Ask Larry: Does My Husband Need To File In 2021 Retroactively To Get The 2022 Social Security COLA?

Today’s Social Security column addresses questions about whether it’s necessary to file retroactive to 2021, documenting current and future payments for work performed in the past in regards to the earnings test and a discrepancy is Social Security benefit estimates. 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.

Does My Husband Need To File In 2021 Retroactively To Get The 2022 Social Security COLA?

Hi Larry, My husband has delayed taking his Social Security benefits until he turns 70 in March. Now, with the 2022 COLA, we’re wondering if he should have filed in 2021 or if he should now file retroactively.

If he starts his benefits in October 2021, he will forgo five months delayed retirement credits. But if I understand correctly, his January benefit would increase by the COLA which is expected to be more than those DRCs plus he has an additional five months of benefit. Is this correct? Thanks, Kim


Hi Kim, Your husband doesn’t need to start his benefits prior to the month he turns 70 in order to receive the January 2022 Social Security cost of living allowance (COLA). A person’s Social Security retirement benefit rate is increased for all Social Security COLAs that occur after they reach 62, whether or not they’re collecting benefits.

So if your husband claims his benefits five months prior to turning 70, he’ll just end up with a permanent monthly benefit rate that’s 3.33% less than the rate he would have received if he started drawing at 70.

You and your husband may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to ensure your household receives the highest lifetime benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry

How Do I Document For SSA That My Income Doesn’t Count For The Earnings Test?

Hi Larry, I plan to retire in two years at 62 because I have young children who will get checks along with mine and another for my wife as their caretaker. I am self-employed (LLC) and I am winding down my business with no new clients, no new work.

But because of the nature of my business, I get paid some time, often several years, after I do the work. I have about $1 million in payments receivable for work done over the last several years that will continue to roll in over the next few years.

I understand that money from work done before I retire does not count in the income test, but how do I document and report the income to the SSA to make sure it is not counted against me? Thanks, Bradley

Hi Bradley, The specific documentation that you may need to provide to Social Security would depend on the nature of your business and the type of income you receive. For example, documenting renewal commissions received by an insurance agent would be different from the documentation needed for royalties received by an author.

In general, what you’ll need to do after any year in which you a) received Social Security benefits prior to your full retirement age (FRA) and b) reported earned income (i.e. net earnings from self-employment and/or gross wages) in excess of the Social Security earnings test exempt amount is contact Social Security and provide them with a copy of your W-2 form(s) and/or Schedule SE from your tax return along with any evidence that you can provide showing that some or all of the income included on your tax return was earned prior to the year in which you started drawing benefits.

Social Security should then let you know what if any additional evidence you may need to provide. Best, Larry

Can You Explain The Discrepancy In My Benefit Estimate?

Hi Larry, I am 68, currently receiving a spousal benefit and am trying to decide when to switch to the benefit based on my work record. Social Security provided benefit estimates for January 2022 (I turned 69 in December 2021) and January 2023.

My delayed retirement credit is supposed to be 8% for each year beyond my full retirement age of 66, but Social Security says my 2023 benefit will only be 5.8% larger than my 2022 benefit. Can you explain the discrepancy? Thanks, Carol

Hi Carol, I can’t say why you see this specific discrepancy but estimates provided by Social Security are sometimes inaccurate. One thing that I can assure you is that if you reach 70 in December 2022, you wouldn’t want to claim your Social Security retirement benefits any later than that month.

And since your full retirement age (FRA) was 66, if you claim your benefits starting with the month you reach 70, your benefit rate will be 32% higher than your FRA rate, or primary insurance amount (PIA). Best, Larry

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