When Social Security will let you take only one benefit at a time

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 of Maximizing Your Social Security Benefits,” (co-authored with Paul Solman and Making Sen$e Medicare columnist Phil Moeller) will be published in February by Simon & Schuster.

Question: As a widow, why am I not able to collect any benefit from my deceased spouse’s Social Security if I chose to take the benefit from my Social Security?

Larry Kotlikoff: Once you have filed for two benefits, you get just the larger of the two. So to maximize your Social Security benefits, the trick is to take one benefit — the widows or your own retirement benefit — first, while letting the other grow.


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For example, you can file just for your widows benefit starting at 60 and then wait until, say, 70 to collect your own retirement benefit, when it will start at its highest value. Or you can start your own retirement benefit at 62 and wait until full retirement age to take your widows benefit, when it will start at its highest value. Determining which option is best requires using very careful software, which Social Security doesn’t have, but which is commercially available.

Now if you are already, say, 72 and your husband, say, just died, you have no option but to take the larger of the two benefits. In effect, he paid, via his FICA contributions, for years for this life insurance policy that comes in the form of widows benefit to you, but then it’s being taxed up to the level of your own retirement benefit. This is very nasty business and reflects bureaucrats gone wild — trying to do good, but with rules so intricate that most people at Social Security don’t know many if not most of them. I’m all for having the government force people to save and buy life insurance for their spouses and children. If they don’t, everyone else has to pick up the bill for taking care of them. But there are better ways to do it.

Denise — Kentucky: My husband of eight years is 79 and I am 59. His previous wife died after 10 years of marriage in 1988. It never occurred to him to file for widower’s benefits, and he began taking his own retirement benefits at age 68. He earned substantially more during his career than did I. Could it benefit us now if he were to file for widower’s benefits? Would he be required to suspend his retirement benefits?

Larry Kotlikoff: Because your husband remarried after reaching age 60, he can certainly file for a divorced widows benefit. But he’ll get the larger of either his own retirement benefit and his widows benefit. If he was the higher earner, chances are his own benefit is the larger of the two and that he won’t be able to collect anything off his deceased ex’s work record. You can’t suspend your own retirement benefit after age 70. And suspending it, were it even allowed at his age, would reduce his remaining lifetime benefits.

Jennifer — St. Louis, Mo.: My husband is 61 (I’m 41) and we have two young children. I know there is a family limit to how much he can collect in Social Security. If he files and suspends at 62, will we get a higher amount for the kids until he turns 70? Or should he just file ASAP because of those child benefits?

Larry Kotlikoff: You have two strategies to consider.

Strategy A is what I call Start-Stop-Start. Under this strategy, your husband starts collecting either at 62, or sometime after reaching 62, but before reaching full retirement age. This enables your children to collect child benefits and you to collect a child-in-care spousal benefit until they both are age 16. Or, if they are disabled, and became so before age 22, you can collect a child-in-care spousal benefit on an ongoing basis, and they can collect child benefits on an ongoing basis.

But there is a family benefit maximum equal to between 150 percent to 187 percent of your husband’s full retirement benefit depending on the size of your husband’s full retirement benefit. Even though your husband will be collecting permanently reduced retirement benefits, 100 percent of his own retirement benefit will be counted against the family benefit maximum, leaving, for your children and yourself, only 50 to 87 percent of his full retirement benefit.

Since the child benefit for one child is 50 percent of the full retirement benefit, as is the child-in-care spousal benefit, if both your children collect, as well as you, the 50 to 87 percent of your husband’s full retirement benefit will be split evenly three ways. If you don’t try to collect, the two children will collect the 50 to 87 percent, but split evenly two ways. In short, given the family benefit maximum, it doesn’t help to have more than two of the three of you try to collect. So you might just have the children collect and when your oldest no longer is eligible, you can join your youngest if he/she is, at that point, still under 16 or disabled. Your children, if they aren’t disabled, can collect until they reach age 18 or age 19 if they are still in elementary or secondary school.

The final aspect of strategy A is that your husband would suspend his retirement benefit upon reaching full retirement age and start it up again at age 70. His suspension of benefits won’t affect your children’s or your eligibility to collect benefits on his work record, so don’t worry about that. At 70, your husband’s retirement benefit will restart at a 32 percent higher level than the reduced (due to taking benefits early) level it was at when he suspended it.

Strategy B is what I call File-and-Suspend. Here your husband waits until full retirement age to file for his retirement benefit. But upon doing so, he immediately suspends his retirement benefit and restarts it at 70 when it begins at a level that is as large as possible. Once your husband files for his retirement benefit, and regardless of whether he suspends his retirement benefit, your children and you can start collecting child and child-in-care spousal benefits on his work record. However, the family benefit maximum will still limit what can be collected.

Which is best, Strategy A or Strategy B? It depends on both of your earnings histories, your maximum ages of life, your future projected earnings, your children’s ages, their disability status and the discount rate you apply in valuing your future benefits. In short, there are a lot of factors. You need an extremely precise Social Security lifetime benefit maximization program to tell you which strategy can be expected to produce the highest lifetime benefits.

Now to answer your specific question. First, your husband can’t file and suspend at 62. He needs to wait until he reaches full retirement age to file and suspend. Second, once he files for his retirement benefit, your kids and you can, subject to the family benefit maximum, collect on your husband’s work record. When that option ends doesn’t depend on whether or not your husband has reached age 70. However, if he files prior to full retirement age and continues to work, Social Security has an earnings test that could reduce or preclude the payment of benefits to your family. Finally, whether he should file before reaching full retirement age is a question that only the right software program can help you address.

Kat — St. Louis, Mo.: My husband is 64 and I’m 57. He was laid off and took Social Security early at age 62. I am planning to retire at 59 but wait until my full retirement age to start collecting spousal benefits. Then at age 70 I will switch to my own benefits, which at that point will be more than what my husband is receiving. Are we handling this optimally? Any pitfalls we should avoid? Thanks for your advice!

Larry Kotlikoff: This sounds like a good plan. But there is one other option to consider: namely having your husband suspend his retirement benefit when he reaches full retirement age, which, in his case, is 66. Then, at 70, his benefit would restart at a 32 percent higher level after inflation. An advantage of this strategy, in addition to his receiving 32 percent higher real benefits for what may be 30 years (if he lives to 100), is that your widows benefit, should he die after reaching age 70, will be 32 percent higher. This may exceed your own age-70 retirement benefit.

KP — Salt Lake City, Utah: I was born in 1952. Seven years ago, my ex and I divorced after 25 years of marriage. During our marriage, I worked for his business, without pay, so we did not contribute to my Social Security fund.

I have been employed for a state higher education institution for seven years, and combined with my pre-marriage-employment Social Security earnings, have sufficient credits to draw retirement, at a lower benefit amount than that of my former spouse. I would like to relocate to California to be nearer to my children, but I am not entirely confident that I can secure a job. May I retire before 65, draw divorced spousal benefits, and continue to earn credits toward my own Social Security benefits? And would that make financial sense? Thank you.

Larry Kotlikoff: I recommend you use a top-notch software program to examine your options, including how your benefits will be affected by your future earnings. There are many factors here. I presume your state higher education institution job is covered by Social Security. If not, and if you are going to receive a pension from this non-covered employment, you will get zapped by the Windfall Elimination and Government Pension Offset provisions.

But let’s assume you have enough credits in covered employed and will not be getting a pension based on non-covered employment. Let’s also assume your ex will be over 62 when you reach 66 — in four years. In this case, you can collect a full spousal benefit starting at 66 (your full retirement age), which will equal half of your ex’s full retirement benefit (not what he actually receives as a retirement benefit).

But you can only collect a full spousal benefit if you file just for your divorced spousal benefit and not for your own retirement benefit. Otherwise, they will give you your own retirement benefit plus your excess spousal benefit, which may be small or zero. If you then wait until 70 to collect your own retirement benefit, it will be 32 percent larger after inflation than at 66 and may exceed half of your divorced spousal benefit. In this case, at 70, your monthly check will rise. Also, by continuing to work, you may raise the level of your full retirement benefit upon which your age-70 benefit is also based.

Now to your question. If you file for your divorced spousal benefit before age 66, they will give you your reduced retirement benefit plus your excess spousal benefit. This is called deeming. Because you’d be trying to collect a spousal benefit before full retirement age, you’ll be deemed to be also filing for your own retirement benefit. This forced filing for your own retirement benefit will transform your spousal benefit into an excess spousal benefit.

The only way you can collect a full spousal benefit, while letting your own retirement benefit grow, is to wait until full retirement age and file what’s called a “Restricted Application” just for your divorced spousal benefit. You can’t file such a restricted application until you reach full retirement age. Even if you suspend your own retirement benefit at full retirement age, just the act of filing on your own for your retirement benefit, or being forced to, will mean you can never get a full spousal benefit (a divorced spousal benefit just by itself) while letting your own retirement benefit grow through age 70, at which point, if it’s large enough, you’d see your monthly check increase.

Roger: I took retirement at age 66 and am currently 67. I retired to Colombia, where I married a Colombian national. She is 52, and has a daughter (adopted) that is nearly six years old. My ex-wife of 35 years is collecting Social Security and began at age 64. Please tell me if spousal benefits may be available for me or for my current wife. If I adopt my wife’s daughter, are there benefits available for her and what restrictions apply?

Larry Kotlikoff: Because you are remarried, you cannot collect divorced spousal benefits on your ex-wife’s work record (even if you were married the required minimum of 10 years). Your new Colombian wife could become entitled to spousal and widows benefit (once you die) based on your work record, but she’d need to be at least age 62 to be eligible for a reduced spousal benefit, or 60 to collect a reduced widows benefit.

If you have been married to your new wife for at least a year and you adopt her daughter, they both could become entitled on your record immediately. However, unless they become U.S. citizens or meet one of the exceptions to Social Security’s alien non-payment provision, they would not receive any benefits.