Taxes

Ask Larry: Should I Draw My Social Security Retirement Benefit Now Or Consider Delaying?

Today’s column addresses questions about filing at FRA or delaying till 70, the ability to collect spousal benefits, the earnings test, drawing benefits while living with a partner and drawing benefits while living in another country. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc, a company that markets Maximize My Social Security and MaxiFi Planner.

See more Ask Larry answers here.

Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.


Should I Draw My Social Security Retirement Benefit Now Or Consider Delaying?

Hi Larry, I turned 66 in November. My wife turned 66 in December. She has been receiving a modest monthly Social Security retirement benefit since 62. We have a meeting scheduled at the local SSA office soon and I am seriously considering applying for my Social Security retirement benefit, which means my wife would get a boost since her amount is less than 35% of my currently estimated benefit. Can you help me determine whether this decision is the best for me or should I consider others (e.g. waiting until 70 to get DRCs). Thanks, Jorge

Hi Jorge, Since you were born prior to 1/2/1954, one option that you should at least consider is filing just for spousal benefits only and letting your retirement benefit rate grow by 8% per year until 70. You could then switch to your own higher retirement benefit rate at 70, at which time your wife could apply for spousal benefits. Any additional spousal benefits that your wife could draw from your account would be calculated based on your full retirement age rate, or primary insurance amount (PIA), but if you die before her, she could get your full age 70 rate as a survivor if you wait until then to start drawing your own benefits. She wouldn’t get that full amount plus her own benefit, though, just the higher of the two amounts.

You should strongly consider using of my company’s two tools — Maximize My Social Security or MaxiFi Planner — to fully compare your options so that you can choose the filing strategy that you believe would work out best in your case. Best, Larry


Can My Wife Collect Spousal Benefits To Increase Her Amount?

Hi Larry, I turned 66 this past October. I want to now start collecting my Social Security retirement benefits while continuing to work. My wife who will be 63 this coming March wants to stop working and collect early retirement benefits . Her amount would be about $920. Can she collect spousal benefits to increase her amount? Thanks, Kent

Hi Kent, Your wife could only receive spousal benefits in addition to her own benefits if you’re drawing your retirement benefits and if 50% of your primary insurance amount (PIA) is higher than her PIA. A person’s PIA is the amount of their Social Security retirement benefit if they start drawing at full retirement age (FRA). However, if your wife starts drawing benefits before FRA, her benefit rate and any additional spousal benefits that she qualifies for would be reduced for age.

You might want to at least consider an entirely different strategy, though. Since you were born prior to 1/2/1954, if your wife files for her benefits, you could file for spousal benefits only instead of filing for your own retirement benefits. That would allow you to draw 50% of your wife’s PIA while letting your own retirement benefit rate grow until 70. Then, at 70 you could switch to your own retirement benefits, at which time your benefit rate would be 32% higher than your PIA. That would also likely provide your wife with a higher widow’s benefit rate if you die before her. Best, Larry


Can My Friend Draw Social Security Benefits Without Penalty?

Hi Larry, My friend turned 65 last month. He works for metro transit authority. At 65, making $30.00 an hour and he works 40 hours a week or more. Can he draw Social Security benefits without penalty? Thanks, Dwayne

Hi Dwayne, f your friend was born in 1954, his full retirement age (FRA) for Social Security benefits is 66. Until then, his Social Security benefits would be subject to full or partial withholding if he works and earns more than the exempt amount allowed under Social Security’s earnings test. The exempt amount in 2020 for people under FRA throughout the year is $18,240. The 2020 exempt amount for people reaching FRA this year is $48,600. It sounds like your friend is earning more than both amounts noted above, so if he files for his benefits before FRA, it’s likely that at least some of his benefits would need to be withheld. Best, Larry


Can My Boyfriend And I Both Collect Benefits On Our Own Records If We Live Together?

Hi Larry, My boyfriend and I have lived together for 11 years. We are in early 70s. Can we both collect Social Security retirement benefits? I get survivor’s benefits from a previous ex. Thanks, Sally

Hi Sally, Yes, merely living with someone wouldn’t disqualify you from being able to draw any type of Social Security benefits. Even if you got married, though, it wouldn’t affect your ability to draw your own Social Security retirement benefits. And, since you’re over age 60, a new marriage wouldn’t affect your eligibility for surviving divorced spousal benefits either. Best, Larry


What Are The Rules For Getting My Monthly Payments While Living In Another Country?

Hi Larry, I recently read an article about a guy that was sued by our government for receiving SSI payments while living in the Philippines. What are the rules on getting my monthly payments while living in another country? Thanks, Phil

Hi Phil, When you use the abbreviation SSI, I’m not sure whether you are referring to standard Social Security benefits or Supplemental Security Income. Supplemental Security Income (SSI) is a needs based benefit administered by Social Security, and those benefits can only be paid to people residing in one of the 50 US states, the District of Columbia, or the Northern Mariana Islands, except for a child of military parent(s) assigned to permanent duty anywhere outside the United States or certain students temporarily abroad.

Whether or not Social Security benefits can be paid to a person residing outside of the US depends on the person’s country of citizenship, country of residence, and the type of benefit they receive. In most cases, US citizens can continue to receive their benefits while living abroad, as can non-US citizens who receive benefits based on their own earnings record. Best, Larry


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