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Ask Larry: Is Delaying My Social Security Retirement Benefits Really Our Best Strategy?

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Today’s Social Security column addresses questions about whether waiting till 70 is always the best strategy, how the Windfall Elimination Provision and the Government Pension Offset can reduce benefit amounts and whether to take survivor’s benefits or retirement benefits first. 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.


Is Delaying My Social Security Retirement Benefits Really Our Best Strategy?

Hi Larry, My wife is almost 64 and is four years older than me with an FRA of 66 and six months. My FRA is 67. I was going to wait until 70 to file. Does that sound like our best strategy? I’m the main earner. Thanks, Arnold

Hi Arnold, One possibility would be for your wife to apply for her benefits at full retirement age (FRA), and for you to file for your benefits at 70. Whether or not that’s a good plan however depends on your and your wife’s comparative benefit rates.

By waiting until 70 to claim your benefits, you would be providing your wife with the highest possible survivor rate if you die before her. But she couldn’t qualify for spousal benefits at least until you start drawing your benefits. Your wife won’t qualify for spousal benefits at all though unless your primary insurance amount (PIA) is more than twice as much as her own PIA.

You and your wife may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to fully analyze your options so you can make informed decisions about your best strategy for maximizing your benefits and avoid unknowingly leaving money on the table. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry


How Much Will My Wife’s Benefit Rate Decrease Because Of Her Pension?

Hi Larry, I am close to retirement. My wife works for a college where she will get a pension. She has been there 10 years. I expect to retire at 65. My wife earned enough Social Security credits to get benefits. How much will her be fit decrease due to the pension? Thanks, Phil

Hi Phil, Assuming that your wife’s pension is based on earnings that were exempt from Social Security taxes, it sounds like receiving her pension will cause her Social Security retirement benefit rate to be lowered due to the Windfall Elimination Provision (WEP).

The WEP formula is complex, so I can’t tell you how much of a reduction your wife could expect without much additional information.

Any spousal or widow’s benefits she might be eligible for could be reduced or eliminated by another provision, the Government Pension Offset. My company’s software accounts for both of these as do some other calculators. Best, Larry


Are My Calculations Correct?

Hi Larry, I was married for 15 years before divorcing in 2004. My ex died in 2009 at 54 without ever claiming benefits. My ex would have reached FRA in February 2022 at 66 and two months. I am retired and am thinking of applying for survivor’s benefits early next. I will be 61 and five months in February 2022.

My understanding is that my survivor’s benefit will be based on my ex’s full PIA plus any COLAs with a reduction. I calculate that I will receive 78.2% of my ex’s full PIA plus COLAs in February 2022 and 78.6% of my ex’s full PIA plus COLAs in March 2022. Is this correct? My FRA for survivor’s benefits is 66 and eight months.

My FRA is 67. I believe my ex’s full PIA and my own full PIA are similar so I plan on switching to my own benefit at 70 to earn delayed retirement credits. Does this make sense? Thanks, Charlie

Hi Charlie, I calculate that you’d receive a bit below 78% of your ex-husband’s primary insurance amount (PIA) if you start drawing at age 61 and five or six months. But regardless of the exact rate, if you’re retired it sounds like you should do one of two things. Either a) file for reduced survivor benefits now and then switch to your own record at 70, or b) file for reduced retirement benefits on your own record at 62 and then file for unreduced survivor benefits at full retirement age (FRA).

If you’ll be switching to a higher benefit rate on your own account at age 70, you’d want to start drawing your survivor benefits ASAP. Even though your monthly benefit rate would be a bit lower if you start drawing now vs. February or March 2022, by the time you reach 70, you’d have received more total benefits by starting to draw now instead of waiting.

Normally, you would want to start out drawing the lower benefit first and then switch to the higher benefit when it reaches its highest potential rate. My company’s software could help sort all of this out for you so that you can determine the best strategy for maximizing your benefits. Other well engineered software can also be helpful as long as it accounts for survivor’s FRA and other details. Best, Larry


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