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Social Security rules are complicated and change often. For the most recent “Ask Larry” columns, check out maximizemysocialsecurity.com/ask-larry.
Editor’s Note: Boston University economist Larry Kotlikoff has spent every week, for over three years, answering questions about what is likely your largest financial asset — your Social Security benefits. His Social Security columns 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 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 before the changes from the Bipartisan Budget Act of 2015 went into effect. The three authors are now doing an overhaul of the book. The new version of “Get What’s Yours” should be out this spring.
Kotlikoff has been keeping readers updated on how the budget act changes a number of Social Security rules with “This is not how you fix Social Security,” “Congress is pulling the rug out from people’s retirement decisions” and “12 secrets to maximizing your Social Security benefits under the new rules,” as well as his answers to viewer questions. We’ll continue publishing updates on what this new law means for you. Stay tuned.
Many people are now being told they can’t get an appointment with Social Security before May. But there are those who are now 66 and need to file and suspend their retirement benefit before or on April 29. They need to do so in order to permit their spouse (if he/she was 62 before Jan. 2, 2016) or their young or disabled children to collect benefits on their work record while their own benefit is in suspension. This file and suspend strategy should be well known to regular readers of this column. Yet, how can one file and suspend before the deadline — if, indeed, this is the optimal strategy — if one can’t get in the Social Security door?
READ MORE: The Social Security pitfall we just learned about
The answer is to a) just go to your local office and sit there until they see you or b) file online. (Read here why filing online is ideal.) Either way, you need to make absolutely sure that the remarks section of the application, which is at the end of the application form, states that you are filing as of the day you go online for your retirement benefit and that you are also requesting your retirement benefit be suspended as of the day you go online.
Print out a copy of the application and keep it safe. You may need to use it to prove you did file and suspend by the April 29 deadline.
Stacey: Now what? Formerly, I had sent in a question regarding how my husband and I should take Social Security. Since we are eight plus years apart, you had stated he should wait until 70, and I should wait until full retirement to take a spousal benefit at 66 and then flip to mine at 70. Since I have the misfortune of being born after January of 1954, it seems the new rule has now taken away this option. He is now receiving Social Security. What is the best option for a couple in our position? How does this affect a women who becomes a widow?
Larry Kotlikoff: The new law doesn’t affect widow(er)s. But, unfortunately, it has eliminated your ability to take a full spousal benefit between full retirement age and 70 and then take your own benefit at 70. What you can collect at full retirement age is your excess spousal benefit, but a) it may not be small or zero and b) you can’t suspend your own retirement benefit without wiping out your excess spousal benefit during the years of suspension. That, too, is a terribly nasty gotcha in the new law.
Careful software can help sort you out.
Dale – Kan.: I turned 62 this year, my husband is 63 and a half. He is not taking Social Security until he is 66. (He doesn’t want to wait until 70 to take his.) I want to wait until I’m 66 to hopefully get a spousal benefit on half of his Social Security and then take my own benefit at 70. Under the new law, am I still be able to claim a spousal benefit once I reach 66 on my husband’s Social Security record, and is there anything we need to know now in order to take the steps necessary to do this when I turn 66?
READ MORE: Don’t take a one-time payment. You can’t count on dying on time
Larry Kotlikoff: Unfortunately, you can’t collect just a spousal benefit at 66 and claim your own retirement benefit at 70. You are too young and will be deemed to be also filing for your own retirement benefit at 66. So your best bet may be to wait until 70 to collect your retirement benefit and forget about your spousal benefit. This will likely be your best bet if your excess spousal benefit is zero or very small.
Barbara – Ind.: I will turn 66 in July 2016. I was married for over 10 years and have been divorced since 1993. (I have not remarried.) My ex-husband was born in 1953. I don’t know if he’s filed for Social Security. I want to keep working until I’m 70. Under the new rules, can I still claim the spousal benefit and collect it for the four years prior to filing for my own benefit? If so, do I need to file a “restricted” application? Can I still get the spousal benefit if my ex hasn’t filed?
Larry Kotlikoff: The answer is yes. You are old enough to have been grandfathered in. You can file an application that’s restricted to your divorced spousal benefit when you reach 66 in July.
Helen: My husband and I have had your book for a long time and accessed the Maximize My Social Security this past weekend in order to purchase a family report. Both are very helpful, but we still have questions which we hope you can address.
My husband was born in May 1947, and I was born in July 1950. Both of us work full time, make roughly the same salary, and based upon your book, we planned on waiting until 70 to claim our Social Security benefits. Now, with the changes which will occur on April 29, we would like to know if he should file and suspend prior to that date. I understand from one of your columns that it is best done online.
READ MORE: 12 secrets to maximizing your Social Security benefits under the new rules
My related question is how and when I would need to file for a spousal benefit. Can that also be done online? Would it have to be after my 66th birthday in July (when I reach full retirement age)? Finally, are there any downsides to this series of events (problems with deeming or any other negative result)?
Larry Kotlikoff: Yes, your husband needs to file and suspend before April 30th in order for you to start collect a full spousal benefit on his work record as soon as you turn 66 and while waiting until 70 to collect your own retirement benefit.
Francis – Delaware, Ohio: I am divorced after 20 years of marriage. I’m 59, and I’m just finding out about divorced spousal support (yea!) and then (ugh) missing out on spousal support. I will file for my full retirement benefit at 70. If my ex remarries, am I still able to receive his full benefit after he dies?
Larry Kotlikoff: Yes, if you earned enough, you won’t be able to collect an excess divorced spousal benefit. However, the new law didn’t affect divorced widow(er) benefits. So when your ex dies, you can collect what you would otherwise have collected. If it looks, for sure, that he will pass away before you reach 70 and if your age-70 retirement benefit is lower than your widow’s benefit, you’ll want to take your retirement benefit starting at 62, and depending on when your ex dies, take your widow’s benefit either when he dies or as soon as your widow’s benefit is no longer reduced by taking it early. If your ex took his retirement benefit early, this date at which your widow’s benefit will peak will typically be a year or two before full retirement age. This is due to the special RIB-LIM widow(er) benefit formula that applies to widow(er)s or divorced widow(er)s whose spouses or ex-spouses filed for their retirement benefits early — before full retirement age. (RIB-LIM stands for Retirement Insurance Benefit Limit.)
Rob – Austin, Texas: I am the older spouse (born in May 1947) and am currently receiving Social Security monthly payments. My spouse was born in September 1954, and our plan was that when she turned 62 in September 2016, she would file and suspend and start claiming spousal benefits on my account. With recent changes in the law, she cannot file and suspend, but can she still claim and receive spousal benefits? I plan to file and suspend before April 29, 2016 in order to gain some increase in benefits before I reached 70. Comments welcome, many thanks for your “bible.”
READ MORE: Congress is pulling the rug out from people’s retirement decisions
Larry Kotlikoff: Your wife is free to file and suspend. The new law does not keep people from filing for their retirement benefit at any age between 62 and 70 and subsequently suspending it at any age between full retirement age and 70 (One cannot, as you suggest, suspend one’s retirement benefit before full retirement age). But that’s not called for in your wife’s case. When your wife reaches full retirement age, you will be collecting your retirement benefit. This will permit her to file for her spousal benefit on your work record. But since she will turn 62 after January 1, 2016, when she files for her spousal benefit, she will be deemed to be filing for her retirement benefit as well, and Social Security will give your wife her retirement benefit plus an excess spousal benefit, which could be small or zero. Under the old law, your wife wouldn’t have been deemed after reaching full retirement age and could have received just her spousal benefit for four years. About what you should do, Rob, I don’t see how your filing and suspending is going to help you or your spouse.
Since you are already drawing, you probably should voluntarily suspend by April 29, since it will increase your age-70 benefit as well as potentially enabling your wife to receive an excess spousal benefit from October 2016 to April 2017 if she files at 62. We can’t be sure about the last part though, since we don’t know any benefit amounts. Only a very smart software program can tell whether or not this strategy is optimal.
Clark – Conn.: I had to be on Social Security Disability Insurance and Supplemental Security Income since age 35. Now, I’m 66, and my Supplemental Security Income was cut from my Social Security retirement benefits. I can’t live on this retirement benefit of $676 in Connecticut. The Supplemental Security Income was $77 and was cut off completely. I don’t know what to do. I have a hearing with the Social Security Administration on May 13, 2016. Can you refer someone to assist me in the hearing?
Also, I am having a hearing the same day for my Plan to Achieve Self-Support (PASS Plan) for the registered nursing program at Connecticut community colleges. I obviously can’t afford a lawyer.
I always wished to alert every Congressperson to how low Social Security can be for the disabled! But it occurred to me that they know it and don’t care.
Larry Kotlikoff: I find it outrageous that our country pays so little to people like you in such dire straits. I don’t know why your Supplemental Security Income was cut upon your reaching full retirement age. I’m not an expert on that program, but I don’t believe its age dependent. Keep me posted on your hearing. If I learn something that will help before your hearing, I’ll let you know.
Laurence Kotlikoff is a William Fairfield Warren Professor at Boston University, a Professor of Economics at Boston University, a Fellow of the American Academy of Arts and Sciences, a Fellow of the Econometric Society, a Research Associate of the National Bureau of Economic Research, President of Economic Security Planning, Inc., a company specializing in financial planning software, and the Director of the Fiscal Analysis Center. Kotlikoff's columns and blogs have appeared in The New York Times, The Wall Street Journal, The Financial Times, the Boston Globe, Bloomberg, Forbes, Vox, The Economist, Yahoo.com, Huffington Post and other major publications.
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