Ask Larry
Financial Safety Planning, Inc.
At present’s Social Safety column addresses questions on how taking early retirement advantages can have an effect on later spousal advantages, results of the January 2022 COLA on advantages taken later and whether or not retirement advantages at 70 are required. Larry Kotlikoff is a Professor of Economics at Boston College and the founder and president of Financial Safety Planning, Inc.
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Have Social Safety questions of your individual you’d like answered? Ask Larry about Social Safety right here.
Will Early Social Safety Retirement Advantages Cut back My Spousal Charge Later?
Hello Larry, I used to be born in 1956 and labored sufficient years to attract some Social Safety retirement advantages. My partner was born in 1954 and shall be ready till 70 to start out amassing retirement advantages. If I begin to attract my very own profit now, will it have an effect on the quantity of my spousal profit after I swap since that quantity shall be bigger than my retirement profit? Thanks, Daniel
Hello Daniel, Sure. First, you’ll be able to’t truly swap from drawing your individual advantages to drawing simply spousal advantages. You possibly can nonetheless file on your retirement advantages first after which doubtlessly qualify for an extra spousal profit when your partner begins drawing retirement advantages.
However if you happen to begin drawing your retirement advantages earlier than full retirement age (FRA), you will be caught with the ensuing age discount in your profit price even if you happen to later qualify for an extra spousal profit.
For instance, say Amy information for her retirement advantages this yr at 65. Amy’s main insurance coverage quantity (PIA), or full retirement age price, can be $800, however Amy’s price is decreased for age to $728. A number of years later when Amy is over FRA, her husband applies for his retirement advantages. Amy’s husband’s PIA is $2,000, so Amy’s unreduced extra spousal price is calculated by subtracting her PIA from 50% of her husband’s PIA. In Amy’s case, that quantities to $200, i.e. $2000 / 2 – $800. That quantity would then be paid along with Amy’s personal decreased price of $728 to present her a mixed price of $928.
You could wish to think about using my firm’s software program — Maximize My Social Safety or MaxiFi Planner — to make sure your family receives the best lifetime advantages. Social Safety calculators supplied by different corporations or non-profits might present correct recommendations in the event that they have been constructed with excessive care. Finest, Larry
How Will The January 2022 Price Of Dwelling Adjustment Have an effect on Me?
Hello Larry, How will the 2022 Social Safety value of residing adjustment have an effect on me? I shall be 65 on this yr and I am nonetheless working and never amassing advantages. Thanks, Susan
Hello Susan, All Social Safety value of residing (COLA) will increase that happen after an individual turns 62 are added to a their Social Safety retirement profit price whether or not or not they’re drawing advantages. So the brief reply is that you’re going to be credited with the COLA improve though you delayed drawing your advantages. Finest, Larry
Should I Take The Increased Profit From My Personal Earnings Once I Attain 70?
Hello Larry, I am receiving a widow’s profit and my retirement profit at 70 shall be bigger than my widow’s profit. Do I would like to change to my greater retirement profit at 70? Thanks, Kay
Hello Kay, I do not know something about your particular profit choices however if you happen to’re amassing survivor advantages, there is no requirement that you simply ever should apply on your personal retirement advantages.
Nevertheless, if your individual Social Safety retirement profit price shall be greater than your survivor price if you attain 70, I am unable to think about what motive you’d have for not claiming the upper profit. Delayed retirement credit (DRC) cannot be gathered beginning with the month you attain 70, so ready previous then to say your individual Social Safety retirement advantages wouldn’t improve your profit price. Finest, Larry
