Ask Larry: Did Social Security Give Me Wrong Information About Withdrawing A Benefit Application?

Today’s column addresses questions about when you can file for retirement benefits after withdrawing your previous application and repaying all the funds you’ve received, eligibility for retirement and survivor’s benefits, spousal benefits at 62 and delaying the WEP by delaying a pension.

Did Social Security Give Me Wrong Information About Withdrawing A Benefit Application?

Hi Larry, I’ve been collecting Social Security For 11 months and was thinking of withdrawing my application, repaying the funds and beginning again at a later date but when I called the Social Security, I was told that if I did this, I could only restart at 70 and not before. I don’t know if this is correct. Can you clarify for me please? Thanks, Louis

Hi Louis, Social Security provides four types of information — correct, wrong, incomplete, and misleading. My sense is that correct holds half the time. But maybe it’s far higher. It would be a useful study. In your case, you got wrong information. If you withdraw your benefit application and repay all the funds received, gross of the Medicare Part B premium deduction, you then appear to Social Security as having never filed for your retirement.

In this case, you are free to file for benefits at any time up through 70. If you don’t withdraw and repay, but rather suspend receipt of your retirement benefit, you are free to restart it any time between the month of suspension and the month you turn 70. If you restart before 70, your benefit won’t be increased by the delayed retirement credits (DRCs) for the year in which you restart until January 1st of the next calendar year. Thus, you won’t get all your DRCs for part of a year if you restart before 70. If you restart at 70, this shorting of your benefit for a number of months doesn’t occur. Best, Larry

Why Can’t I Draw My Own Social Security If I Receive Widow’s Benefits?

Hi Larry, I receive widow’s benefits. Why can’t I draw my own Social Security. I am 75. I paid in for over 50years. What happens to my money? Thanks, Helen

Hi Helen, You can draw your own Social Security benefits, but you can’t draw both your own benefits and a full widow’s benefit at the same time. The most you can be paid is either your own benefit rate or your widow’s rate. The reason for that is simply that it’s stated that way in the Social Security law that congress passed into law.

If you’re drawing your own retirement benefits and your spouse dies before you, you can only be paid the higher of the two amounts. However, your own benefits wouldn’t stop in that event. Instead, you’d continue to be paid your own benefits, and if your spouse’s rate was higher than your own rate you’d also be paid a partial widow’s benefit in addition to your own benefit. The partial widow’s benefit would amount to the difference in your benefit and your deceased spouse’s rate, so the net result is that you’d then receive a combined rate equal to your deceased spouse’s higher rate. Best, Larry

If I Draw At 62, Can I Receive Spousal Benefits?

Hi Larry, In November, my husband will begin taking Social Security at 62. He will draw $1,895 per month. I am 60 and according to my Social Security report, I will only draw about $700 a month at 66. If I draw at 62, can I file for spousal benefits on his record?

If so, will I receive 1/3 or 1/2 of his Social Security retirement benefit? If I draw my retirement benefit at 63, can I change and draw spousal benefits at 66? Thanks, Cindy

Hi Cindy, Since you were born after 1/2/1954, no matter when you file for either your own benefits or for spousal benefits, you’ll be deemed to be filing for both benefits. If your spousal rate is higher than your own retirement benefit rate and if your husband is drawing his retirement benefits when you file, you’ll end up receiving your own benefit rate plus an excess spousal rate. And the earlier you apply prior to full retirement age (FRA), the lower your monthly rate will be.

For example, say Amy files for retirement benefits at 62. Amy’s own full retirement age rate, or primary insurance amount (PIA), would be $800, but since Amy is starting at 62 her rate is reduced for age to $563. Amy’s husband is drawing his retirement benefits and his primary insurance amount (PIA), which is equal to his full retirement age (FRA) retirement benefit amount, is $2,200. Amy’s unreduced excess spousal rate would be calculated by subtracting her PIA from 50% of her husband’s PIA, which in this example is $300 (i.e. $2,200 / 2 –$800). However, since Amy filed at 62, her excess spousal rate is reduced to $196. That amount would then be paid in addition to Amy’s own reduced rate of $563, giving her a combined rate of $759.

Before deciding when to apply for benefits, you and your husband may want to consider using my company’s software — xxxxxxx — to analyze all of your various options so that you can determine the best strategy for maximizing your benefits.

Is This Strategy Valid?

Hi Larry, Could you confirm for me that this strategy is valid. If I take Social Security benefits early and postpone my pension that will trigger the WEP or GOP. I’d collect full Social Security until I took the pension and when I start receiving the pension, my Social Security would be reduced.

If I’m receiving retirement benefits and still working and earn a very high income in any particular year, does my benefit change? Does a high income year knock out a lower year in the 35 years? Thanks, Victor

Hi Victor, The Windfall Elimination Provision (WEP) doesn’t apply until the month you become entitled to a pension based on non Social Security covered earnings. Social Security defines entitlement as follows: “An individual is entitled to a pension when he or she has applied for benefits and has proven his or her rights to benefits for a given period of time.”

So, yes, you could potentially delay applying for your non-covered pension, in which case your Social Security benefits would be calculated without regard to WEP until you do become entitled to the non-covered pension. Whether or not that’s a good plan depends on a number of different factors, though. My company’s software — xxxxx — can calculate your maximized strategy with and without WEP and you can enter the year your pension will start, so you may want to use it to help with your Social Security planning.

Regarding your second question, the answer is yes. Your Social Security retirement benefit rate can be recalculated after any year in which you have Social Security covered earnings that are higher than one of your previous 35 highest wage-indexed earnings years, know as your computation years. Best, Larry