Following a recent seminar on
Social Security claiming strategies that I conducted at the request of a local wealth advisory firm, I received some fascinating questions.
One was from a woman who is 69. Her husband, who is 71, began collecting his
Social Security benefits at age 70. She is still working and plans to collect her benefits at 70, too, after she retires next spring. Based on their lifelong earning history, they both qualify for maximum benefits.
But after listening to me describe some of the creative claiming strategies available to maximize benefits, she wonders if she has made a mistake.
“It sounds like I may have missed an opportunity to claim for a spousal benefit when I reached age 66,” she wrote in an e-mail following my presentation. “Is there anything I can and should do now or am I out of luck on that?”
Actually, there is something she can do.
I suggested that she immediately file a restricted claim for spousal benefits only, which would entitle her to half of her husband's benefit that he was entitled to at his full retirement age of 66 (not half of his age 70 benefits). Meanwhile, her own retirement benefits would continue to accrue delayed retirement benefits, worth 8% per year for every year she postpones collecting benefits between full retirement age and age 70. At that point, she could switch to collecting her own retirement benefits.
I noted that spousal benefits do not qualify for delayed retirement credits. The maximum spousal benefit is worth half of the worker's benefit at full retirement age if collected at age 66; less if collected earlier. But it does not grow any larger if collected after full retirement age.
Because she is already 69, she has missed out on collecting three years' worth of spousal benefits. I'd like to think that an astute financial adviser well-versed in the rules of
Social Security would not have allowed that to happen in the first place.
But there is a little-known rule that allows those who delay collecting benefits beyond their full retirement age to receive a lump sum payment for up to six months of retroactive benefits earned at age 66 and later.
I wasn't sure if the lump sum payment rule applied to spousal benefits, so I asked the folks at the
Social Security Administration. Sure enough, it does!
“Yes, retroactivity may apply for up to six months,” said SSA press officer Kia Anderson. “The reader should contact 1-800-772-1213 about her individual situation.”
Once again, thanks to a great question from a reader, I learned something new about
Social Security benefits and I hope you did, too.
