Ask Larry: Will My Social Security Payment Go Up When I Reach Full Retirement Age?

Today’s column addresses questions about potential retirement benefit rate increases at full retirement age (FRA), spousal benefits based on the record of someone receiving Social Security disability benefits and maximizing benefits after retiring earlier than expected.

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 Social Security Payment Go Up When I Reach Full Retirement Age?

Hi Larry, The division where I worked was sold in to a private equity group about eight years ago. We were declared bankrupt in a couple years later and all employees were laid off.

I started my Social Security retirement benefit earlier than I wanted to and before my full retirement age while still having a part time job. When I do reach my full retirement age, will my Social Security retirement benefit go up? Thanks, Karla

Hi Karla, Your benefit rate won’t go up as a result of reaching full retirement age (FRA) unless some of your benefits have been withheld due to Social Security’s earnings test. If a person starts drawing Social Security retirement benefits prior to FRA and if some of their benefits are withheld due to their earnings, Social Security adjusts the amount of reduction for age applied to their benefit rate effective the month they reach FRA.

You don’t get the benefits themselves back after they’re lost to the earnings test, but the early filing reductions are removed at FRA for early benefits you didn’t actually receive due to the earnings test. If you haven’t lost any benefits to the earnings test though, then no adjustment in your rate will occur when you reach FRA.

The only other way that your benefit rate could increase aside from COLAs is if your current or future earnings are higher than one of your highest 35 years of earnings currently being used to calculate your benefit rate. Social Security retirement benefits are calculated based on an average of a person’s 35 highest years of Social Security covered wage-indexed earnings, and their benefit rate can be recalculated following any year in which the person earns more than the amount of one of their previous high 35 years of earnings. Best, Larry

Will My Wife Be Eligible For Spousal Benefits From My SSDI Instead Of Her Own Benefit At Her FRA?

Hi Larry, I’m 54 and receive SSDI, about $2,500. My wife is 62 and wants to retire at 63. If she starts drawing SSA at age 63, SSA estimates her retirement benefit at approximately $915. Will she be eligible for spousal benefits from my SSDI instead of her record at her FRA as it will be more than her retirement benefit? Thanks, Howard

Hi Howard, Your wife could potentially qualify for spousal benefits if you’re drawing Social Security disability (SSDI), but she can’t file for her own benefits early and then switch to spousal benefits later.

Since she was born after 1/1/1954, when your wife applies for either spousal benefits or her own Social Security retirement benefits, she’ll be deemed to be filing for both benefits. What she’ll then receive is essentially the higher of the two benefit rates, and her rate will be reduced for age if she starts drawing prior to her full retirement age (FRA).

If your wife’s own age 63 rate would be about $915, then her primary insurance amount (PIA) must be around $1,200. A person’s PIA is equal to their Social Security retirement benefit rate if they start drawing at FRA, or their full SSDI benefit rate.

If 50% of your PIA is higher than your wife’s PIA, then she’ll likely qualify for a small excess spousal benefit in addition to her own benefit. The unreduced excess spousal benefit would be calculated by subtracting her own PIA from 50% of your PIA. Best, Larry

What Is The Best Way For Us To Maximize Our Benefits?

Hi Larry, I am 67 and and my wife just turned 65 so I have already reached my FRA and my wife will reach her FRA at 66 and four months next year. She is currently retired. I recently learned I am facing a “forced” retirement at the end of next year.

We are fortunate to have decent assets and no mortgage on our home. I had always planned to apply for my benefits at 70 in order to achieve the maximum amount of credits but it seems that plan might now be out the window.

We need to decide how to maximize our Social Security benefits in light of my forced retirement next year. While my wife can apply for Social Security benefits now, we would prefer to delay receiving her benefits at least until she reaches her FRA in 16 months.

Does it make sense to use our other assets to live on so we can defer applying or her benefits until after she reaches her FRA?

What about me waiting until 70 as we originally planned. We would like to maximize our our benefits but we’re uncertain if spending down our current other assets is a viable strategy for us. Thanks, Tim

Hi Tim, I can only answer questions about Social Security benefits. What I can tell you about your Social Security options is that regardless of when your wife starts drawing her own retirement benefits, if she’s at least full retirement age (FRA) when you die, she could be paid the higher of her own retirement benefit rate or your retirement benefit rate.

So if you wait until 70 to start drawing your retirement benefits and if your benefit rate is higher than your wife’s retirement benefit rate, she’ll get your full age 70 retirement benefit amount if you die before her and after you reach 70. Just to be clear though, your wife couldn’t be paid both her own retirement benefit rate and your full retirement benefit rate as her widow’s benefit, just the higher of the two amounts.

You and your wife will need to decide for yourself what filing strategy you feel would be best for you, but my company’s software — Maximize My Social Security or MaxiFi Planner — should certainly be able to help you make a wise decision. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry