Social Security rules are complicated and change often. For the most recent “Ask Larry” columns, check out maximizemysocialsecurity.com/ask-larry.
Boston University economist Larry Kotlikoff has spent every week, for over two years, answering questions about what is likely your largest financial asset — your Social Security benefits. His Social Security original 34 “secrets”, his additional secrets, his Social Security “mistakes” and his Social Security gotchas have prompted so many of you to write in that we feature “Ask Larry” every Monday. Find a complete list of his columns here. And keep sending us your Social Security questions.
Kotlikoff’s state-of-the-art retirement software is available here, for free, in its “basic” version. His new book, “Get What’s Yours—the Secrets to Maxing Out Your Social Security Benefits,” (co-authored with Paul Solman and Making Sen$e Medicare columnist Phil Moeller) was published in February by Simon & Schuster.
Watch Larry explain how Paul and his wife could collect an extra $50,000 in Social Security benefits:
The Supreme Court’s historic decision to legalize gay marriage means gay spouses can now collect spousal, child-in-care spousal, widow(er) and mother or father benefits regardless of what state they call home. It also means that gays who are divorced (and who had been married for 10 years or more) can collect divorcee spousal, divorcee child-in-care spousal, divorcee widow(er) and divorcee mother or father benefits.
Moreover, gay couples should know that they become eligible to collect spousal benefits after just one year of marriage and widow(er) benefits (if, heaven forbid, their spouse dies) after just nine months of marriage.
But the good news about gay marriage and Social Security comes with a cloud. My bet is that most gay spouses or eligible gay ex-spouses have little if any knowledge of these benefits and how to collect them. Why? Because the same appears true of the general population. Indeed, a recently released MassMutual survey found that 72 percent of respondents failed a very basic Social Security quiz.
What’s worse is that even some of the staff at Social Security seem to be clueless about the system’s actual rules. And when they don’t know, they have had a tendency to make up their own rules.
I’d love to design and administer a basic rules quiz for the folks administering Social Security. I’d start with the following question:
Can someone who took her retirement benefit early suspend her retirement benefit at or after reaching full retirement age and then restart it at a higher level before or at age 70?
The correct answer to this question is an unequivocal yes.
Whether it is in the person’s best interest to do so is a different question. As I’ve written before, for people who are collecting an excess spousal, excess divorcee spousal, excess widow(er) or excess divorcee widow(er) benefit, suspending their own retirement benefit may be a huge mistake. It can cost them years of benefits with no net increase in their check when they restart their retirement benefit at 70.
For someone who has never been married there are no excess benefits available. Thus, the above concern doesn’t apply to someone who has never been married.
I’m going to tell you about an unmarried 66 year old I am advising, who I’ll call Jane. Her experience with Social Security should serve as a warning to everyone, but particularly, gay spouses and gay ex-spouses who are now (or will become) eligible for Social Security benefits.
Jane took her retirement benefit at age 63. Having reached full retirement age, Jane called Social Security. She asked to suspend her retirement benefit so she could restart it at 70 at a 32 percent higher level, thanks to the accumulation of Delayed Retirement Credits during her period of suspension. She called five times, and each time she was given the wrong answer and told she could not suspend her benefit. In two of the five calls she was told she couldn’t suspend, because she hadn’t requested future suspension when she first filed at 63 for her retirement benefit. In one of the calls she was told she had to repay all benefits she had received in the past.
These answers were all wrong. The right to suspend your retirement benefit is clear as day. (And there is no requirement to repay anything, which only arises if one is withdrawing, not suspending one’s benefit. Additionally, withdrawals can only occur within a year of filing for one’s retirement benefit.)
Senior officials at Social Security’s Office of the Chief Actuary have confirmed the right to suspend one’s retirement benefit with me as of early last week.
I told Jane to go to the local Social Security office. At the local office, she met with a staffer who had been on the job for six months. He told her the same thing: “No, you can’t suspend your retirement benefit and restart it before or at age 70.”
Jane requested that he consult with a Technical Expert. After consulting with a Technical Expert, he told her that the Technical Expert had confirmed what he had originally said. Jane left thoroughly discouraged after six attempts to do what is legally possible.
Upon hearing this news, I called the office that she had visited and asked to speak to the Technical Expert who had misguided her. We did speak, although I didn’t mention Jane’s full name.
After explaining that I know a thing or two about the system and write this column and have co-authored a book, the Technical Expert said she’d check and get back to me about the question of suspension. I took this as a bad sign, since I posed Jane’s case as a generic situation and expected the Technical Expert to know the correct rule as clear as day.
Having not received any answer, I left a message Saturday morning and the Technical Expert’s boss—the local office manager—called me a couple hours later. He could not have been nicer. But he also said he didn’t know the rule on this and would need to check. He assured me that the last thing that Social Security staff want is to deny anyone from collecting benefits or higher benefits. Despite all the expressions of good will and intent, Jane applied my simple one-question quiz six times to six different Social Security staff and each time they failed.
This could well be another Social Security horror story, but an hour before this article was published, the local office manager called and redeemed himself and his staff. He informed me that, indeed, his office got it wrong, and Jane could certainly suspend her benefit now and restart it at 70. He also said that he would have a staff meeting to explain this rule in order to make sure that they would never make this mistake again.
The bottom line of Jane’s story is that in dealing with Social Security, everyone ought to follow this dictum: Tell them what to do, don’t ask them what to do. This is why Paul Solman, Phil Moeller, and I wrote “Get What’s Yours.” We’re trying to empower the public in dealing not just with Social Security’s rules, but with its staff.
Barry – Montvale, N.J.: I retired in 2014 at age 64. I was born in 1950. My first wife, Carol, died in 2000 at age 48. She was born in 1952. My current wife Nancy and I married in 2011, at which time I was 61 and one month and had been a widower for over 11 years. Nancy was born in 1957.
My intention was to wait until I was 70 and a half to begin collecting my Social Security benefits. What I want to know is this: Am I entitled to any survivor benefits? Can I could collect them now or do I have to wait until I’m 66? I know remarrying is an issue, but I was told that if one re-marries after a certain age, one may be eligible.
On another note, Nancy’s income is higher than mine. Is there any way for me to file and suspend in order to take advantage of that? And is there any spousal benefit under our present situation?
Larry Kotlikoff: You can and should file immediately for a widower benefit on Carol’s work record. You remarried after age 60, so you are eligible to collect a survivor benefit on a deceased or deceased ex-spouse (to whom you had been married at least 10 years). At 70, you’ll take your own retirement benefit. (This all assumes you own age-70 retirement benefit exceeds your widower benefit. If not, you may be better off filing on your own account now, and for widower’s benefits at age 66.) When Nancy reaches full retirement age, she should file for only her spousal benefit. At 70, she should take her own retirement benefit. If, God forbid, Nancy passes away, you can take a widower benefit on her work record. But at that point, depending on whether you were still below full retirement age, you’d want to run it through a very high quality commercial Social Security maximization program to determine exactly what to do.
Karen – Westlake, Ohio: Early on in my career and for about 10 years, I paid into the Social Security system. For the last 25 plus years I have been in the Ohio Public Employees System. I am considering taking a part-time job, which will require me to pay back into the Social Security system. What is going to happen to the Social Security I’ve paid once I retire from Ohio’s pension program in six years? I’m trying to decide whether or not it is worth my time and effort to take this part-time job.
Larry Kotlikoff: There are two very big reasons for you to purchase a high quality Social Security maximization program. Such a program takes into account the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) provision, which you will face when you try to collect Social Security benefits. The software also needs to carefully calculate the two ways your benefits will change as you accumulate more years of covered earnings. First, your benefits will go up, because you will be adding non-zero years of covered earnings to your work record, thereby raising your Average Indexed Monthly Earnings, which determines your retirement benefit. Second, they may go up, because you will be adding additional years of substantial covered earnings. The current annual threshold for this is $22,050. Also, if Ohio’s pension can be deferred and started later at a higher value that fully compensates you for waiting, you’ll want to consider deferring it and starting your Social Security retirement and other benefits you may be eligible for based on your current or ex-spouses. The Windfall Elimination Provision and Government Pension Offset don’t kick in until you start taking your non-covered pension.
Keith – Santa Cruz, Calif.: I’ve been on Disability since 1993. I get $1840 a month now, but how will this change once I reach retirement age in two years? I was only 43 when I was put on disability, and as I understand it, I won’t have the 35 years required for Social Security. What will happen to me?
Larry Kotlikoff: Your Disability Insurance check will be called your full retirement benefit once you reach full retirement age. You’ll collect your Disability Insurance check until full retirement age and still collect it thereafter, but it will just be under a different name. At full retirement age, you will have the option of suspending your retirement benefit and restarting it at 70 at a 32 percent higher level after inflation. If you decide to do this, you’ll need to pay your Medicare Part B premiums out of pocket.
Anonymous – Berkeley, Calif.: Do spousal benefits depend upon on one’s spouse being 65 or older? I am 65, but my spouse is 57. He won’t retire for several years. Can I collect spousal benefits on his earnings now or do I have to wait until he is 65? (I realize that his earnings would be higher if I waited, but who knows how long I’ll live!)
Larry Kotlikoff: Your spouse must be entitled to retirement or disability benefits for you to collect a spousal benefit or an excess spousal benefit on his work record. The earliest he can qualify for retirement benefits is age 62.
Michelle – Rome, Ga.: I’m representative payee for my deceased sister’s young child, who is under 16. The child is with me because my sister’s husband—the child’s father—has no stable residence. Is my sister’s husband eligible for survivor benefits due to having a child under 16, even if the child doesn’t live with him?
Larry Kotlikoff: I don’t believe the father can collect a Fathers Benefit if the child is not in his care. The child can collect a child survivor benefit through age 19 if he or she is still in high school, or he or she can collect it indefinitely if he or she is disabled.