Today’s column addresses questions about what month bonuses are credited in, the availability of divorced spousal benefits, filing online and how to file in response to virus related unemployment. 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.
Which Month Does My Bonus Pay Count Towards My Earnings Limit?
Hi Larry, I receive disability from Social Security, and I work a part time job. I know there is a limit as to how much I can earn before they take away my disability. My part time job is giving a bonus because of the corona thing and for every hour I work they will give $2.00 that will be paid the following month. Does that count towards my earnings limit for the month I earn it or the month it’s paid? Thanks, Ellie
Hi Ellie, Social Security counts your earnings when the money’s earned, not when it’s paid. If you receive a bonus, it counts as earnings for the period in which you did the work to earn the bonus.
However, sometimes it’s difficult for Social Security to determine when earnings are earned vs. when they are paid. If they lack sufficient evidence to the contrary, their guidelines permit them to count your earnings as being earned in the month they’re paid. You’ll want to try to keep records such as your pay slips so that you’ll be able to document your correct monthly earnings. Generally, earnings that average in excess of $1,260 per month in 2020 is considered by Social Security to be “substantial gainful activity” (SGA), which could cause your Social Security disability benefits to be suspended or terminated. Best, Larry
When Can I Possibly Start To Receive Any Divorced Spousal Benefits?
Hi Larry, I am 60 and currently receiving my Social Security retirement benefit and wanted find out if I am eligible for Social Security divorced spousal benefits although my ex hasn’t retired yet and is still working at 68. When can I possibly start to receive any divorced spousal benefits? We were married 12 years. Am I eligible for anything and if so do wait until he actually retires? Thanks, Abbie
H Abbie, You’d have to be at least 62 to potentially be eligible for divorced spousal benefits, and your ex would either have to be drawing his benefits or be at least 62. Even then, though, you’ll only qualify for divorced spousal benefits in addition to your Social Security retirement benefits if your ex-spouse’s primary insurance amount (PIA) is more than twice as much as your PIA. A person’s PIA is equal to their Social Security retirement benefit rate if they start drawing at full retirement age (FRA). And if you do qualify for additional divorced spousal benefits and if you start drawing your benefits prior to FRA, your benefit rate will be reduced for age. You can use my company’s software — Maximize My Social Security or MaxiFi Planner — to explore your potential filing options. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry
Why Can’t My Wife And I Both File Online?
Hi Larry, My wife, born in 12/1950, filed for her retirement benefits at FRA. I turn 66 in October and plan on filing when I reach FRA. From looking at the website, it appears she can not file for spousal benefits online since she is already receiving her retirement benefits. Is this correct? If so, why can’t we both use an online application? Thanks, Charles
Hi Charles, You’ll have to ask Social Security that question, but apparently their online systems aren’t prepared to handle the processing of spousal claims filed after a person is already drawing their own benefits. Social Security’s website claims that they’re constantly expanding their online services, though, so maybe people will be able to file claims like that online at some point in the future. Best, Larry
What Would You Recommend In My Situation?
Hi Larry, I’ve just turned 65 and now with the virus sweeping the globe, I, like many others, am now unemployed. I’m skeptical about my chances of finding another job where I make what I’ve been making due to my age and the current situation which will have some long term effects. My FRA is 66 and two months. My benefit at 70 is based on my continuing to earn income and I don’t believe that is on the table any longer. What would you recommend? Maybe waiting until FRA? Thanks, Will
Hi Will, Only you can really decide when to start drawing your benefits, but if you’ve lost your job and need income, you could file now and be paid benefits at least for any months this year that you earn less than $1,520. Or if you earn less than $18,240 in 2020 you could be paid all of your benefits regardless of how much you earn in individual months.
If your full retirement age (FRA) is 66 and two months and you start drawing benefits effective the month you reach 65, your monthly benefit would be equal to roughly 92.2% of your FRA (100%) rate. Your rate would get progressively higher for each month that you wait to start drawing until 70. If you waited all of the way until 70 to start drawing benefits your rate would be roughly 130.66% of your FRA rate.
If you’re married and your benefit rate will be higher than your spouse’s, another factor you should consider is that your spouse’s survivor benefit rate will be limited to your benefit rate. So if you start drawing early, it could adversely affect the survivor rate your spouse could draw in the event of your death. Best, Larry