Ask Larry: Is The Benefit Estimate On My Social Security Statement Too High?

Today’s column addresses benefit estimates on Social Security statements, switching to spousal after retirement benefits, the earnings test and survivor’s benefits, Medicare qualification and the possibility and advisability of filing retroactively for spousal benefits. 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.

Ask Larry about Social Security here.

Is The Benefit Estimate On My Social Security Statement Too High?

Hi Larry, Why is the monthly benefit amount on my Social Security statement so much higher than it seems it should be? It seems like it’s over the maximum amount. It’s the same for my husband. When we go to apply, will we be in for a rude awakening? According to my statement, if i wait five years until age 70 to collect, my monthly benefit is estimated to be $3,064. Just how accurate are the figures on the statement? Thanks, Alesandra

Hi Alessandra, In past years we’ve always found the Social Security statements to be pretty accurate, but we recently became aware of an example where the numbers on an individuals statement were way off. For example, on that person’s statement their actual age 70 rate was shown as their age 66 rate, and their actual age 66 amount was shown as their age 62 rate. So, you’re wise to be skeptical.

That said, if your full retirement age (FRA) is age 66 and your statement says that your age 70 rate would be $3,064, that indicates that your FRA rate would be roughly $2,321. That is significantly below the current maximum possible FRA rate, so I can’t tell you whether or not your statement is inaccurate. However, you and your husband may want to strongly consider using one of my company’s two tools — Maximize My Social Security or MaxiFi Planner — to both determine your correct benefit rates, and to explore your filing options in order to identify your best strategy for claiming your benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry

Can My Wife Switch To A Spousal Benefit When I File On My Record?

Hi Larry, I am 66 and my wife is 68. She started taking her Social Security retirement benefit at 62 on her own work record. I am now receiving a spousal benefit and will wait until age 70 to collect my retirement benefit on my own record. When I file at 70, can my wife then switch to a spousal benefit on my record? Her FRA benefit will be much smaller than my FRA benefit. From what I have read, could she get the difference between her FRA benefit and 50% of my FRA benefit? Could you please explain how it all works, if at all? Thanks, Paul

Hi Paul, Your wife could potentially file for an excess spousal benefit at that time. She’ll only qualify for an excess spousal benefit, though, if 50% of your primary insurance amount (PIA) is higher than her own full PIA. A person’s PIA is the amount of their Social Security retirement benefit if they start drawing at their full retirement age (FRA).

For example, say Julie started drawing her own Social Security retirement benefits at 62. Julie’s PIA is $1,000, but her reduced age 62 rate is only $750. When Julie’s husband reaches 70, he applies for his Social Security retirement benefits with a PIA of $2,000. Julie’s husband’s benefit rate would then be $2,640 (i.e. 32% higher than his PIA), because he earned 4 years worth of delayed retirement credits (DRCs) by waiting until 70 to start his retirement benefits rather than claiming them at his FRA of 66. However, even though Julie’s monthly benefit rate is less than a third as much as her husband’s benefit rate (i.e. $750 vs. $2,640), she would not qualify for any spousal benefits because her PIA is equal to or greater than 50% of her husband’s PIA (i.e. $1,000 vs 50% of $2,000). Best, Larry

Can I Work 36 Hours Per Week And Still Collect Widow’s Benefits?

Hi Larry, My husband passed away fifteen years ago after we were married for nearly 20 years. Can I work nearly full time, about 36 hours weekly, and still collect my widow ‘s benefits? I turned 60 in July. Thanks, Lora

Hi Lora, I can’t give you a yes or no answer because it would depend on how much you earn. I assume you work for wages, in which case you could potentially be paid widow’s benefits starting at 60 if you either earn a) less than $17,640 for the calendar year of 2019, or b) no more than $1,470 in any month from July through December. If your gross monthly wages will be more than $1,470, you may still be able to draw some of your benefits, but you’d lose $1 of benefits for each $2 that you earn in excess of $17,640 in 2019 (i.e. January through December).

Your best strategy for claiming benefits is likely to either take reduced widow’s benefits now and switch to your retirement benefit at 70 or to take reduced retirement benefits at 62 and then your unreduced widow’s benefit at your FRA. However, if your spouse received reduced retirement benefits prior to his death then it might be better to file on his account at some point prior to your FRA. Normally, you would want to start out drawing the lower benefit first and then switch to the higher record when it reaches its highest potential rate. Best, Larry

Can I Still Qualify For Free Part A Of Medicare Based On My Husband’s Work If He’s Not Eligible For Social Security?

Hi Larry, I will not be eligible for free Medicare A because I only have 36 Medicare credits. Can I qualify on my husband’s record. He retired from government job and so he has no Social Security but he does have Medicare A and B. Can I still use his record? Thanks, Sondra

Hi Sondra, Yes, as long as your husband qualifies for free Part A of Medicare based on his government work and if he’s at least age 62 or disabled and you are at least age 65, then you can qualify for free Part A of Medicare based on his record.

Since 1983, federal employee wages have been subject to Medicare taxes even if their wages were exempt from Social Security taxes. So, as long as they have at least 40 quarters (i.e. 10 years) of Medicare earnings, both they and their eligible auxiliaries and survivors can potentially qualify for free Part A of Medicare on their work record. Best, Larry

Is It Possible To File For Spousal Benefits Retroactively?

Hi Larry, My husband, who is 6 years older, began taking his Social Security retirement benefits when he was 68 and I was 62. I heard about the Social Security spousal benefit from my accountant, but thought I had to wait until I was at my full retirement age of 66 to apply for it. I did apply for it a few weeks before my 66th birthday and will get a spousal benefit amounting to 50% of my husband’s benefit starting in July, allowing my own worker retirement benefit to grow.

However, I was on the Social Security website today and read one of their anecdotes where a person had applied for the spousal benefit at age 62! I had not realized that was possible. I understand that applying at age 62 would have reduced my monthly spousal payment. Even so, I think it would have benefitted me to start collecting the benefit, even though reduced, at 62. Is it possible to file for that spousal benefit again retroactively, allowing me to get those four years of reduced payments, realizing that any spousal payments I would receive between now and in the future would also be reduced? Thanks, Rachel

Hi Rachel, You can’t claim reduced Social Security spousal or retirement benefits for any month earlier than the month that you apply for them, but it doesn’t sound like you’d want to do that anyway. I think that you must have either misinterpreted what you read or else the information you read was wrong. If you had applied to start spousal benefits prior to the month you reach full retirement age (FRA), you’d have been deemed to also be filing for your own Social Security retirement benefits. You’d then receive essentially just the higher of the two benefit amounts, and your rate would be reduced for age for starting your benefits early. Deeming doesn’t apply to survivor benefits, e.g. widow’s benefits, by the way, so my answer assumes that your husband is still living.

Since you were born prior to 1/2/1954, you are allowed to file for just spousal benefits only without also being deemed to have also filed for your own benefits, but you must wait until you reach FRA to restrict your application in this way. Best, Larry

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