Today’s column addresses questions about whether any spousal benefit amounts can be paid in addition to a retirement benefit, whether foreign pensions can be received in addition to Social Security benefits, and the maximum benefit a person can receive based on their employment history. Larry Kotlikoff is professor of economics at Boston University and founder and president of Economic Security Planning, Inc, which markets Maximize my social security and MaxiFi Planner.
See more of Ask Larry’s responses here.
Do you have your own questions about Social Security that you would like to answer? Ask Larry about Social Security here.
Can I really get an additional spousal benefit in addition to my retirement benefit?
Hi Larry, I am receiving my Social Security retirement benefit. A friend told me that I should also apply for my spousal benefit based on my husband’s history. I always thought that a person could receive only one or the other, but not both. Should I apply for spousal benefits now even if I am already receiving my retirement benefit? Thanks Heather
Hi Heather, You can’t get both benefits in full. People born after 1/1/1954 are considered to be claiming both their own Social Security retirement benefits and spousal benefits when they apply for either benefit. And you can only pay up to essentially the higher of the two benefit rates.
However, a person who is eligible for retirement and spousal benefits would always receive their own retirement benefit. If your spousal rate is higher than your retirement benefit rate, then a partial or excess additional spousal benefit may be paid to you.
For example, suppose Mary applies for her Social Security retirement benefits at age 62. Mary’s Primary Insurance Amount (PIA), which is her retirement benefit rate if she waited until full retirement age (FRA) to start drawing, is $ 800. But Mary’s benefit rate is lowered. for age $ 570 because you apply at age 62. Mary’s husband already receives his benefits and his PIA is $ 2,000.
Maria is considered to be applying for spousal benefits, and the amount of her excess, unreduced spousal benefit is calculated by subtracting her PIA from 50% of her husband’s PIA. In Mary’s case, that equates to $ 200 (that is, $ 2,000 / 2 – $ 800). However, since Mary applies at age 62, her excess spousal fee is reduced per age to $ 132. Then, Mary would be paid both reduced benefit rates, giving her a combined benefit rate of $ 702 (that is, $ 570 + $ 132).
Before applying for benefits, you may want to consider using my company’s software: Maximize my social security or MaxiFi Planner – fully analyze the options available to you in order to determine your best strategy to maximize your profits. Social Security calculators provided by other companies or nonprofits can provide appropriate suggestions if they were constructed with extreme care. Better, Larry
Is it true that I can’t collect CPP or Social Security?
Hi Larry, I have dual citizenship: Canadian and American. I have only worked in Canada. I have CPP there. However, I have not paid CPP for seven or eight years. I married my American husband in 2006. Social Security told me that I cannot collect CPP or Social Security. Social Security told me that they could collect some Social Security based on my last five years of work in Canada. During these years I did not pay CPP. Clear as mud? Thank you alicia
Hi Alicia, It is certainly possible to collect both US Social Security benefits and a Canadian Pension (CPP), but to qualify for US benefits to be collecting your Social Security benefits.
If you have never worked in the US and you never paid US Social Security taxes, then you might not qualify for US benefits based on your own employment history. Social Security has a summation benefit that combines work credits earned in more than one country, but you would need to have worked and paid in the U.S. Social Security program long enough to get at least six quarters of coverage (QC ) in order to even be eligible for a totalization benefit. And you would have to be at least 40 QC to qualify for regular US Social Security retirement benefits.
However, even if you are not eligible for US benefits based on your own employment history, if your husband receives his retirement benefits from Social Security, then you should at least be able to qualify for spousal benefits from his history. However, you would need to be at least 62 years old to be eligible for spousal benefits, and your spousal rate would be lowered by age if you start drawing before your full retirement age (FRA).
Your CPP pension would have no adverse effect on your ability to collect spousal benefits, and if a Social Security employee tells you otherwise, you should not believe them. There is a government pension offset provision (GPO) that can cause a person’s spousal benefits to be offset in whole or in part, but the GPO only applies when a person receives a government pension based on their work in the US. A CPP pension would not cause compensation for your spousal benefits. Better, Larry
If I start drawing at 66 and two months, is that the total maximum profit?
Hi Larry, If I start collecting Social Security at 66 years and two months, are these the maximum benefits I could get? Thanks Jack
Hi Jack, If you were born in 1955, so your Full Retirement Age (FRA) is 66 and two months, then you would be paid a monthly fee equal to 100% of your Primary Insurance Amount (PIA) if you submitted the request at that time. However, that is not the maximum amount you can take out.
First, your PIA is based on an average of your highest 35 years of wage-indexed income covered by Social Security. So if you continue to work and earn more in a year than in one of the previous 35 highest years, you can increase your PIA and the resulting benefit rate.
Also, your monthly Social Security retirement benefit rate would be higher if you simply waited beyond your FRA to begin receiving your benefits. Social Security adds Deferred Retirement Credits (DRC) to a person’s benefit rate for each month that they do not collect their Social Security retirement benefits from FRA up to 70. The DRCs amount to 2/3 of 1% per month , or 8% per year.
So if your FRA is 66 and two months and if you wait until age 70 to start receiving your retirement benefits, your monthly benefit rate would increase to about 130.66% of your PIA. Better, Larry