Answers to Benign and Scary Social Security Questions
Ron Hillyer, who was a custodian in the D.C. public schools for 32 years before retiring, gets a group hug from students who remember him. Photo by Jahi Chikwendiu/The Washington Post via Getty Images.
Boston University economist Larry Kotlikoff’s post on Monday, “34 Social Security Secrets You Need to Know Now” is running second only to the Charles Murray “bubble quiz” in the annals of Making Sen$e, with nearly 100,000 views. But the “secrets” can be complex, confusing when you get down to individual cases. So we offered readers the opportunity to pose specific questions to Larry directly. Here’s the first batch, with his responses. Feel free to pose your own question in the comment box below. And be advised that Larry’s state-of-the-art retirement software is available here, for free, in its “basic” version.
richardinsf: Obviously none of this applies to same gender couples, married legally or not, since Federal law does not recognize same gender spouses as legal. That said, for single people, who are disabled before their retirement age, where is the guidance as to what happens when that person reaches retirement age? Does their disability roll over into a retirement payment? Is it the same benefit? Lower? Higher?
Larry Kotlikoff: Our software doesn’t incorporate disability benefits, at least for now. But disability benefits will roll over into retirement benefits when you reach full retirement and will be the same amount as far as I understand it.
Mediaspecialist: Any comment on a situation where one spouse receives benefits from a state public employee retirement system, and the other spouse is covered by Social Security?
Larry Kotlikoff: A worker who receives benefits from a job that was not covered by Social Security will be subject to the Windfall Elimination Provision (WEP) with respect to the calculation of his/her retirement benefit, and this WEP adjustment may reduce his/her retirement benefit on a permanent basis. If the worker, who, again, worked in non-covered employment, is receiving Social Security spousal or survivor benefits based on her husband’s/wife’s earnings record, these benefits will be subject to the Government Pension Offset provision and may end up with lower spousal and survivor benefits.
Erin Mansuetto: Can you tell me if you have school age dependents can you take the benefit at 62, suspend and still get the dependent benefits????
Larry Kotlikoff: You can’t suspend benefits at 62. You can only suspend after full retirement age. If you earn money and lose it due to the earnings test, the effects of the earnings test on your own retirement benefit will be undone at full retirement age by giving you a permanently higher benefit. But if you earn enough money, all of your retirement benefits and those of your child will be wiped out and your child will not recoup those lost benefits in the future.
Clemmarie: My husband is 65 and has been on disability for several years. You stated if I apply for my own early benefits I will permanently be reduced, but what if I just apply for spouse benefits and wait to apply for my own?
Larry Kotlikoff: If you apply for your spousal benefits early — before full retirement age — Social Security will deem you to be applying for your retirement benefit as well as your spousal benefit. After full retirement age, you can apply for just your spousal benefit, but not before, IF your husband has filed for his own retirement benefit before you apply for either your spousal or retirement benefit. In your husband’s case, the fact that he’s receiving disability benefits is viewed, as far as I understand, as if he had filed for his Social Security retirement benefit even though he won’t do so until he reaches full retirement age — when Social Security will automatically convert his disability benefit to a retirement benefit.
This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions