Taxes

Ask Larry: Will My Earnings Affect My Wife’s Social Security Spousal Benefits?

Today’s Social Security column addresses questions about whether the earnings test can a spouse’s benefit, changing benefit payment dates and a foreign pension’s potential effect on benefits. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc.

See more Ask Larry answers here.

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


Will My Earnings Affect My Wife’s Social Security Spousal Benefits?

Hi Larry, My wife and I plan to start drawing Social Security benefits. She is FRA and entitled only to spousal benefits. I will only be 65. If I earn more than the annual limit, will her benefits be affected? I understand the amount that mine will be reduced by. Thanks, Todd

Hi Todd, Yes. If you earn more than the earnings test exempt amount, then Social Security will need to withhold at least part of both your retirement benefits and your wife’s spousal benefits. The basic rule is that for each $2 that a worker earns in excess of the exempt amount, $1 of the benefits payable on that worker’s record must be withheld.

That includes withholding auxiliary benefits such as spousal benefits, even if the spouse has reached their full retirement age (FRA). However, in the calendar year the worker reaches FRA, $1 is withheld for each $3 of excess earnings and only earnings in months prior to the month that the worker reaches FRA are counted.

You may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to ensure your household receives the highest lifetime benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry


Am I Correct That My Payday Will Now Be On Different Date?

Hi Larry, Am I correct in the fact my payday will now be on different dates? Or can I count on it staying the same? Thanks, Lisa

Hi Lisa, I don’t know if your payment date will be changing, but we’ve received several questions similar to yours. All I can tell you is that the Social Security regulations that govern payment dates haven’t changed since 1997. Based on those regulations, most people are now paid either on the second Wednesday of the month, or the third or fourth Wednesday depending on their day of birth.

The only people who should still be receiving their benefit payments on the third day of the month are people who were already receiving benefits prior to May 1997, or beneficiaries who are living outside of the country, or people who are eligible for Supplemental Security Income (SSI).

So I don’t know of any reason why your normal payment date would change unless you’ve been receiving your payments on the wrong day of the month. If you’ve received a notice from Social Security regarding your payment date, then you’ll need to contact them for an explanation. Best, Larry


Will My Pension From Belgium Be Exempt From Causing Any WEP Or GPO Reduction In My Divorced Spousal Benefits From The US?

Hi Larry, If I draw a Social Security pension from Belgium and at 66 years and four months will draw divorced spousal benefits from the US, will my US Social Secuirty be exempt from both WEP and GPO and not reduced because of my foreign pension? Thanks, Lina

Hi Lina, Yes. The Windfall Elimination Provision (WEP) doesn’t apply to auxiliary (e.g. spousal, divorced spousal) or survivor benefits, so the WEP won’t be an issue with regard to your divorced spousal benefits from the US.

The Government Pension Offset (GPO) provision does apply to auxiliary and survivor benefits, but foreign pensions are excluded from the GPO definition of a “government pension.” Only pensions from governmental agencies in the US cause a person’s auxiliary or survivor benefits to be offset. So your Belgian pension won’t have any adverse effect on your ability to be paid divorced spousal benefits from the US Social Security program. Best, Larry


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