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Ask Larry: Do I Qualify For Social Security Spousal Benefits?

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Today’s column addresses questions about when Social Security spousal benefits can be available, a reason there might be years with no income on a person’s Social Security earnings record and how much benefits are reduced for filing early. 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.


Do I Qualify For Social Security Spousal Benefits?

Hi Larry, I will be 63 in September 2021. My husband is 76 and took SSDI when he was 64. His current benefit is about $2,550. He is not in good health and I am considering retiring when I reach 63. My own benefit at that time will be approximately $880 per month.

Do I qualify, and should I file for spousal benefits or my own retirement benefits? Is my spousal benefit figured on what his benefit is currently or is it based what it would have been 10 years ago if he had not retired early? I’m confused! Would survivor benefits ever be available?I don’t know if I’m even asking the right questions! Thanks, Abbie

Hi Abbie, Since you were born after 1/1/1954, when you apply for either spousal benefits or your own Social Security retirement benefits, you’ll be deemed to be filing for both. Spousal benefits are calculated based on 50% of the worker’s primary insurance amount (PIA). A person’s PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA), or their unreduced SSDI benefit rate.

Social Security disability (SSDI) benefits are paid at a rate of 100% of a worker’s PIA assuming that they didn’t collect reduced Social Security retirement benefits prior to qualifying for SSDI benefits.

If you file for benefits at FRA and if your husband is living at that time, what you’d be paid is your spousal benefit, which would be the higher of your own PIA or 50% of your husband’s PIA. But if you start drawing prior to FRA your benefit rate will be reduced for age. By the way, a person’s PIA is adjusted to reflect Social Security cost of living increases (COLA), so your spousal rate will be calculated based on your husband’s current rate at the time you claim benefits.

Drawing reduced benefits prior to FRA wouldn’t reduce your future widow’s benefit rate as long as you don’t start drawing widow’s benefits prior to your FRA. Unreduced widow’s benefit rates are calculated based on 100% of the deceased spouse’s monthly benefit rate, so if you become eligible for widow’s benefits at FRA or later, you’ll be eligible for your husband’s full benefit rate including COLAs.

You wouldn’t get both his full rate and your own retirement benefit rate, though, just the higher of the two amounts. If you start drawing reduced benefits and if your husband dies prior to when you reach FRA, you would have the option of either a) drawing just your reduced retirement benefit until you reach FRA at which time you could file for an unreduced widow’s benefit, or b) file for reduced widow’s benefits.

It sounds like you might want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to fully analyze the options available to you in order to determine your best strategy for maximizing your benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry


Why Are There Zeros On My Social Security Earnings History?

Hi Larry, I have been working for years in a self-employed capacity and have filed taxes every year. There are some zeros for example last four years. Why would that be? Should I do something about this? Will it effect my payment amount at retirement? Thanks, Greg

Hi Greg, Self-employment earnings are reported on Schedule SE of a person’s tax returns. If you reported a net-profit of $400 or more from your self-employment on a Schedule SE, then those earnings should show up on your Social Security earnings history. But if you had a net loss from your self-employment, or a net profit of less than $400, then your Social Security earnings record would correctly show $0 earnings in those years.

If you did have any years in which you reported a net-profit of at least $400 on Schedule SE of your tax return and if those earnings aren’t reflected on your Social Security earnings history, you should contact Social Security to request correction of your earnings record. You will need to submit a copy of your Schedule SE for any years in question, as well as proof of filing your tax return.

Social Security retirement benefits are based on an average of a person’s highest 35 years of Social Security covered wage-indexed earnings. If you have less than 35 years of earnings, Social Security will average in zero years when calculating your benefit rate. That would obviously drag down your 35 year earnings average as well as your resulting benefit rate. Best, Larry


How Do I Figure Out How Much My Benefit Will Be Reduced If I Start Drawing Early?

Hi Larry, I would like to retire this fall when I’ll be two months short of my 66 years and two months full retirement age. How do I figure out how much my benefit will be reduced by? Thanks, Chris

Hi Chris, If you start drawing at full retirement age (FRA), your Social Security retirement benefit rate will be paid at a rate of 100% of your primary insurance amount (PIA). If you start drawing before then, your benefit rate will be reduced by 5/9ths of 1% for each month that you start drawing early.

So if you start drawing two months prior to the month you reach FRA, your benefit rate will be reduced by roughly 1.1%. In other words, you’d receive roughly 98.9% of your PIA. Best, Larry


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