Will my Social Security retirement pension rate drop when I stop working?

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Today’s Social Security column addresses questions about how stopping work before filing may affect benefit rates, when it is possible to start spousal benefits on a spouse’s record and be independently entitled to divorced spouse’s benefits before an ex files. Larry Kotlikoff is Professor of Economics at Boston University and Founder and Chairman of Economic Security Planning, Inc.

See more Ask Larry answers here.

Do you have social security questions yourself that you would like to answer? Ask Larry about Social Security here.


Will my Social Security retirement pension rate drop when I stop working?

Hi Larry, I am 68 years old and I applied for a retirement pension recently, but there has not been a decision from the SSA yet. Once the SSA determines the amount of my benefits, will it be fixed for the rest of my life?

Can I stop the payments and return to work until age 70 to earn deferred retirement credits? Will my benefit then be higher for the rest of my life? Or when I stop working at age 70 with no other income, will it go back to the lower amount before? Thanks, Betty

Hello Betty, Social Security retirement benefit rates can potentially be increased after any year in which a person has Social Security covered income or earns deferred retirement credits (DRC).

These increases are permanent. You cannot earn additional DRCs after you turn 70, and if you stop working at that time, your allowance will not increase due to additional income. Thus, the amount of your benefits would remain the same after the increase in the cost of living (COLA). Your benefit rate will not drop or return to a previous benefit rate just because you stop working.

By the way, Social Security retirement benefits are based on an average of a person’s highest 35 years of earnings-indexed earnings covered by Social Security, so additional years of earnings won’t increase your income. benefit rate only if the new income is greater than one or more of the 35 years currently used to calculate your current benefit rate.

If your new income is not among your top 35 earners after indexing for inflation, the new income is simply not factored in and your benefit rate remains the same. Best, Larry


Can my wife apply for spousal benefits from my account even though I am not old enough for the benefits?

Hi Larry, My wife turned 62 this year and started collecting her Social Security retirement benefits of around $ 800. I am 55 years old, so I will not be receiving benefits for at least seven years. I’m retired, I’m lucky, so I don’t have any salary income right now. Can and should she apply for spousal benefits?

My FRA benefit is currently calculated at around $ 3,000, so even though she only receives the difference between her benefit and 50% of mine, it’s still $ 700 more than she could receive, if I understand correctly. spousal benefits, which is a big if. Or is she only eligible for spousal benefits after I start receiving my own pension benefits? Thanks Lucas

Hello Lucas, Your wife could not claim spousal benefits at least until you start collecting your benefits, and even then she will only be entitled to spousal benefits if your primary insurance amount (ARP ) is more than twice its ARP. A person’s PIA is equal to their Social Security retirement pension rate if they start receiving their benefits at full retirement age (FRA).

His potential spousal benefit would be 50% of your PIA minutes 100% of his PIA, not his reduced retirement benefit taken at age 62. You and your wife might consider using my company’s software – Maximize My Social Security or MaxiFi Planner – to fully analyze your options so that you can make informed decisions on your best strategy to maximize your benefits and avoid losing money. money on the table without knowing it. Social Security calculators provided by other companies or nonprofits may provide suitable suggestions if they have been constructed with extreme care. Best, Larry


Why do I have to wait until my ex retires to qualify for Divorced Spouse Benefits?

Hi Larry, I recently started getting SSDI at age 63. An acquaintance told me that I had to wait until my ex, who is 65, retires to receive a divorced spouse’s benefit based on his record. Is it really true? We had been married for over 30 years. Thanks, Harvey

Hello Harvey, You don’t have to wait for your ex to start collecting benefits to be potentially eligible for Divorced Spouse’s benefits, provided your ex is at least 62 years old and your divorce has been final for at least two years. years.

However, you will only be entitled to divorced spouse’s benefits if your ex’s Primary Insurance Amount (ARP) is more than double your own ARP. A person’s PIA is equal to their Social Security retirement benefit rate if they start receiving their benefits at full retirement age (FRA) or their disability benefit rate from unreduced social security (SSDI).

And if you qualify for divorced spouse’s benefits and start collecting them before your FRA, your divorced spouse’s rate will be reduced based on age. So you may want to wait for your own or closest FRA before you file for a Divorced Spouse’s benefit. Best, Larry



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