Herm and Flo Dorion celebrated their 70th wedding anniversary on July 11. Social Security expert Larry Kotlikoff answers readers’ questions on retirement, including when to take spousal benefits. Photo by Autumn Cruz/Sacramento Bee/MCT via Getty Images.
Larry 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’ve decided to inaugurate a regular feature here on Making Sen$e — “Ask Larry.” 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 plan to run “Ask Larry” on Mondays, where he’ll take my seat as the sage of the day. Unlike my answers, his will be short and sweet (or, for some emailers, bitter) and so he’ll be taking on half-a-dozen questions or so, instead of just one.
Here, then, is our first Monday “Ask Larry.” You are encouraged to keep your questions coming in.
J. Stout: Regarding point 16: After my husband died, we were granted spousal and children benefits. I started working full-time, and I received a letter stating I was only allowed to make approximately $17,000 a year and had to pay back $1 of benefit for every $2 I made over the limit. The monthly benefit was restricted, and I had to write the Social Security Administration a check. So why should one not be worried about making too much money? I used the insurance money to go to nursing school to support my family since Social Security was not enough.
Larry Kotlikoff: Point 16 doesn’t refer to mothers’ and fathers’ benefits. You were receiving a mother’s benefit. It’s not reduced to begin with, so it’s not increased later if you lose benefits due to the earnings estimate. I added point 40 to make this clear.
Judy: My husband and I are both on disability. I am 64 and he is 68. Would it be to our benefit to switch to Social Security at this time, or is that not possible? Would it be more of a benefit for me to apply for spousal benefits when I reach 65?
Larry Kotlikoff: People on disability are automatically rolled over onto Social Security retirement benefits when they reach full retirement age. This means your husband is no longer collecting a disability benefit. He’s actually collecting his Social Security retirement benefit. Your best strategy may be to wait until full retirement age, submit a restricted application just for your spousal benefit on your husband’s work record and wait until 70 to collect your own retirement benefit.
Kay C: I am 62 and my ex will be 62 next year. I would like to take Social Security benefits soon and wonder if I can take the “ex-spousal” benefits next year and put off taking my own until they go up at full retirement age (66)? If this is possible, would he and I need to file for benefits next year and then put a hold on mine? Could he also do the same in reverse?
Larry Kotlikoff: If you take your spousal benefit before full retirement, you’ll be deemed to be taking your retirement benefit as well because your ex is 62 or over. In that case, your retirement benefit will be permanently reduced. And if you are eligible for a spousal benefit in addition to your retirement benefit, it too will be permanently reduced. Your options are completely independent of what he does at this point. Same for him. You or he — or both — can wait until full retirement and both apply just for spousal benefits at that point and both wait until 70 to get your highest retirement benefits. But whatever he does doesn’t affect what you can do and vice versa. This is a benefit of being divorced compared to being married. Both of you can collect “free” spousal benefits starting at full retirement age. If you were married, only one of you could get free spousal benefits.
Keith: My wife, 59, is on Social Security disability and receives a monthly check. I am planning to retire at age 62 in a few months. What will happen to her Social Security Disability Insurance amount when I start my own Social Security? Does my amount get reduced because she is already receiving SSDI?
Larry Kotlikoff: Nothing will happen to her check. When she is at full retirement age, her DI benefit will convert to her Social Security retirement benefit. At this point, she could suspend its collection and wait, say, until 70 to collect — in this case, a benefit that’s 32 percent higher. If you are taking a retirement benefit when your wife reaches age 62, she can apply for a reduced spousal benefit. But it may be better for her to wait for full retirement age so she avoids having her spousal benefit be reduced. If you start collecting a retirement benefit at 62, you will not, as I understand it, be deemed to be applying for a spousal benefit because your wife is not yet age 62 or older. Once she hits 62, you can apply for a spousal benefit, but it will be reduced if you are under full retirement age when this occurs. Also, if you were the high earner, you probably won’t qualify to get a spousal benefit. Your best option may be to wait until you reach full retirement age, apply for only a spousal benefit, make sure you pay your Medicare Part B premiums by sending SSA a check each month, and then wait until 70 to get your highest possible retirement benefit.
Wally Wright: How can I help a 75-year-old homeless person who is an un-medicated schizophrenic get Social Security benefits? The only means of very limited communication with him for the past 30 years is a post office box number in a town 1,000 miles from Houston. He obviously trusts no one, and the situation is very delicate.
Larry Kotlikoff: He should be eligible for Supplemental Security Income, but check with Social Security.
Bob Jennings: I believe the file-and-suspend strategy in several of your points may have been rendered impossible to do since the Social Security Administration limited the file-and-suspend strategy last year to being performed only once in your life — and only within 12 months of starting benefits under SSA 2009-0073 from December 2010.
Larry Kotlikoff: No, they limited to one year the option to repay all benefits received on your record plus Medicare Part B premiums paid out of your check and apply afresh for benefits as if you had never applied for benefits in the past. This had nothing directly to do with file and suspend.
As usual, look for a second post early this afternoon. And please don’t blame us if events or technology overtake us. This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions