Ask Larry: Will Continuing To Work Increase My Social Security Retirement Benefit?

Today’s Social Security column addresses questions about when and how continuing to work can affect benefit rates, when widow’s benefits can be available and how timing can affect spousal benefit rates. 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 Continuing To Work Increase My Social Security Retirement Benefit?

Hi Larry, I turn 66 in October. A friend says this mean that my first check will be in February — is that true? If I continue to work full time, will my check stay the same or increase as I continue to work? Thanks, Benny

Hi Benny, Social Security retirement benefits are based on an average of a person’s highest 35 years of Social Security covered wage-indexed earnings. So your future earnings will only increase your benefit rate if they’re higher than one or more of the 35 years currently being used to calculate your benefit rate.

If you were born in October 1957, then your full retirement age (FRA) for Social Security retirement benefits is 66 and six months. So unless you were born on the first day of October, your FRA month would be February 2024. However, Social Security pays benefits behind a month, so if you claim benefits starting in February 2024, your first payment would be scheduled for sometime in March 2024.

Most importantly though, you have many different filing options to consider besides simply filing for your benefits at FRA. Your best option depends on numerous different factors, and the best filing strategy for each person depends on all of those different factors.

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. Our software can also confirm your correct benefit amount, ensuring you aren’t being paid too little or too much, which could lead to potential clawbacks due to Social Security’s overpayment to you. Best, Larry

When Can I Take My Widow’s Or Retirement Benefits And At What Age?

Hi Larry, I am a 60 year old widow. I work full time earning earning a small check. I am working with my financial planner right now in preparation to retire within the next two months. If I take widow’s benefits now at 60, will they be reduced or at the full amount? Also, will the widow’s benefits be deducted from my retirement benefits? Thanks, Cathy

Hi Cathy, You won’t get your husband’s full rate if you apply for widow’s benefits at 60. If you claim widow’s benefits in the month you reach 60, your benefit rate would be calculated at 71.5% of your husband’s primary insurance amount (PIA). The percentage you’d receive would vary depending on your exact age at the time you claim the benefits.

Your best filing strategy could be either filing for reduced widow’s benefits early and then switching to your own record at 70, or filing for reduced retirement benefits on your own record early and then filing for unreduced widow’s benefits at full retirement age (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

Is There A Certain Time Period When I Need To Notify Social Security That I Want A Spousal Benefit?

Hi Larry, When should I apply for my spousal benefits. I am older than my husband and I will be full retirement age in 2024 and plan to draw my Social Security benefits at that time.

My husband will reach full retirement age in 2027 and plans to draw benefits at that time. His estimated benefit will be more than double what my estimated benefit will be. My understanding is if I draw my benefits early, then I would not be able to receive the full 50% spousal benefit.

Is there a certain time period I need to notify Social Security that I want to draw the spousal benefit? Also, is my understanding correct in that should he die before I do, I would receive 100% of his benefit amount. Thanks, Louise

Hi Louise, You can’t qualify for spousal benefits at least until your husband starts drawing his retirement benefits. You don’t need to tell Social Security that you want to claim spousal benefits until you actually apply for them, and you can’t do that until your husband applies for his benefits.

And yes, if you’re at least full retirement age (FRA) at the time of your husband’s death then you could be eligible for 100% of his full benefit rate as a widow. You wouldn’t get your husband’s full amount and your own full amount though, just the higher of the two rates.

Your understanding is correct that if you start drawing your retirement benefits prior to your FRA, you wouldn’t be eligible for a full 50% of your husband’s primary insurance amount (PIA) when you start drawing spousal benefits. Any reduction for age that applies to your own benefit rate would continue for as long as both you and your husband are living, even if you later become eligible for spousal benefits. Best, Larry

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