Ask Larry: Will Working Part Time Lower My Social Security Retirement Benefits?

Today’s column addresses questions about what effect years of lower income might have on benefits taken later, when the higher income limit for the earnings test is applied and whether a divorce and subsequent remarriage can satisfy the 10 year marriage requirement. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc, which 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.

Will Part Time Work Lower My Social Security Retirement Benefits?

Hi Larry, I quit my engineering job a year and a half ago to stay home and take care of our child. My husband continues to work full time. If I go back to work part time, how will that impact my Social Security benefits when I eventually file for them?

I am wondering if it would be better for me to stay home until I can go back to my higher income engineering job full time or if working part time in a lower paying job for a few years wouldn’t hurt my Social Security benefits. I am over 50. I plan to wait till 70 to file.

Will multiple years of significantly lower income lower my benefits when I do file?

Thanks, Annette

Hi Annette, You can’t hurt your benefit rate by working part time. Social Security retirement benefits are based on an average of a person’s highest 35 years of Social Security covered wage-indexed earnings. If your years of part time work don’t end up being among your highest 35 years of earnings, then those years disregarded when calculating your benefit rate.

It also doesn’t matter which specific years are in the 35 computation years used to determine your benefit rate.

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

Does The Higher Earnings Test Limit Apply For The 12 Month Period Prior To The Month You Reach Full Retirement Age?

Hi Larry, I will reach full retirement age in January 2022. I would like to start collecting Social Security in April 2021 as I will not earn more than $48,000 in 2021. Does Social Security count 12 months before your full retirement age as the higher earnings amount or do they use calendar months? Thanks, Nick

Hi Nick, The applicable annual earnings test limits are based on calendar years. If you reach full retirement age in February 2022, you won’t be eligible for the higher earnings test limit until the calendar year of 2022. The lower exempt amount of $18,960 will apply to you for the entire calendar year of 2021.

If you apply for benefits this year, Social Security would need to withhold $1 of your benefits for each $2 that you earn in excess of $18,960. There is, however, an alternate monthly earnings test that could be used if it would be more advantageous for you. Best, Larry

Would Social Security Recognize This Marriage As Lasting For 10 Years?

Hi Larry, If a man and woman in California are married for five years get a divorce but continue living together, purchase a home together and two years later remarry with the second marriage lasting another three years would the state of California and SSA recognize their marriage as lasting 10 years? Thanks, Sandy

Hi Sandy, California doesn’t recognize common law marriages, so the only way that the couple you mention could qualify for divorced spousal benefits is if they were married for at least 10 consecutive years. Two marriages separated by a divorce can sometimes be considered as continuous, but only if the couple’s remarriage occurs in the calendar year immediately following the year in which the prior divorce occurred.

For example, say Bob & Dee get married on July 1 2001. They subsequently get divorced on January 2 2005. Bob & Dee then remarry each other on December 31 2006, but get divorced again on July 1 2011. In that case, Bob & Dee would meet the 10 year duration of marriage requirement for divorced spousal benefits. Their first divorce could be disregarded because they remarried in the calendar year following the calendar year of their divorce. Best, Larry