Ask Larry: Will My Social Security Retirement Benefits Increase If I File After I Stop Working?

Economic Security Planning, Inc.

Today’s column addresses questions about potential effects of stopping work years before filing for Social Security, suspending benefits, language to use when filing a restricted application, retroactive benefits and retirement benefits before survivor’s 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.

Will My Social Security Retirement Benefits Increase If I File After I Stop Working?
Hi Larry, I stopped working at 62 for health reasons but do not plan to file for my Social Security retirement benefits until at least my full retirement age of 66 yrs and 6 months. If I do not earn any income over the coming few years, will my benefits still rise in value by waiting? Thanks, Brad
Hi Brad, Yes, as long as you don’t start drawing your benefits, your monthly benefit rate will continue to increase until you reach 70. However, if you aren’t working due to health reasons, you may want to consider applying for Social Security disability (SSDI) benefits. If you’re approved, you’ll be paid your primary insurance amount (PIA), which would amount to drawing your full retirement age (FRA) benefit rate early. You could still then suspend your benefits once you reach FRA in order to accrue delayed retirement credits until 70. Best, Larry

Can You Still File And Suspend?
Hi Larry, Is it possible to start your Social Security retirement benefits either early, say at age 65, or at full retirement age and then put it on hold, if, you get a new job and that gives you an opportunity to increase the benefits you will receive later? Thanks, Marty
Hi Marty, If you start drawing your benefits before full retirement age (FRA), you can’t voluntarily suspend your benefits until the month you reach FRA. However, if you work and earn more than the Social Security earnings test exempt amount prior to FRA, your benefits could be suspended involuntarily. And if your benefits are suspended before you reach FRA as a result of your earnings, your benefit rate would be recalculated the month you reach FRA in order to remove the reduction for age that was previously assessed for any months that your benefits aren’t paid to you.
If you’re already drawing your benefits when you reach FRA, you could then voluntarily suspend your benefits in order to earn delayed retirement credits (DRCs). DRCs would add 2/3rds of 1% to your benefit rate for each month, or 8% per year, that you voluntarily suspend your benefits between FRA and 70. Best, Larry

What Terminology Does My Wife Use To Apply For Spousal Benefits Only?
Hi Larry, I just turned 70 this summer and will start getting my Social Security retirement benefits shortly. My wife was born in 1953 and will turn 66, her FRA early next month. We believe that my wife’s own earned Social Security retirement benefits will exceed her spousal benefits if she defers getting her own benefits until 70. What is the correct terminology to use with the Social Security office? Thanks, Marco
Hi Marco, Since your wife was born prior to 1/2/1954, she can opt to file for spousal benefits at full retirement age (FRA) or later without being deemed to have also applied for her own Social Security retirement benefits. However, your wife can’t qualify for spousal benefits any earlier than your first month of entitlement to your retirement benefits, and she can’t be paid spousal benefits for any months that your benefits are voluntarily suspended. Assuming that’s what your wife wants to do, when she speaks with Social Security she needs to stress to them that she wants to file a restricted application for spousal benefits only. She’ll want to closely review her copy of her application form to make sure that it includes a statement restricting her own retirement benefits from the scope of the application. Best, Larry

Does This Sound Right?
Hi Larry, A friend of mine who is 67 just started getting his Social Security retirement benefits. She says that since she didn’t take them at 62, she received a check from Social Security for the difference between her benefit at 62 and 67 in the amount of $27,000. Does this sound right? Thanks, Taylor
Hi Taylor, That does not sound right. You can only claim Social Security retirement benefits retroactively for a maximum of six months so unless there was a long delay between the time your friend applied for benefits and the time she was finally paid by Social Security, it’s very unlikely that she could have been eligible for as much as $27,000 in back pay. Best, Larry

Can I Start Drawing My Social Security At 63 And Switch To My Widow’s Benefits At My Full Retirement Age?
Hi Larry, I am 62 and a widow. I am wondering if I take my Social Security retirement benefits at age 63 with reduced rates, can I switch to my widow’s benefit at 66 and 4 months without having reduced rates o? My retirement benefit is about only half of what his would be. Thanks, Janna
Hi Janna, Yes, you can start out drawing your own Social Security retirement benefits at a reduced rate as early as age 62 and then switch to widow’s benefits at full retirement age (FRA). However, you’ll only receive your husband’s full unreduced benefit rate if your husband did not receive reduced Social Security retirement benefits prior to his death. if your husband did receive reduced Social Security retirement benefits prior to his death, then it would almost certainly be more advantageous to claim your widow’s benefits at some point prior to when you reach FRA.
Taking your own benefits early would not cause your widow’s benefits to be reduced for age but if you are still working, your benefits could be partially or fully withheld if you earn more than the Social Security earnings test exempt amount. Still though, if your own Social Security retirement rate is substantially lower than your widow’s rate, it would likely be advantageous to start drawing your own retirement benefits as soon as your earnings would be low enough to permit at least some of your benefits to be paid. Best, Larry

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