Ask Larry: Will Filing Early Lower My Wife’s Social Security Spousal Benefit?


Today’s Social Security column addresses questions about possible of effects of taking retirement benefits early on a spouse’s benefits, making sure benefits begin the month you turn 70 and accounting for continued income after filing. 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.

Will Filing Early Lower My Wife’s Social Security Spousal Benefit?

Hi Larry, I’m thinking of retiring before my FRA but I wonder about some of the potential effects. Primarily, while I know of course that my benefit would be reduced, would taking my retirement benefit before FRA cause my wife’s spousal benefit to be reduced when she takes it? Thanks, Aaron

Hi Aaron, Claiming your benefits early won’t adversely affect your wife’s spousal benefit rate, but it would limit her potential survivor benefit rate to the higher of your reduced rate or 82.5% of your primary insurance amount (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).

The only adverse effect that your retiring early could have on your wife’s spousal rate might result from you stopping or reducing your work and earnings. Your PIA is based on an average of your highest 35 years of Social Security covered wage-indexed earnings, so if you stop working early then you won’t be increasing your PIA with higher years of earnings. And, since your wife’s unreduced spousal rate would be calculated based on 50% of your PIA, a lower PIA results in a lower spousal rate.

You and your wife may want to consider using my company’s software — xxxxx — 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

When Should I Apply For My Own Benefits?

Hi Larry, I’m currently receiving spousal benefits on the second Wednesday of each month. I will turn 70 at the end of May. What date should I apply for retirement benefits on my own record so that there is a clean break from spousal benefits, and to ensure my own retirement benefits start when I’m considered to be 70, and not before that? Is there a grace period they give to do this? Thanks, Steve

Hi Steve, Even if you don’t turn 70 until the latter part of May 2023, for benefit calculation purposes Social Security will consider you to be 70 for that full month. So if your own Social Security retirement benefit rate will be higher than your spousal rate, you’ll want to claim your benefits effective May 2023 in order to get your highest possible monthly benefit rate. Social Security allows you to submit your application for benefits up to four months in advance, so you can file your application now.

It isn’t called a grace period, but since you’re past full retirement age (FRA), you could apply for benefits up to six months after the month that you want to claim benefits. So, assuming that you want to claim your own benefits in 5/2023, you could apply as early as 1/2023 or as late as 11/2023. Best, Larry

Will Social Security Automatically Adjust My Benefit Rate If I Continue Working?

Hi Larry, If I apply for Social Security at 70 but continue to work well beyond 70, will my retirement benefit automatically adjust each year based on the highest 35 year formulation? If I have 20 years of substantial covered earning under Social Security at 70 and continue to work, will my WEP reduction automatically decrease each year? Thanks, Ben

Hi Ben, Yes. Social Security retirement benefits are based on an average of a person’s highest 35 years of Social Security covered wage-indexed earnings. If you have fewer than 35 years of covered earnings, zero earnings years are included in your average. If you continue to work and replace those zero years with years of earnings, then your yearly average along with your benefit rate will increase.

Even if you already have 35 years of covered earnings though, you can increase your benefit rate if you continue working and if you earn more than you did in one of your previous highest 35 earnings years after indexing for inflation. Such benefit recomputations are done automatically by Social Security.

And if your benefit rate is reduced due to the Windfall Elimination Provision (WEP) and if you have between 20 and 30 substantial earnings years, then additional years of substantial earnings can lessen the percentage WEP reduction. Those types of benefit adjustments are also done automatically. Best, Larry

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