Taxes

Ask Larry: Are There Maximum Social Security Benefits A Couple Can Receive?

Today’s column addresses questions about limits a family could receive, whether working longer can increase benefit amounts, whether delaying till 70 is still worth it, whether filing at 62 might be better and filing for survivor benefits while still working. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc, the company that markets Maximize My Social Security and MaxiFi Planner.

See more Ask Larry answers here.

Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.


Are There Maximum Social Security Benefits A Couple Can Receive?

Hi Larry, When there are two earners in the family, is there a maximum amount each can receive when filing on their separate work account? Is there a household maximum when filing this way? Do they limit how much we can receive? Thanks, Frank

Hi Frank, There is no set limit on how much a couple can receive in Social Security benefits based on their own earnings. Each member of a couple can be paid their full benefit rate no matter how high the benefit amount is.

It sounds like you’ve heard of the family maximum benefit (FMB). The FMB refers to the limit on the total amount of benefits that can be paid from one individual’s record. In other words, if several family members are eligible for benefits on one person’s record, then their benefit rates can be limited based on the FMB limit payable on that worker’s record. But if members of a household are receiving benefits based on the records of more than just one person, the total benefits they receive as a family are not limited by any FMB.

Well programmed software, such as my company’s two tools — Maximize My Social Security or MaxiFi Planner — can help you decide on your best path. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry


Would I Increase My Social Security Benefit By Working Until December Of Next Year?

Hi Larry, I plan to retire later this year. I will be 70 this August. I’m employed and collecting my Social Security retirement benefit now. My social security benefit has been going up each year because i’m replacing the top earning years now against my earlier lower income years. Would I increase my Social Security retirement benefit by working until December of this year or are the benefits calculated based on my income up to my birthday in August? Thanks, Colin

Hi Colin, Your 2020 earnings can be used in the calculation of your Social Security retirement benefit rate starting with your payment for the month of January 2021, however, your 2020 earnings will only raise your benefit rate if your 2020 earnings are higher than one of your previous 35 highest years of wage-indexed earnings. Earnings you pay Social Security taxes on can be used to calculate your benefit rate regardless of your age at the time you produce the earnings, so if you earn more by working until December, that could potentially boost your benefit rate but only if your 2020 earnings are higher than one of your previous highest 35 years of wage-indexed earnings. Best, Larry


Is It Still Worth It Financially To Hold Out Until Age 70 To File For My Benefits?

Hi Larry, I am 68 and my wife is 65. We had an analysis done back in 2017 by a local planner and the strategy was for my wife to file for her retirement and I would file a restricted application for my spousal benefits only and wait until 70 to file for my retirement benefits. When the analysis was done, my intention was to continue working until 70, but because my health has declined I’m now only able to work part time. So is it still worth it financially to hold out till 70 or would it now make more sense to file now? Thanks, Dave

Hi Dave, I can’t decide that for you, but I can tell you that whether you stop working or not, your Social Security benefit rate would continue to grow by 8% per year until you reach age 70 as long as you don’t claim your benefits before then. If you keep earning and make more than you did in some of the lower earning years of your highest 35 year of income after indexing for inflation, you benefit could grow even more. Furthermore, assuming that your benefit rate is higher than your wife’s rate, waiting until age 70 to switch to your own record would provide your wife with a higher survivor rate if you die before her. Best, Larry


Should My Wife File At Age 62 To Maximize Her Benefits?

Hi Larry, I am 74 and my wife just turned 62 in December. To maximize her Social Security benefit, should she file this month? Thanks, Tim

Hi Tim, The answer to your question depends largely on your and your wife’s comparative benefit rates, as well as how long you end up living. If your wife starts drawing at 62, though, she’ll be stuck with a substantially reduced monthly benefit rate for at least as long as both of you are living. There can of course be legitimate reasons to do so, but we often find that it’s better to delay if it’s at all possible. Best, Larry


Should I Collect Widow’s Benefits Or My Own Benefits And Still Work Until 67?

Hi Larry, Should I collect my Social Security widow’s benefit file for or my own Social Security retirement benefit and still work until 67? My husband died about five years ago when I was 60. I’m now 65. What is the best strategy for me to collect my maximum benefits? I want to travel and enjoy the rest of my life while I still can and still be able to pay my bills. Thanks, Allison

Hi Allison, I’m sorry for your loss.

If your earnings will be low enough to permit you to draw at least some benefits under Social Security’s earnings test, then you should probably file for either your widow’s benefit or your retirement benefit as soon as you can draw at least some benefits. When a person is potentially eligible for either Social Security retirements benefits on their own record or widow’s benefits, it’s generally best to draw the lower of the two benefits as soon as possible and then file for the higher benefit when it reaches its maximum rate.

So if your retirement benefit rate will be higher than your widow’s benefit, it would likely be best to file for your widow’s benefits now or as soon as your earnings will allow you to draw at least some benefits, then switch to your own retirement benefits at 70. But if your widow’s rate would be higher than your retirement benefit rate even if you waited until 70 to file for your own retirement benefits, it could be best to file for your retirement benefits now or as soon as your earnings will allow you to draw at least some benefits, then file for your widow’s benefits no later than when you reach your full retirement age (FRA).

One factor that could affect your optimal strategy is if your husband drew reduced retirement benefits prior to his death. In that case, your widow’s benefit amount would reach its maximum rate sometime before you reach FRA and you probably wouldn’t want to wait until FRA to file for widow’s benefits. Best, Larry


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