Ask Larry

Hi Larry
Thank you so much for your work. It's so helpful. I love your book but am rather afraid of when it comes time to take SS because so many people have no idea what they are doing. I already (thanks to your book) saved a colleague from paying for Medicare when he already had work health insurance. He'd been paying for a year and of course will never get that money back. But at least he no longer pays for it right now. Meanwhile, I have an addendum question to Windfall Elimination Provision. My UK pension will be a STATE pension. It is not from employment and is actually from me paying "voluntary contributions from abroad" . Does that mean it does not come under the auspices of pension earned from work. Also I think I have only 16 years of "substantial earnings."

Hi. My expertise doesn't extend to pensions from the United Kingdom, so I'm not familiar with the specific pension type that you mention. What I can tell you is that the Windfall Elimination Provision (WEP) can only cause a reduction in a person's U.S. Social Security retirement or disability benefit amount if the person receives a pension, or lump sum payment in lieu of a pension, that is based in whole or in part on their earnings that weren't subject to U.S. Social Security taxes.

Therefore, if the U.K. pension that you plan to receive is not based in whole or in part on your work and earnings, then it should not result in a reduction to your U.S. Social Security benefit rate.

You may want to strongly consider using our software (https://maximizemysocialsecurity.com/purchase) to fully compare and analyze all of your options so that you can determine your best strategy for maximizing your benefits.

Best, Jerry

i just received my first SS payment. My wife took SS at 62. What does she need to do to collect spousal?

Hi. Your wife would need to file an application with Social Security in order to claim spousal benefits. She can make an appointment to apply by calling Social Security at 800-772-1213. However, your wife will only qualify for spousal benefits if 50% of your primary insurance amount (PIA) is more than her own PIA. A person's PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA).

Best, Jerry

Larry, You provide great information. I have just one hopefully easy question. I plan to retire on February 1 2024 1 month before my 65th birthday. At that time I would get a payout of 12 weeks or more vacation. I fear that my 2024 earned income would jump to almost $40,000 for the year. How does the social security "earnings test" affect me? If I just wait until March to file for SS would it solve it or should I try to get a vacation payout in 2023? I thought I saw somewhere that there is no "monthly test" in 2024.

Thank you for all the information you have provided.

Getting Close

Hi. Accumulated vacation pay received in a lump sum upon retirement can usually be excluded from counting toward the Social Security earnings test limit. But, Social Security won't know anything about your vacation pay unless you tell them about it. The only earnings information that Social Security will automatically receive is a copy of your W-2 form(s), and if it shows earnings of $40,000 then they will assume that all of that income is countable.

In order to get Social Security to exclude your vacation pay from counting toward your earnings limit you'll need to submit to them a form SSA-131 (https://www.ssa.gov/forms/ssa-131.pdf) that's been completed by your employer.

In spite of what you may have heard, there will be a monthly earnings test in 2024. The monthly earnings test can be used as an alternative to the annual earnings test in the initial year that a person starts collecting benefits, but the monthly test is only used if it allows the Social Security recipient to be paid more total benefits than they'd receive if the annual earnings test was used (https://www.ssa.gov/benefits/retirement/planner/rule.html).

It sounds like you should strongly consider using our software (https://maximizemysocialsecurity.com/purchase) to fully compare and analyze all of your various filing options so that you can determine your best strategy for maximizing your benefits.

Best, Jerry

My wife passed away in July of 2021. She had a SS benefit check of $450 a month. I'm a retired school teacher from LAUSD and have a retirement benefit from Calstrs plus a small SS benefit check of $196 a month which is based on the fact that I worked out side of teaching to earn SS credits!!!! Upon the death of my wife should I not receive a higher SS check based on her higher SS earnings as the surviving spouse????

Hi. I'm sorry for your loss. Even though you likely meet the technical requirements for widower benefits, it sounds like the Government Pension Offset (GPO) would probably prevent you from actually being able to collect any additional monthly benefits. The GPO provision states that if a person is receiving a pension based on their earnings from a federal, state or local government agency in the U.S. that were exempt from Social Security taxes, then any Social Security spousal or survivor benefits for which they'd otherwise qualify must be offset by 2/3rds of the amount of their government pension (https://www.ssa.gov/pubs/EN-05-10007.pdf).

Therefore, unless your Calstrs pension is less than 2/3rds of the difference between your benefit rate and your wife's benefit rate, your monthly widower benefit rate would almost certainly be reduced to zero. However, there is a one time lump sum death benefit of $255 for which you'd likely qualify (https://www.ssa.gov/OP_Home/handbook/handbook.04/handbook-0430.html). If you haven't already applied for the lump sum death benefit you should probably contact Social Security to do so as soon as possible, because in order to be eligible for the benefit you must file an application within 2 years of your spouse's death.

Best, Jerry

hi Larry and Team, You folks are Awesome! Thank you.

My question: If my wife takes her spousal benefit prior to her FRA (67), does that same age carry over as the age (for benefit reduction purposes) when she takes survivor's benefit?

To that point, say my wife takes spousal benefits at 62 (and she has no SS of her own) then I die when she is 66, Is her survivor benefit based on age 62 or 66? Similarly, if I die when she is older than her FRA will her survivor's benefits be subject to any reduction due to having taken spousal benefits "early"?

I just spoke with an SSA representative who did not know the answer to that question but gave me a reply that I am totally unfamiliar with: they said that on my death my wife (now widow) would get benefit consisting of two parts: (i) her usual spousal benefit based on having taken this at age 62 plus (ii) another portion consisting of the survivor benefit (and it's unclear to me now as to what they said that this amount would be). Is this really the case? It sounds like how spouse's get their own SS benefit first, if any, and then they get an additional spousal benefit as 50% of the NH's benefit, reduced by their own (the spousal applicant) benefit (again, reduced for taking benefits early).

Can you clarify please? Thank you.

Hi. No. Survivor benefit rates are calculated based on the survivor's age at the time they start drawing their survivor benefit. Whether or not they previously collected reduced retirement or spousal benefits is irrelevant.

Therefore, even if your wife starts drawing spousal benefits at age 62, if she's at least full retirement age (FRA) when you die then her survivor benefit rate would not be reduced for age. But, if your wife claims spousal benefits early and if you die before she reaches her FRA, her spousal benefit will automatically convert to a survivor benefit effective with your month of death. In that event, your wife's survivor rate would be reduced for age based on her age at the time you die.

You state that your wife doesn't have enough work credits to collect benefits based on her own earnings history, in which case what you were apparently told by a Social Security representative is wrong. Spousal benefits can only be payable during the lifetime of the worker on whose record they are based. So, if your wife is drawing spousal benefits when you die, those benefits will stop and she'll be paid survivor benefits instead.

What it sounds like the representative was describing is what happens when a surviving spouse is collecting their own benefits when their spouse dies. In that case, if the deceased spouse's benefit rate is higher than the survivor's own benefit rate, the survivor continues to be paid their own benefit plus a partial widow's benefit equal to the difference in the two benefit amounts. That results in the survivor receiving a combined benefit amount equal to the higher survivor rate.

The best filing strategy for you and your wife depends on a number of different variables, so you should strongly consider using our software (https://maximizemysocialsecurity.com/purchase) to fully compare and analyze all of your various options so that you can determine your best strategy for maximizing your benefits.

Best, Jerry

Hello Larry,

I spoke to Social Security about a Direct Express card because I no longer have a bank account. I found no application. Is there something else as a paper check might lead to many problems as I am homeless. I can't be the only one. What would you advise? Going into the office is a problem with a knapsack. Thank you.

Hi. The instructions for applying to have your Social Security benefit payments issued via a Direct Express card can be found on the following Social Security website: https://www.ssa.gov/deposit/.

Best, Jerry

Hi, I began receiving SSI at age 20. My father just retired, and my parents want me to look into receiving the DAC benefit as they will not be able to afford to help me pay for things any longer now that my Dad is retired. My mum will be retiring in four years, and they worry that I won't have enough money to live off of, as they've always supplemented my SSI because I cannot hold a job, but didn't qualify for SSDI.

The problem I'm running into is I'm unsure if the DAC will bounce me off of my Medicaid (MassHealth) benefits. I am severely disabled with multiple chronic illnesses, and the cost of my medical care is quite high but because I am on MassHealth I do not currently pay anything for it. If I begin receiving the DAC will it end my eligibility for Medicaid? Is the DAC taxable? My parents and I tried to look into this ourselves and all we found was that SSI is not taxable income and therefore doesn't count against income based requirements for MassHealth.

So essentially my question is will the DAC count against me in being able to receive Medicaid (MassHealth) benefits?

Hi. My expertise is limited to Social Security benefits, so I can't tell you whether or not receiving disabled adult child (DAC) benefits would affect your Medicaid/MassHealth benefits. What I can tell you, though, is that if you're receiving Supplemental Security Income (SSI) then you'll be required to apply for DAC benefits as a condition for continuing your SSI eligibility. SSI is a needs based program, and one of the requirements for eligibility is that you apply for any other type of benefits for which you qualify (https://www.ssa.gov/OP_Home/cfr20/416/416-0210.htm). That includes DAC benefits.

DAC benefits, like any other type of Social Security benefit, can potentially be subject to federal income taxes. However, unless your combined income in a year exceeds $25,000, then you won't be required to pay income taxes on your DAC benefits. The following Social Security website explains how 'combined income' for tax purposes is calculated: https://www.ssa.gov/benefits/retirement/planner/taxes.html.

Best, Jerry

I'll turn 70 in May 2023 and have recently submitted my application to take my SS at that time My FRA was 66. I worked 32 years for IBM, and 30 years as an officer in the U.S. Army & Army Reserve, plus several minimal jobs throughout my high school and college days. My SS payout will be substantially larger than my wife's, as she only worked 15 years, then stayed home after our children started arriving. She is 9 years younger than me (currently age 60), with an FRA of 67. When would be the best time for my wife to take her SS, so as to maximize her SS payout while I'm still alive, and also after I've passed away (assuming I go first). What happens in the event that she passes first - prior to her FRA and also after her FRA? How would that affect me? What should we do to make sure we're maximizing our payouts given our age differences? BTW, we have no debt, and all IRA/401K accounts have been converted to ROTH accounts.

Hi. The best time for your wife to start drawing benefits depends on numerous different factors. Our software (https://maximizemysocialsecurity.com/purchase) was developed to analyze all of those factors in order to allow people to compare all of their various filing options so that they can decide which filing strategy they believe would be most likely to result in a maximization of benefits. You and your wife should strongly consider using the software so that you can make the best possible decision with regard to when she should claim benefits.

What I can tell you in general is that if your wife starts drawing her benefits before her full retirement age (FRA), she'll be stuck with the resulting reduction for age that's applied to her benefit rate for at least as long as both of you are living. But, if you die before your wife and if she's at least FRA when she starts drawing widow's benefits, her survivor rate won't be reduced for age even if she started drawing her own benefits early.

If your wife dies before you, regardless of whether or not it's prior to her FRA, your benefit rate won't be affected. The surviving member of a couple can basically be eligible for up to the higher of their two benefit rates, but not both benefits in full. So, since your benefit rate is apparently significantly more than your wife's benefit rate, you would simply continue to receive your own higher benefit rate in the event of your wife's death. You would, however, likely qualify for a one time death benefit of $255 if your wife dies before you (https://www.ssa.gov/OP_Home/handbook/handbook.04/handbook-0430.html).

Best, Jerry

WIFE AND I WERE MARRIED IN1962 WE STARTED DRAWING S/S WHEN WE WERE 62. I IN 2001 HER IN 2005 . CAN SHE CHANGE TO SPOUSAL FROM HER S/S AS IT WOULD BE AT LEASE 80 PER MO

Hi. No. Once you start drawing your own Social Security retirement benefits, those benefits continue for life. However, your wife could apply for spousal benefits to potentially be paid in addition to her own benefits, but she'll only qualify for additional spousal benefits if your primary insurance amount (PIA) is more than than twice as much as her own PIA. A person's PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA).

Best, Jerry

Hi Larry:
On October 2022, I reached my FRA, and retired this past January 2023, I am no longer working and earning a salary.
Does the annual 8% increase on the earn delayed retirement credits, only apply if I continue working and earning a salary until I reach age 70, or is it, if I simply wait to apply for ss benefits until it I reach age of 70?
last month while talking to a ss agent to apply for Medicare, I was asked if I wanted to apply for my ss benefits, since i was not provided with information on delaying retirement credits, I said yes. Now, if I simply have to wait to age 70 for a better pay out, but I already received a retroactive lump sum (last month) , should I do a suspense of benefits or a withdrawal of benefits?

It would be greatly appreciated if you can kindly reply via my e-mail address, I am also assuming that you are posting my question online, or in your newsletter, kindly make sure my e-mail address is not visible.

Thank you so much for having this forum, and for sharing your knowledge.
Maria

Hi Maria. No, you don't have to be working in order to earn delayed retirement credits (DRC). DRCs are added to your benefit rate for each month that you don't collect Social Security retirement benefits between your full retirement age (FRA) and age 70, regardless of your work status. The DRC credit amounts to 2/3rds of 1% per month, or 8% per year.

You can't suspend your benefits retroactively in order to earn DRCs. The earliest that you could suspend benefits is the month after the month you submit your request for suspension to Social Security. So, if you submitted a request to suspend your benefits to Social Security in March 2023, for example, April 2023 is the first month that you could start earning DRCs.

Alternatively, you could withdraw your application (https://www.ssa.gov/manage-benefits/cancel-your-benefits-application) and repay all of the benefits you've been paid. You could then reapply for benefits when you reach age 70, in which case you'd be credited with your maximum amount of DRCs. You may want to consider using our software (https://maximizemysocialsecurity.com/purchase) to fully compare and analyze all of your options so that you can determine your best strategy for maximizing your benefits.

Best, Jerry