Can You Start and Stop Social Security Payments and Then Start It Up Again
Afterward y'all reach total retirement historic period, you tin can suspend your benefits and restart them at a higher value any time through age lxx. Photo courtesy of Jim McGuire via Getty Images.
Larry Kotlikoff's Social Security original 34 "secrets", his additional secrets, his Social Security "mistakes" and his Social Security gotchas have prompted so many of you to write in that we now characteristic "Ask Larry" every Monday. We are determined to continue it until the queries finish or nosotros run through the item problems of all 78 one thousand thousand Baby Boomers, whichever comes offset. Kotlikoff's state-of-the-art retirement software is bachelor here, for free, in its "bones" version
Patricia Donnelly — Due west Oasis, Conn: I will exist 66 at the end of this month. I will receive my first Social Security cheque in January. I'm unmarried, never married. When I went to Social Security to sign up, I asked if I could suspend my payment in the next year. I was told that I could merely that I would have to pay back all payments that I have received. This is never mentioned in your manufactures.
Besides, I was hired by the Veterans' Affairs Department one month before Medicare and Social Security were deducted, so I paid for Medicare but not Social Security for those years. Luckily, I as well worked in Social Security-covered employment part time so I take some credit. These are my everyman years of earnings, however. They would be among the highest if Social Security had not been deducted.
I will not get a Federal alimony for this work since I've withdrawn my contributions. Is it possible for me to pay into Social Security what would have been paid if Social Security taxes had been deducted on my VA pay that was not covered by Social Security?
Larry Kotlikoff: Let me focus starting time on your first question. I call back the person at the Social Security Administration gave y'all the wrong respond.
You asked to append your benefit, non withdraw it. The person at the Social Security Administration must accept thought you lot were request to withdraw information technology or didn't understand that you have the selection to suspend it. If y'all become dorsum to that person and he or she doesn't agree that yous tin suspend (not withdraw) your do good once y'all accomplish full retirement historic period, ask to speak to his or her supervisor.
After you accomplish full retirement age, you can suspend your do good and commencement it up once again at a higher value whatsoever fourth dimension up through age 70. Merely the increase to your do good, which is the outcome of the delayed retirement credit, will be applied to the do good level that you were receiving at the time of pause. So, for example, had you started taking your retirement benefit at age 62 (and not lost whatsoever benefits between 62 and now due to the earnings test), your age-62 do good would take been reduced by 30 percent compared to your full retirement do good. That means any delayed retirement credits from suspending your retirement benefit would be applied to your reduced, not to your total retirement do good.
If you lot were to withdraw your application, which yous can only do within one year of first filing for your retirement benefit, you would get to start from scratch but have to repay everything you lot received. In your case, we're talking almost, I believe, only i month'due south benefits, and then whether you repay that month's benefit or suspend it won't make a huge difference to the retirement benefit you lot'll receive when you lot restart it.
Regarding your other question, my agreement is that you worked in not-covered employment and are wondering if you can voluntarily pay Social Security taxes on those earnings in order to qualify for college benefits. The respond is no. However, since you withdrew your ceremonious service contributions instead of receiving a federal alimony, your Social Security benefits will not be reduced by the Windfall Elimination Provision.
Robert Chester — Palm Harbor, Fla.: If I collect Social Security at 65 (my full Social Security would exist at 66) and become a task, can I stop these benefits and restart at 66 to collect total benefits?
Larry Kotlikoff: No, yous can't suspend your benefits until you lot attain full retirement age. But if you earn enough money to lose all your benefits via the earnings test, Social Security will treat yous at age 66 and thereafter as if y'all had never applied for your retirement benefit when it comes to calculating your ain retirement benefit down the road. But remember that the minute yous file for your own retirement do good, your option to file for a full spousal benefit (as opposed to an excess spousal benefit) disappears.
Bob Hines — Piqua, Ohio: My wife and I are 66 years old. She started collecting Social Security at age 62 just continues to work role time. I recollect she is immune to earn $fourteen,500 without penalty. I started collecting my Social Security at age 66 but keep to piece of work full time mostly considering my group health insurance pays the lion's share of my insulin pump and continuous glucose monitoring supplies.
Despite having diabetes for 35 years, I'1000 nevertheless in good health. I tentatively program to retire in April of 2014. In January 2014, my Social Security will be at $2,037 a month. My wife will get $858 per month Social Security in January 2014. I stumbled on your column, but I'g still confused virtually the spousal do good.
Friends have told me my wife would exist eligible for half of mine. That would give her a $160.50 increment per calendar month. We asked a lady at the Social Security office, and she said my wife wasn't eligible for half of mine. Could she be mistaken? We've been working for 48 years and would like a rest.
Larry Kotlikoff: The lady at the Social Security office has it right. Because your wife filed for her own retirement benefit, her total benefit is her reduced retirement benefit plus her excess spousal benefit, not her total spousal benefit. Her backlog spousal do good is half your total-retirement-age benefit less 100 per centum of her full-retirement-age benefit (i.e., the amount she would have received on her account if she had waited until historic period 66 to utilise). If the excess spousal benefit is negative, it's set to zero. If this is your wife's example, her spousal benefit won't equal half of your retirement benefit; it will equal zero.
Had she non filed for her ain retirement do good, she could, indeed, collect a full spousal benefit equal to half of your full retirement do good starting at total retirement age, but only if she applied just for a spousal benefit. The infinitesimal one files for a retirement benefit, 1's ability to get a full spousal benefit (half of one'south partner'due south full retirement benefit) goes poof!
As I discussed in a contempo column, Social Security could non make this more confusing for people.
Here may be the best thing for you lot and your wife to do. You, yourself, tin repay all the benefits you've received and then apply just for a full spousal benefit on your wife'southward account. You can so expect until seventy to collect your highest possible retirement do good. It will be 32 percent larger, later on inflation, than it is now.
For her function, your wife can suspend her retirement benefit and start it upwards again at 70 at a higher value. If she only turned 66 (her total retirement age), her benefit at 70 will likewise be 32 percent larger than what she is now collecting. If she is some months across her 66th birthday, the increment at 70 in her benefit will be less than 32 percent.
If you are pressed for funds or are sure you will die at a adequately early historic period, this may not be the best strategy. Software programs whose calculations nether the hood are highly accurate tin can assistance you consider other options. Simply they must properly value your remaining lifetime Social Security benefits and incorporate the choice for current recipients to suspend their benefits between full retirement age and 70 to take advantage of the delayed retirement credit.
Daniela — Sacramento, Calif.: My question is uncomplicated, just I can non find an answer in any of the Social Security papers. I am 62, and side by side month, I will receive a spousal benefit bank check from Social Security. I do not have enough credit to go my ain retirement. My husband is now 71 years old, and I am wondering if I will exist a widow later on, can I still employ to go the widow benefit?
Larry Kotlikoff: When your married man dies, you need to inform Social Security and then they will provide you with a survivor do good, which should equal at least as much as what he is now receiving equally a retirement benefit.
Please realize that by taking your spousal benefit before full retirement historic period — and, if your hubby dies, taking your survivor benefit earlier full retirement age — you volition be permanently reducing your benefits. For example, your spousal benefit, were you lot to wait until full retirement historic period (66) to collect it, would exist 43 percent higher, for every bit long as you husband survives.
Susan — Brooklyn, North.Y. At what age will I collect the well-nigh Social Security? I was built-in in March 1955.
Larry Kotlikoff: If we are talking virtually your retirement do good, it's historic period lxx. If we are talking well-nigh your spousal do good from your current spouse or, if you are not remarried, from an ex-spouse with whom you were married for 10 years, it'southward 66 and two months. But (there are always buts with Social Security) your current spouse would need to be at to the lowest degree 62 for you lot to collect a spousal benefit at 66 years and two months. And your ex would demand to be at least 62, and you lot would have to have been divorced for at to the lowest degree two years.
In regards to collecting a survivor benefit, the age at which you can go the highest survivor benefit is historic period 66 exactly. This is your survivor full retirement age. You might retrieve the full retirement age for survivor benefits would exist the same as the full retirement age for retirement and spousal benefits. For immature'uns like yous, the full retirement age for retirement and spousal benefits can be up to four months older than the full retirement age for survivor benefits.
Ellen Lubell — Saint James: I'm 63 and collecting Social Security. I had to become a chore to support myself. Side by side year, I volition make more money than they let. Can I end Social Security and collect when I reach the proper age? Practice I have to pay back the money I already nerveless? And how does that work?
Larry Kotlikoff: You can't suspend your do good until y'all reach full retirement age. And you tin can't repay all the benefits you lot received and reapply if yous have been receiving benefits for a year or more. But don't worry. When you attain full retirement age, Social Security will raise your retirement do good (actually, undo the early retirement benefit reduction) to make up for any benefits you and your family members lose on your own earnings record via the earnings test between now and when y'all attain full retirement age.
This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions
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Source: https://www.pbs.org/newshour/nation/how-to-suspend-social-security-benefits-and-restart-them-at-a-higher-value
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