How a ‘Start-Stop-Start’ Strategy Can Maximize Your Social Security Benefits
Larry Kotlikoff says that maximizing your Social Security benefits is more complicated than reaching retirement and receiving the “green light” to start collecting Social Security. In some cases, you could receive the highest amount of benefits with a “start-stop-start” strategy. Photo by Chris Voll/Flickr.
*Larry Kotlikoff’s [Social Security original 34 "secrets"](http://www.pbs.org/
newshour/businessdesk/2012/07/social-security-secrets-you-ne.html), his [**additional
social-se.html), his Social Security ["mistakes"](http://www.pbs.org/newshour/businessdesk/2012/08/11-social-security-mistakes-pe.html) and his [**Social Security
security-gotchas.html) have prompted so many of you to write in that we now feature “Ask Larry” every week.*
*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. Kotlikoff’s state-of-the-art retirement software is [available](http://
basic.esplanner.com/), for free, in its “basic” version. His considerable and often very useful output is available on his website.*
Before responding to emailers this week, let me first ask myself and then answer a question that our readers may find useful:
What is the “Start-Stop-Start” Social Security benefit claiming strategy and who can it help?
Start-Stop-Start is a term I’ve coined for starting your benefits prior to full retirement age, stopping them at full retirement age (this is done by filing a request with Social Security to suspend your benefits) and starting them up again at age 70 when they will be 32 percent larger due to the delayed retirement credit.
Following this strategy may make sense for married couples in which one spouse has reached full retirement age without having applied for his/her retirement benefit.
Let’s call the younger spouse Sue and the older spouse Alex. And let’s assume that Alex has just turned 66, which is his full retirement age. If Sue is 62 or older, she can let Alex collect “free” spousal benefits on her work history. But to do this, she has to apply for her retirement benefit early.
Having done so, Alex, because he’s reached full retirement age, can apply just for a spousal benefits and collect half of Sue’s full retirement benefit, while waiting until 70 to collect his largest possible retirement benefit. The spousal benefit that Alex receives between 66 and 70 is, effectively, “free,” since he is more than fully compensated for waiting to collect his retirement benefit at 70.
After 70, Alex will collect both this retirement benefit plus what’s called an excess spousal benefit. Unless Alex’s covered earnings were a lot less than Sue’s, his excess spousal benefit will be zero. The excess spousal benefit is not half of Sue’s full retirement benefit — her primary insurance amount (PIA). Rather it’s this amount minus Alex’s own PIA augmented by the delayed retirement credit. And if this difference is negative, it’s treated as zero.
But, let’s not forget Sue, who took her own retirement benefit at 62. In so doing, she condemned her own retirement benefit to be permanently reduced by 25 percent. Or did she?
In fact, she didn’t. When Sue reaches full retirement age, 66, she can suspend her retirement benefit and start them up again at 70. Furthermore, since she has reached 66 and Alex is now collecting his own retirement benefit, Sue can apply for a spousal benefit based on Alex’s work history. It will be calculated as her excess, not her full spousal benefit, but, hey, if it’s positive, it’s better than nothing.
Lora — Allen, Texas: I was married to my first husband for 23 years, and I am currently remarried. Can I draw Social Security from my first husband even if he is still living and at what age can I start drawing from him?
Larry Kotlikoff: You cannot collect spousal benefits on your ex’s earnings record since you are remarried. Nor can you collect survivor benefits, with one exception. If you remarried after age 60, you can collect survivor benefits based on your ex’s work history (of course only after he passes away).
Robert Rush — Queens, N.Y.: We are planning for my upcoming retirement. Although we both plan to wait to collect until our full retirement age, I was wondering how my passing (before then) would effect my wife’s ability to collect a survivor benefit early?
Larry Kotlikoff: Your passing would permit your wife to collect a survivor benefit starting at age 60. Your intent to both collect your retirement benefit at full retirement age (FRA) sounds like a mistake. It’s probably better for one of you to start collecting a full spousal benefit when that person reaches FRA and have you both collect your retirement benefit at age 70. See my first answer, above.
Mark M. — South Bend, Ind.: I am going to be 63 years old this summer and currently receive a pension from the utility company at which I worked for 37 years. Presently I am working full time but plan to go part-time and take Social Security this summer. My wife also works part time and averages $12,500 a year. Can she take a spouse option at 62 and draw her full Social Security benefit when she turns 66? She plans to work at her current pace until 66.
Larry Kotlikoff: This is probably the wrong move unless you have no other means of support. Yes, your wife can take her spousal benefit at 62, but she’ll also be forced to take her retirement benefit at 62 and her retirement benefit may wipe out or mostly wipe out her spousal benefit. What you want to consider is both waiting until 70 to collect your retirement benefits and having one of you collect just a spousal benefit starting as soon as possible after full retirement age. Or look at the “Start Stop Start” strategy referenced above.
Dennis — Stroudsburg, Penn.: I am a postal worker under Civil Service. I do not have enough quarters to collect SS. Could I collect under my wife’s working history or do I need to work for the quarters I need?
Larry Kotlikoff: You can collect a spousal benefit but it will be reduced due to the government pension offset (GPO) by two-thirds of amount of your Civil Service pension. If you have an option to wait to collect your Civil Service pension and can collect your spousal benefit immediately, it may be best to do so. The GPO doesn’t kick in until you start collecting your pension from non-covered employment.
Cynthia Clarkson — Petaluma, Calif.: I am 63, working, but not receiving Social Security benefits. My ex-husband of 18 years is receiving $1200 a month in Social Security benefits. At age 66, I am eligible for my own benefits of $1200 a month. Can I receive spousal benefits now and then apply for my own benefits later?
Larry Kotlikoff: No. If you apply for spousal benefits now, you’ll be forced to take your retirement benefit as well. Consider waiting until 66 to collect your spousal benefit. It won’t be reduced and you’ll get the full spousal benefit (half of your ex’s full retirement benefit), not the excess spousal benefit (half of his full retirement benefit less your full retirement benefit), which could end be negative, in which case it will be set to zero. Under this strategy, you’d wait until 70 to collect your own retirement benefit. But this may or may not be the very best you can do depending on your earnings history and that of your spouse.
This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions