hi Larry, The pandemic closed the company l’ve worked for this year after 26 years. I will be 62 in 2022 and am considering taking my Social Security earlier than my FRA of 67. My spouse is going to continue to work until his FRA in 2022.

What are our options regarding Social Security spousal benefits? We both have 401ks and he also has a pension available to him. Thanks, Laurie

Hi Laurie, My answer assumes that your husband was born after 1/1/1954. You can’t qualify for spousal benefits at least until your husband starts drawing his benefits, and your husband couldn’t apply for spousal benefits without also being required to apply for his own benefits at the same time.

Basically, neither of you will qualify for spousal benefits unless one of your primary insurance amounts (PIA) is more than twice as much as the other spouse’s 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).

You could file for your own reduced benefits at 62 and then apply for spousal benefits when your husband claims his benefits but as I mentioned above, you’ll only be eligible for spousal benefits if your husband’s PIA is more than double the amount of your own PIA.

It sounds like you and your husband may want to my company’s software to explore all of your options. Software designed by other companies can also be helpful as long as they are also engineered with great care. Best, Larry