Ask Larry: How Do I Estimate Social Security Benefits If I Don’t Know My Ex’s Earnings?

BY Paul Solman and larry kotlikoff  August 27, 2012 at 10:10 AM EST

Retirement Plan
Retirement plan image by Kick Images via Getty Images.

Retirement expert Laurence Kotlikoff advises Making Sen$e readers on various Social Security subjects, including how to determine what benefits one might receive even if they don’t know their ex’s entire earning history. For additional Social Security advice, you can check out Larry’s Social Security software, www.maximizemysocialsecurity.com/. Unlike Making Sen$e, however, it is not underwritten by viewers like you and the Sloan Foundation, among others, and therefore costs money.

Kotlikoff’s Social Security “secrets” and his answers to your questions (Answers to Benign and Scary Social Security Questions, Social Security Confusion: Our Expert Dispels Some More and 11 Social Security Mistakes People Make) have prompted so many of you to write in that we decided to inaugurate a regular feature here on Making Sen$e — “Ask Larry.” You can read last week’s installment here. We are determined to continue it until the queries stop or we run through the particular problems of all 78 million Baby Boomers, whichever comes first. We run “Ask Larry” on Mondays, where he takes my seat as the sage of the day. Unlike my answers, his are short and sweet (or, for some emailers, bitter) and so he takes on half-a-dozen questions or so, instead of just one.

Ginger Hill: When I turn 60 in Aug. 2013, will my pension, as a widow, have cost-of-living raises added or will it be the amount my husband was drawing when he passed?

Larry Kotlikoff: It will have the cost of living raises added.

Jenifer Fisher: I have been reading the 34 Social Security Secrets You Need to Know Now. It seems complicated. I am divorced so I don’t have access to my ex-husband’s earnings records in order to use the maximizemysocialsecurity calculator.
My ex was the higher wage earner. I am 63 and wonder if I should take benefits now (my ex has not filed yet for benefits) based on my earnings record and at my full retirement age (or later) take spousal benefits? Would the spousal benefits be reduced by the amount of benefits I had already received?

Larry Kotlikoff: You can estimate earnings. But can’t you ask, bribe, beg, cajole your ex-husband to supply them? Or, if you are at age 62 or over, Social Security should at a least supply you with a calculation of your spousal benefit. It’s outrageous that ex-spouses can’t get full access to this information. It is, after all, their property — their spousal benefit — that’s at stake. I’d call my Congressman and ask him to call the Office of the Actuary and demand they make this information available to ex-spouses. Now, to your other issue. What you do and can do has nothing to do with what your ex does, leaving aside your killing him which would entail his dying and entitle you to his survivor benefits. (Note, I’m trying to be as funny as Paul and failing. Also, don’t kill him. Good, now I’ve fulfilled my unofficial fiduciary obligation.) If you take your benefits now, you’ll be forced to take both your retirement and spousal benefit (if you qualify for one) now and both will be permanently reduced. If you wait until full retirement age, you can collect just your spousal benefit and then at 70 you can apply for your largest possible retirement benefit.

Carol Patterson: Is there a disadvantage to collecting survivor’s benefits at age 60?

Larry Kotlikoff: Yes, they will be dramatically and permanently reduced compared to taking them later. But there is no advantage to waiting beyond full retirement age to take your survivor benefits. The best strategy may be to take your survivor benefits early, even as early as 60, and your retirement benefit at 70. Or the best strategy may be to take your retirement benefit starting at 62 and your survivor benefit at your full retirement age, which for you would be 66.

Dave Hultgren: I was a Federal Government employee with 37 years to my credit. My wife worked very little in her younger years before our marriage in 1962. While on active duty with the Air Force and without my knowledge, no Social Security payments were withheld, as was done during the rest of my career until heart problems forced my retirement. I have worked since 1957 and now collect only $345 per month. What are my options as the Social Security Administration has cut me and the wife claiming they made a mistake and overpaid us?

Larry Kotlikoff: I’d talk to the Office of the Actuary to make sure you have been treated fairly. This penalty for being on active duty just doesn’t sound right. I’ll ask Paul for your email address so we can discuss this over the phone.

Suzanne: My husband is claiming his Social Security. I’m now just unemployed, over 62. Can I claim reduced spousal benefits now and wait to claim on my own work record when i hit full retirement age without a penalty?

Larry Kotlikoff: No, you will be deemed to be applying for both. This is one of Social Security’s gotchas. There are different ways to go here depending on your circumstances. If your husband has collected for less than one year, it may even be best for him to pay back everything he received and wait a while to start collecting. Need to know more details of your situation to give you decent advice.

Mimi: My husband receives Social Security disability. We are both age 63. I intend to work until age 66 1/2. If I chose to wait until age 70 to receive my Social Security benefits and draw the spousal benefit, what amount will my spousal benefit be based on — the Social Security disability amount or the regular Social Security amount?

Larry Kotlikoff: I take it you are talking about taking your spousal benefit at full retirement age? There is nothing to be gained by waiting beyond full retirement age to take your spousal benefit. At full retirement age you can apply just for your spousal benefit and then wait until age 70 to collect your highest possible retirement benefit. This may be your best option.

This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions