Is my Social Security check fair?

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Larry Kotlikoff’s 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 now feature “Ask Larry” every Monday. Find a complete list of his columns 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. Let us know your Social Security questions. Kotlikoff’s state-of-the-art retirement software is available here, for free, in its “basic” version.

Judy — Winston Salem, N.C.: My husband Joe died at age 68. He had been getting his Social Security since he was 66. I was 64 and still working at the time he passed away. Social Security told me that I was not eligible to draw widows benefits until I turned 66 and was eligible to draw my own benefits. I never understood this since my husband’s death had taken all of my income away, except for my own paycheck. I have asked this question several times, and each time I get a different answer from the Social Security office. I now get his Social Security check since his was a tad larger than mine. I have not received any of my own benefits — only the widows benefits. Is this fair?


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Larry Kotlikoff: You were eligible to collect widows benefits at 64, so Social Security told you something that wasn’t true if that’s precisely what they told you. But they may have told you that your earnings were such that you’d lose your widows benefit via the earnings test. In this case, waiting until full retirement age would be required before you’d actually collect any money as a widow.

The fact that you worked perhaps your entire life and are not going to ever receive a penny in retirement benefits based on your own years of FICA tax contributions is, to me, grossly unfair. It’s like a husband who’s married to a wife with a retirement account buying life insurance to protect his wife, and then when he dies, her retirement account being wiped out, leaving her with only the proceeds of the life insurance policy.

Arlene — Houston, Texas: I am 69 years old and my husband died three years ago when he was 68. When he died, I started receiving widows benefits. I have never filed for my own Social Security benefits since I am still working. When I do leave my job, which will be after I am 70, am I also qualified to receive Social Security benefits under my name along with the widows benefits?

Larry Kotlikoff: You won’t receive both, just the larger of the two. So if your own age-70 retirement benefit exceeds the widows benefit that you are now collecting, you’ll get a higher check, but it may not be much higher. If this isn’t the case, you’ll just continue to collect your widows benefit and receive not a penny more in benefits based on all your years of contributing to the system. This is, of course, outrageous — the result of no-doubt well-meaning social engineering by petty bureaucrats whose notions of fairness were never put to popular vote.

William — Amarillo, Texas: Is it necessary to file and suspend when I am 66 if I intend to wait until I am 70 to collect? I thought I just wouldn’t file at all until age 70. I am 65 and a half; my wife is 60. My income has been much greater than hers. Is it best if my wife files and takes benefits early at 62? Or should she wait till 66? I know it’s best for me to wait until 70 since if I died, as I understand it, she would get the full benefit of mine. I was going to wait to message you until I was 69 until I noticed the file and suspend comment.

Larry Kotlikoff: ​If you never married, I’d tell you to file and suspend your retirement benefit at full retirement age​ and restart your retirement benefit at age 70. This would give you the option, in an emergency where you needed a large infusion of cash, to request a lump-sum payment of all your suspending benefits — albeit at the cost of having your retirement benefit from then on set at its full retirement level (i.e., with no adjustment for the delayed retirement credit).

But in your case, it might be best for your wife, at age 62 or somewhat later, to file for her retirement benefit, at which point you can file just for a spousal benefit based on her work record. Then at 70, you’d go for your own retirement benefit.

Alternatively, it may be best for you to file and suspend at full retirement age (giving you the aforementioned option to request a lump-sum payment of your suspended benefits), wait until 70 to collect your retirement benefit and have your wife take just her spousal benefit at full retirement age and her own retirement benefit at 70. Very careful software can tell you instantly which is the best option in your particular case given your covered earnings histories.

Nita — Jersey City, N.J.: My mom will be 65 in December. My dad died 10 years ago and since then, my mom has been collecting my dad’s Social Security of about $480 a month. She works part time. If she works over a certain amount Social Security does not pay. Assuming she will retire at age 66, how will it work for her? Will my dad’s Social Security stop and her Social Security go into effect since her amount is higher?

Larry Kotlikoff: Your mom’s widows benefit at full retirement age will be raised permanently based on benefits lost due to the earnings test, so she shouldn’t be concerned about losing benefits from working and earning more. ​

On the contrary, if she is going to be collecting just widows benefits for the rest of her life because they are higher than her highest own retirement benefit (her retirement benefit if she begins taking it at 70), then the best thing for her to do is to earn as much as she can before full retirement benefits and have as much of her widows benefit wiped out by the earnings test as is possible. This will undo the mistake she appears to have made in taking her widows benefit early and working less. The more benefits she loses, the more her post full-retirement-age widows benefit will be increased for the rest of her life.

If what I’m assuming is wrong and her age-70 retirement benefit exceeds her widows benefit, she should (assuming she has a high maximum age of life) wait until 70 and switch over to collecting her retirement benefit.

Unfortunately, she can’t collect both benefits at once. Please run her through some very careful software that handles the earnings test and the adjustment of the reduction factor to understand all her options. And encourage her to keep working and to earn as much as she can.

Gerry — Ore.: My deceased husband took his Social Security benefit at age 62. I will be eligible for his widows benefit at age 62. I also have a public employees retirement account that I could access at age 58 (in one-and-a-half years). Without touching my 403(b) and current employee pension until much later, could I start retirement on the widows benefit and Public Employees Retirement System (PERS) account at 62 without a hefty penalty?

Larry Kotlikoff: Very sorry to hear about your husband. You actually are able to collect reduced widows benefits as early as age 60, or as early as age 50 if you are disabled. If you have a child from your husband who is under age 16 or disabled (prior to age 22) in your care, you can also collect survivor benefits called Mother and Father benefits. Your widows benefit will be subject to the Government Pension Offset (GPO) provision. What you receive will be reduced by up to two-thirds of your non-covered pension. Taking your non-covered pension early means that your non-covered pension will be smaller, which means the offset will be two-thirds of a smaller number. So the GPO provides a reason to take your non-covered pension early.

On the other hand, if the starting value of your non-covered pension will be higher the longer you wait to collect it, it might be best to start your Social Security widows benefit as early as possible — at age 60. Why? Because the GPO doesn’t kick in until you actually start collecting your non-covered pension. The same is true of the Windfall Elimination provision, which reduces your own Social Security retirement benefit if you have 40 but fewer than 120 quarters of coverage. The only way to know for sure what is best is to run yourself through a very detailed Social Security calculator.

Louise — Ohio: I started receiving disability benefits at age 40, but my late husband died in 2000 and was receiving disability benefits when he passed. I’ll be 50 in December. Should I apply for survivors benefits then or wait until I turn 65 because my long-term disability benefits from my job will end. Will this affect or reduce this amount if I collect additional monies from my husband’s record? They already reduced it when I was awarded my benefits in 2007.

Larry Kotlikoff: I’m sorry for your loss. Yes, you should, I believe, take your widows benefit starting at age 50. When you reach full retirement age, your widows benefit will be adjusted to eliminate the reduction for having taken it early. There is a 28.5 percent reduction for taking it between age 60 and your full retirement age, but again, that’s eliminated when you reach full retirement age. But there is no additional reduction for taking your widows benefit between age 50 and 60. So if you would otherwise take your widows benefit at 60, which I’d certainly recommend, there is only an upside to taking your widows benefit starting as early as possible before age 60.

To be clear, Social Security doesn’t pay you two benefits. Rather it pays what is either precisely or almost the larger of the two benefits. So when you start taking your widows benefit at age 50, your check will rise by the difference between your widows benefit and your current disability benefit multiplied by the .715 reduction factor.