Should I Suspend My Social Security Retirement Benefit To Collect My Spousal Benefit?

Today’s Social Security column addresses questions about how to take spousal benefits while delaying retirement benefits till 70, whether forming an LLC will avoid the effects of the earnings test and when divorced spousal benefits can be available. 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.

Should I Suspend My Social Security Retirement Benefit To Collect My Spousal Benefit?

Hi Larry, My husband both born in 1953. My husband will work until he turns 70 and I retired at 66. We have not filed for Social Security benefits yet as we were thinking about waiting to file until 70 to collect our maximum benefits. We are looking for your advice as to when I should file.

At 70, my husband’s estimated monthly benefits will ill be around $3,500 and mine at 70 will be about $2,250. Once my husband files at 70, should I file and suspend my retirement benefits and collect a spousal benefit? If so, will it be 50% of my husband’s benefit rate? Then at 70 I’d of course take my own increased retirement benefit. Thanks, Laura

Hi Laura, You would definitely want to claim spousal benefits when your husband starts drawing his benefits, but you wouldn’t do that by filing for and suspending your own benefits. If you file for and suspend your retirement benefits, you couldn’t be paid spousal benefits even if you qualify for them.

If you plan to wait until 70 to start drawing your retirement benefits, what you’ll want to do is file a restricted application for spousal benefits starting the first month of your husband’s entitlement to benefits.

Filing a restricted application means that you’re limiting the scope of your application specifically to spousal benefits only. You’ll then need to file a separate application for your retirement benefits when you want to switch to drawing on your own account, presumably at 70.

Also, your spousal benefit will be 50% of his primary insurance amount (PIA), which is equal to his full retirement age (FRA) retirement benefit amount, not 50% of his increased benefit at 70.

However, since both you and your husband were born prior to 1/2/1954, that opens up a number of other possible filing options that you may at least want to consider. You and your husband may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to ensure your household receives the highest lifetime benefits. 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 Better For Me To Be In An LLC?

Hi Larry, I’m 62 and I’m going to start Social Security this year. I started a part time delivery business to keep busy. Is it better for me to be an LLC? I will likely make under the allowable amount for Social Security. Thanks, Rick

Hi Rick, If your earnings don’t exceed Social Security’s earnings test exempt amount, it won’t matter whether your income comes to you directly or through a small corporation.

Any earned income that you have, which is any combination of gross wages and net earnings from self-employment, would count toward the Social Security earnings test exempt amount. The exempt amount in 2022 is $19,560. As long as you make less than that, your benefits won’t be affected. Best, Larry

Does My Ex Have To Be Drawing Benefits Before I Can Claim Divorced Spousal Benefits?

Hi Larry, Does it matter if my ex-husband is currently collecting Social Security retirement benefits or not before I can file to collect my spousal benefit while allowing mine to continue to grow until 70? He is currently 62 and I am 61. Thanks, Kim

Hi Kim, You can potentially claim divorced spousal benefits as early as 62 even if your ex isn’t collecting retirement benefits, but only if your ex is at least 62 and your divorce has been final for at least two years.

However, as long as your ex is still living, you could never apply for divorced spousal benefits while allowing your own benefits to grow until 70. Only people who were born prior to 1/2/1954 are allowed to do that. Best, Larry