Today’s column addresses questions about whether spousal benefits will be available after early retirement benefits and how they would be calculated, why benefits can increase after an ex spouse passes away and a question about the WEP being repealed. 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 My Wife Get Social Security Spousal Benefits When I Start My Retirement Benefits?
HI Larry, My wife turned 62 in November 2019 and is collecting $700 per month as a reduced retirement benefit given her age. I am 61 and turn 62 in December 2020 and expect to collect $2,800 per month when I turn 66 years and 8 months, my full retirement age. I am trying to determine if my wife will receive an additional spousal benefit when I begin collecting my retirement benefit or does she need to suspend her current retirement benefits, pay back what she received and restart the clock for her to get additional spousal benefits? I have read online that if she collects early, she will give up any spousal benefits but I also read one of your replies and it seems she may have additional benefits either way. I would really appreciate it if you would clarify this. Thanks, Oliver
Hi Oliver, When your wife filed for her retirement benefits, she was deemed to also be filing for spousal benefits. She’ll be potentially eligible for spousal benefits the first month that you claim your retirement benefits. Her unreduced spousal amount would then be calculated by subtracting her primary insurance amount (PIA) from 50% of your PIA. A person’s PIA is equal to their Social Security retirement benefit amount if they start drawing at FRA. If you start drawing before your wife reaches FRA, her excess spousal rate will be reduced.
In other words, when you start drawing your benefits it sounds like your wife will qualify for an excess spousal benefit to be paid in addition to her own reduced benefit. You may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to help you determine the best overall strategy for claiming 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 Did My Benefit Amount Increase After My Ex-Spouse Died?
Hi Larry, My ex and I divorced 20 years ago after 19 years of marriage. I began collecting a divorced spousal benefit once I reached my full retirement age and aside from COLA increases, it remained steady for five years. But recently my ex died and my benefit increased from $225 a month to $1,021 after his death. Why is this so? Am I going to have to pay it back if it’s a mistake? Thanks, Julie
Hi Julie, Unreduced divorced spousal benefits are calculated at 50% of the worker’s primary insurance amount (PIA), which is equal to their full retirement age (FRA) retirement benefit amount. Unreduced divorced survivor’s benefits are calculated based on either 100% of the worker’s PIA, or if the worker drew Social Security retirement benefits prior to their death, the unreduced survivor rate is calculated based on the higher of a) 82.5% of the worker’s PIA, or b) the worker’s actual benefit rate.
If you’re also drawing retirement benefits on your own record, Social Security would pay you your own benefit rate plus an excess divorced spousal or survivor’s benefit. The unreduced excess divorced spousal or survivor’s rate is calculated by subtracting either your PIA or actual benefit rate from the higher divorced spousal or survivor’s rate. So it sounds like your rate increased because your excess divorced spousal rate converted to an excess survivor’s benefit after your ex’s death. Best, Larry
Will WEP Be Repealed?
Hi Larry, I have Social Security credits and a teacher retirement plan. Will the WEP act be repealed next year? Thanks, Chrissy
Hi Chrissy, The Windfall Elimination Provision (WEP) was added to the Social Security law by Congress in the 1980s, and various bills have been floated in Congress in virtually every Congressional session since that time. None of those bills has even come close to being passed by Congress, so I would be very surprised if the WEP provision is ever changed in any substantial manner. Best, Larry