Ask Larry: Will My Social Security Delayed Retirement Credits Not Apply Until Next Year?
Today’s column addresses questions about when delayed retirement credits (DRCs) are applies, widow’s benefits before retirement benefits, filing online or in person or by phone, receiving benefits while living abroad and children’s survivor benefits and remarriage. rry 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.
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Will My Social Security Delayed Retirement Credits Not Apply Until Next Year?
Hi Larry, I reached 66 last July. I’m planning to start receiving my Social Security retirement benefit in March of next year. I understand that for each additional month I wait, I would receive more benefit. However, when I called Social Security, I was told that for the first year, I would receive the same benefit as I had started with. Only from the second year on, I’d get more benefit because I have started in March instead in January. For example, my benefit amount is $1,000 if starting in January, and is $1,030 if starting in March. If I choose to start in March, I will only receive $1,000 each month for the first year. It seems odd to me. Does such a rule exist? Thanks, Matt
Hi Matt, Yes, that’s true. If a person applies for benefits between full retirement age (FRA) and age, they are initially credited only with the delayed retirement credits (DRCs) they accrued through December of the year prior to the year they claim benefits. You only receive immediate credit for all of the DRCs you’ve earned if you file in January of any year between FRA and 70, or the month you reach 70. Any partial year DRCs earned in the first year of benefit entitlement aren’t credited until the person’s payment for January of the following year.
Furthermore, my understanding is that the automated process used to credit partial year DRCs is only done in every other year. So, you may not see any actual increase in your benefit rate for your partial year DRCs until more than a year after the increase is due. You would, however, be paid any back pay due for months starting with January of the year after you started to draw benefits.
Before deciding when to claim your benefits, you may want to use one of my company’s programsn — Maximize My Social Security or MaxiFi Planner — to compare your options in order to help you determine the 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
Can I Start Collecting My Deceased Husband’s Benefits At FRA And Then Switch To Drawing My Own Benefits At Age 70?
Hi Larry, My husband died in 2012 and I am currently 62. I was told by Social Security that at my full retirement age of 66 and a half, that I could my widow’s benefit equal to 100% of my deceased husband’s retirement benefits and still work full time. Can I then I at 70 switch to collecting my own larger retirement benefit? Thanks, Cecilia
Hi Cecilia, I’m sorry for your loss. The answer to your question is yes. In fact, depending on how much you’re earning, you may even be able to start drawing benefits before your full retirement age (FRA). If you were born in 1957, your FRA for widow’s benefits would be 66 and two months even though your FRA for retirement benefits on your own Social Security record would be 66 and six months.
However, your FRA for purposes of the Social Security earnings test would be 66 and six months regardless of which type of benefit you claim. That means that even though your widow’s rate would be unreduced if you claim benefits at age 66 and two months, your benefits could still be subject to withholding due to the earnings test until you reach age 66 and six months. Whether or not you could be paid benefits before age 66 and six months depends on your benefit rate and the amount of your earnings.
Assuming that your age 70 Social Security retirement rate would be higher than your unreduced widow’s rate, your best filing strategy would almost certainly be to claim widow’s benefits as soon as your earnings would allow you to be paid at least some benefits, then switch to your own benefits at 70. Best, Larry
Is It Best To File Online, Or At The Social Security Office?
Hi Larry, I will be 70 next June and I plan on filing for my retirement benefits next March. Is it best to file on line or in the office. My wife will be 64 next July and she plans to retire the end of July. I will retire next December. She can file after me right? Will her spousal benefits be half of my retirement benefits? Thanks, Sal
Hi Sal, I don’t think there’s any best way to apply for benefits. If you’re comfortable filing online, then that may be easier for you. But, you could also file by phone or in person at a Social Security office. It’s just up to you.
The most that your wife could be paid as a spouse while you’re living is 50% of your primary insurance amount (PIA). A person’s PIA is equal to their Social Security retirement benefit rate if they start drawing at full retirement age (FRA). If you start drawing your benefits effective with the month you reach age 70 you’ll be paid 32% more than your PIA, so your wife’s spousal rate would be much less than half of your actual benefit rate. Furthermore, your wife would only be eligible for a full 50% of your PIA as a spouse if she waits until her FRA to start drawing. If she starts drawing before then, her benefit rate will be reduced for age. Your wife could potentially claim spousal benefits as early as the month you elect to start your benefits, or anytime thereafter.
You don’t mention whether or not your wife will be eligible for benefits based on her own work record, but if she is, she couldn’t file for spousal benefits without also filing for her own benefits at the same time. She can only be paid the higher of those two benefit rates, so if her own PIA is more than 50% of your PIA, she couldn’t qualify for spousal benefits.
If your wife is eligible for her own retirement benefits, she could file anytime without regard to when you file for your benefits, but if she files for benefits prior to FRA her benefits could be partially or fully withheld if she earns too much. That’s due to Social Security’s earnings test. The earnings test could also apply to your wife’s spousal benefits if she files prior to FRA. Best, Larry
Are There Any Conditions On Getting Social Security During A Long Stay Abroad?
Hi Larry, Is there any condition to get Social Security benefits during long stay abroad? In the case of beneficiary getting Social Security spousal benefits, if they’re a US Citizen, is there any problem getting Social Security payments during long stay abroad? When can SSA stop payments that is, is there any reason involved to stop payment? Thanks, Harold
Hi Harold, Yes, definitely. Whether or not, and how long that a person can be paid benefits while outside of the US depends on the type of benefit they receive, their country of citizenship, and their country of residence. However, US citizens can continue to be paid their benefits regardless of their country of residence, provided that they’re not residing in Cuba or North Korea. Best, Larry
Will My Daughter Lose Her Benefits If I Remarry?
Hi Larry, My daughter and I receive survivor benefits from her birth father’s passing. She is 15. If I remarry, will she loose her benefits? I understand that I will after I marry. Thanks, Mary
Hi Mary, If you remarry, it would have no adverse effect on your daughter’s Social Security survivor benefits. Best, Larry