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Ask Larry: Will My Social Security Benefit Still Increase If I Stop Working At 62?

Today’s column addresses questions about how stopping work years before claiming benefits can affect benefit rates, when exactly to submit an application to begin benefits the mont you turn 70 and potential effects of marriage on existing benefits. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc, which 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.

Will My Social Security Benefit Rate Still Grow If I Stop Working?

Hi Larry, I am wondering what happens to my benefit amount if I do not start taking my Social Security payment the month I retire. If I instead wait until later, maybe as late as 70, but if I also I won’t be contributing to Social Security since I won’t be working, I don’t know what will happen to my benefit.

I’ve been told so many different things by so many different people. Some say it will increase but others say it won’t change while still others insist, some of them very vociferously, that it will decrease substantially.

So can you tell me, if I am not contributing but wait to start my payments, will my payments decrease, stay the same or increase? Thanks, Sal

Hi Sal, Yes, they will continue to increase, assuming that you’re between 62 and 70.

Your Social Security retirement benefit rate would continue to increase until you reach 70 as long as you don’t start drawing your benefits before then. The sooner that you start drawing prior to 70, the lower your monthly rate will be.

Your Social Security retirement benefits are based on an average of your highest 35 years of Social Security covered wage-indexed earnings.

If you stop working, then you can’t increase the 35 year average on which your primary insurance amount (PIA) is based but stopping working won’t decrease it either. But you’ll still earn delayed retirement credits so it will increase above and beyond the annual COLA increases.

A person’s PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA). But you can still earn DRCs between FRA and 70 by delaying the start of your benefits.

You may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to get an accurate estimate of your benefit rate, and to fully analyze your filing options so that you can choose the best possible strategy for maximizing your benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry

Does My Application Date Affect The Fact That I Want To Receive My Benefits After My 70th Birthday?

Hi Larry, I will turn 70 in May of this year. I received a letter from Social Security which included a link to begin the process for applying for benefits.

In doing so online, I was informed the following: “We may use 03/06/2021 as the official date of your application for Social Security benefits. In order to use 01/06/2021, we must receive the signed application by 07/07/2021 or you may lose Social Security benefits.”

Does using the application date of 3/6/21 affect the fact I want to received my benefits when I turn 70 in May? Thanks, Klare

Hi Klare, Assuming that you want to receive your benefits starting the month of May 2021, you just need to choose that month as your month of election to start your benefits.

There would almost certainly be no reason to claim your benefits any later than the month that you turn 70 because your benefit rate would not grow any higher if you wait past the month you reach 70 to claim your benefits.

Social Security allows you to apply for benefits up to four months in advance of the month that you want to claim your benefits, so you could have applied as early as January 2021 and you still could have chosen May 2021 as your month of entitlement to begin benefits.

You can also of course do so if you submit your application this month as well.

The notice that you apparently received is a 6-month closeout notice, which is required to close out a protective filing date. I assume then that you must have at some point established a protective filing date by either initiating an application online, or by making an appointment to file an application.

The bottom line though is that it sounds like you simply need to file an application for benefits sometime between now and November 2021, and choose May 2021 as your month of election to start your benefits.

The reason that you could apply as late as November 2021 is that if you file for benefits after reaching full retirement age (FRA), you can claim benefits up to six months retroactively from the month of your application. Best, Larry

Is There Anything That My Fiancée Will Qualify For If We Marry?

Hi Larry, I am a widower, seven years now. My daughter draws Social Security benefits from my late wife’s work record and I draw four months a year because of my income.

I met someone who is a disabled adult child who is drawing from her fathers work record and we are getting married. She receives SSDI and Social security.

When we get married, I understand I will lose what I draw from my late wife. I also understand that my fiancé will lose her SSDI. But she is still disabled. Is there anything she would qualify for on my record? Would she be able to keep her Medicare and Medicaid? Will she have to apply for disability all over again? Thanks, Fred

Hi Fred, Your fiancée would not lose Social Security disability (SSDI) benefits if she marries, nor would a marriage have any adverse effect on her Medicare eligibility.

However, if your fiancée is receiving Supplemental Security Income (SSI) and Medicaid, then those benefits could be reduced or terminated if she marries. SSI and Medicaid are needs based benefits, so if people eligible for those benefits get married then their benefits could be adversely affected depending on the income and resources of their spouse.

Marrying you might eventually allow your your fiancée to qualify for spousal or survivor benefits, but not before you either start drawing your own Social Security retirement or disability benefits or die. Best, Larry

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