Will Early Social Security Retirement Benefits Reduce My Wife’s Later Spousal Benefits?

Today’s Social Security column addresses questions about how early retirement benefits can affect spousal benefits taken after full retirement age, whether earning $2 over the limit can disrupt disability benefits and being able to receive retirement benefits after survivor’s benefits. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc.

Will Early Social Security Retirement Benefits Reduce My Wife’s Later Spousal Benefits?

Hi Larry, I have your (revised) book Get What’s Yours and it is excellent. I have a question about spousal benefits because I am getting conflicting advice.

I was born in 1958 and my wife was born in 1959. She was a homemaker and has a much smaller expected PIA than me, so when I take retirement benefits her spousal benefit will be larger than her retirement benefit. I am going to defer taking my retirement benefits until I am 70 to maximize my benefit and my wife’s widow’s benefit if she survives me.

We had planned to have her take her retirement benefit early at 62 just to have some benefits in the intervening seven years though we can delay hers as well with no problem. I will not take a spousal benefit on her retirement benefit because I don’t want to be deemed. I had expected that she could take a retirement benefit on her own record, from age 62 and when I file at 70, she’ll then take spousal benefits.

I had expected she could get 50% of my PIA. However, an advisor has said that if she takes her own retirement benefit early, then when she takes a spousal benefit at 69, that will also be reduced.

If my wife takes early retirement benefits on her own record, when she take her spousal benefit seven years later, will it be reduced also or will she get the full 50% of my PIA? Thanks, Charles

Hi Charles, The short answer is that if your wife starts drawing her retirement benefits early then she won’t receive a full 50% of your primary insurance amount (PIA) when you start drawing your retirement benefits.

The reason is that your wife can’t actually switch from drawing her own benefits to drawing just spousal benefits. Once a person files for their own Social Security retirement benefits, those benefits continue for the rest of their life. If they later become eligible for a higher spousal or survivor benefit they can apply for an excess spousal or survivor benefit, but they can’t simply switch to the other benefit.

The good news is that even if your wife starts drawing her own benefits early, she can still get 100% of your benefit rate as a widow if she’s at least FRA when she starts drawing widow’s benefits. So if you wait until 70 to start drawing your retirement benefits, your wife could get your full age 70 rate as a widow even if she starts drawing her own benefits early. She wouldn’t get both her own benefit amount and your amount, though, just the higher of the two.

You 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

If I Earned $1,312 In A Month Is It Considered Over The $1,310 SGA Limit?

Hi Larry, I’m on Social Security disability and for the first time, I recently earned over the amount allowed per per month of $1,310 by only $2. Will this interrupt my disability benefits? Thanks, Beth

Hi Beth, The answer’s yes, but whether or not it will affect your benefits depends on a number of factors. Even if you’ve completed your nine month trial work period (TWP), as long as your period of disability was never previously ceased and resumed because you’re in an extended period of eligibility (EPE), then a single month of above substantial gainful activity (SGA) level wouldn’t stop your SSDI benefits as long as your average monthly earnings are below SGA level.

Furthermore, Social Security counts the amount you earn in a month, not the amount that you’re paid. So if the reason that your earnings were over the SGA guideline is because of an extra pay day during the month, then it’s likely not a problem. What I would advise you to do, though, is to notify Social Security ASAP to explain the circumstances so that you can provide any documentation needed, such as pay slips, etc. Best, Larry

Can I Draw From My Own Record Instead Of Continuing To Draw Survivor Benefits?

Hi Larry, I’m drawing survivor’s benefits from my deceased wife who did not work much. Am I locked in to my widower’s benefit or can I switch to my retirement benefit, which is larger? Thanks, Roger

Hi Roger, The answer to your question depends on your age. You’d have to be at least 62 to qualify for Social Security retirement benefits, and your benefit rate would be reduced for age if you start drawing prior to your full retirement age (FRA).

For your information, though, just because you earned more than your spouse doesn’t necessarily mean that you’d be due a higher benefit rate on your own account. Social Security benefits are calculated based on the worker’s average earnings in the years used to compute their benefit amount.

Basically, the higher the average, the higher the benefit rate. Social Security retirement benefits are based on an average of a person’s highest 35 years of Social Security covered wage-indexed earnings, whereas survivor benefits can be based on as few as 2 years of a worker’s earnings depending on their age at the time they died.

Therefore, survivor’s rates can be quite high in some cases even when the deceased worker only worked for a short period of time. Plus, Social Security cost of living (COLA) increases are added to survivor benefit rates starting with the year after the worker’s death.

Also, your retirement benefit rate would continue to grow until you reach age 70 if you wait until then to claim your own benefits. Best, Larry