Column: Social Security advice for the dazed and confused

Social Security rules are complicated and change often. For the most recent “Ask Larry” columns, check out maximizemysocialsecurity.com/ask-larry.

Editor’s Note: Boston University economist Larry Kotlikoff has spent every week, for over three years, answering questions about what is likely your largest financial asset — your Social Security benefits. His Social Security columns have prompted so many of you to write in that we feature “Ask Larry” every Monday. Find a complete list of his columns here. And keep sending us your Social Security questions.

Kotlikoff’s state-of-the-art retirement software is available here, for free, in its “basic” version. His new book, “Get What’s Yours — the Secrets to Maxing Out Your Social Security Benefits,” (co-authored with Paul Solman and Making Sen$e Medicare columnist Phil Moeller) was published before the changes from the Bipartisan Budget Act of 2015 went into effect. The three authors are now doing an overhaul of the book. The new version of “Get What’s Yours” should be out this spring.

Kotlikoff has been keeping readers updated on how the budget act changes a number of Social Security rules with “This is not how you fix Social Security,” “Congress is pulling the rug out from people’s retirement decisions,” and especially his “12 secrets to maximizing your Social Security benefits under the new rules,” as well as his answers to viewer questions. We’ll continue publishing updates on what this new law means for you. Stay tuned.

Dazed and Confused: Thank you for your recent articles on new Social Security strategies. We have not quite seen our case discussed and wonder if you would care to decipher our best course of action.

My wife chose to begin her Social Security benefits about a year ago at age 62 and a half due to a need for cash flow in our household. She has been receiving $682 a month. We are now in a situation where we don’t need this cash flow. She is four days older than I am, and our birth dates are in June 1952.

Can my wife now suspend her Social Security benefits, wait until I file and suspend my Social Security benefits at full retirement age and then apply for spousal benefits? My benefit amount at full retirement age is $2,716. I would subsequently file for Social Security benefits at age 70 (gaining the 8 percent increase per year from age 66 to 70) and my wife would go back to her benefits?

Larry Kotlikoff: Dazed and Confused, the new law has changed a lot of things for you two.

Your wife can suspend her retirement benefit at full retirement age and restart it at 70 at a 32 percent higher level. And you can wait until 70 to collect your own retirement benefit. Another option is for your wife to keep taking her retirement benefit and then you could file for just your spousal benefit at full retirement age. Then at 70 you would take your own retirement benefit. (This does NOT involve your filing and suspending.)

There are many intermediate options. If your wife can still work and can earn enough money to lose all her benefits via the earnings test, that would be great, because at full retirement age, she will have those lost benefits restored in the form of a permanent bump up in her retirement benefit due to the Adjustment of the Reduction provision.

Erica: I purchased your book, “Get Whats Yours,” and I am a little disappointed. There is nothing that I see that can benefit me.

I got a divorce four months before reaching 10 years of marriage. My husband was an orthopedic surgeon for about 15 years. He died at age 38 (in a plane accident) back in 1975.

My question is: Is there a way or loophole that I can receive his Social Security? I was not aware that we had to be married 10 years before I could receive his Social Security. I would have waited four more months if I had known.

I am now a very healthy 81-year-old, and I worked up until I was 75 as a secretary. The attorneys I have called know nothing of any loopholes in Social Security that could help me.

I worked altogether for about 55 years. Please, could you shed some light on my situation?

Larry Kotlikoff: This is truly tragic on all fronts. It boils my blood that Social Security was set up to deprive people like you from what is, effectively, lifetime insurance benefits, which your ex-husband paid for via taxes and which you can’t collect due to a “technicality” invented by males to penalize women who got divorced “too soon.” If you read my column on why I believe Social Security is sexist, you’ll see that the system is chock full of features that end up benefiting men more than women even though the system is nominally sex-neutral.

I wish I had something positive to tell you, but I don’t. The only thing I can do is use your story to let others know the huge potential prize they will pay if they divorce before 10 years.

Erica: I talked with an attorney that handles Social Security, and he suggested I inquire about Social Security Disability Insurance. He said he would represent me for 25 percent of whatever I receive. Does that sound good to you? How would I approach the Social Security Administration so as to not be turned away right away? Any advice would be greatly appreciated.

Larry Kotlikoff: Ditch that attorney and quick! You can’t collect disability benefits beyond full retirement age! And you wouldn’t qualify even if you could, because you said you are perfectly healthy.

Charlotte: I just went online to learn about the new Social Security rules, and your name came up as a reliable expert. I read through many of the questions on the PBS NewsHour site, but I did not see anyone in my situation.

My question: I was born in December of 1951 and turn 66 in December of 2017. My husband was born in 1948. He took his retirement right away at 66, which I now regret. With the new law, I don’t think I can retire at 66, take spousal benefits and postpone my benefits until age 70. Is there any strategy we should use? Could he suspend his benefits now, and could I file and suspend by April this year while I am 64? He gets $2,600 a month, but he would have gotten a lot more if he waited. I get $1,700 if I take my benefits at 66, $1,300 if I am allowed to take spousal benefits and $2,000 of my own if I wait until I’m 70.

Whether you are able to answer this or not, thank you for helping the elderly with your books and advice column.

Larry Kotlikoff: Your husband can and should suspend his retirement benefit immediately and restart it at a higher value at 70. You are old enough to have been grandfathered in by the new law. So if your husband suspends before April 30, you can collect just a spousal benefit on his work record and wait until 70 to collect your own retirement benefit. So you are in luck!

Rose: I am 52, and I have been receiving Social Security disability for about three years. The amount I receive is $464. My husband just passed away. He was 73. His Social Security amount was $1,680. Will I be eligible to receive some of his Social Security benefits? What I saw online is that I would be eligible for 71.5 percent of my husband’s Social Security minus my amount of $464. Does this sound right? I am scared to go to Social Security office without the right knowledge and information.

Also, I think at 67 years old, I may be eligible for 100 percent of his Social Security amount. Does that sound correct?

Larry Kotlikoff: I’m truly, terribly sorry for your loss.

You can, as far as I know, collect 71.5 percent of your widow’s benefit, which may be even higher than $1,680 per month, because the $1,680 may have been net of your husband’s Medicare Part B premium, as well as federal tax withholdings. It could also be larger if your husband had taken his retirement benefit before his full retirement age.

You will be eligible for 71.5 percent of the difference between your husband’s full retirement age benefit (that is, his primary insurance amount) and your disability benefit amount. This excess disabled widow’s benefit will be paid in addition to your disability benefit. Furthermore, because you were disabled before he passed away, when you reach full retirement age, the 28.5 percent reduction of your excess widow benefit will go away. You will then receive a combined benefit amount, which will be at least as much as the full amount your husband was receiving (increased by all subsequent Social Security cost of living increases). Of course, all of this assumes that your disability continues until you reach full retirement age, which is age 67 in your case.

So do rush over to the local Social Security office and claim your widow’s benefit. You should be able to get up to 12 months of retroactive benefits as well, depending on how long ago your husband passed.

Georgia: I would sincerely appreciate some information on how this new law will affect my Social Security. I am now 67. My husband died at 58, and my youngest of five was 12 years old at the time. I was working, so I just collected for her until she reached the age of 18. I had planned on working until I was 70, but illness prevented it. I am not on disability, but I do have a scooter. At the age of 63, I retired and took my husband’s Social Security, because I was told that if I took mine, I would lose $300 a month. I am worried what effect this new law would have on my Social Security. I honestly need my Social Security intact. I believe when I reach 70, I can switch over to my Social Security. Is this still possible? Would I lose money? Should I change or suspend? I worry about it because I am immobile enough that I don’t have the option of going back to work. Walking just a few feet makes me breathless. Any information that you can give me would be gratefully appreciated.

Larry Kotlikoff: The new law hurt a lot of people’s benefits, but it didn’t take anything from you. It doesn’t impact widows at all. So not to worry.

Mark: I am confused about the Windfall Elimination Provision. I worked one year in Texas, but I called the Teacher Retirement System, and they said I withdrew only my portion and that I would not have been eligible for a pension. It was $1,100 or so that I withdrew. It was not the employer’s portion. I was there for just over a year. It takes five years to get vested, so there is a question on the Social Security form that asks: Did you take a lump sum in lieu of pension? I did, but I still would not be eligible for a pension. Would I still face the Windfall Elimination Provision?

Larry Kotlikoff: No, don’t say you received a pension or took a lump sum. You just withdrew you own contributions.

Frank: You came to the rescue. I purchased your book last summer and now my brother’s twin children are receiving monthly benefits. My 63-year-old brother, a golden handcuffed former banker, made a poor decision some years ago by buying a franchise that ultimately bankrupted him, leading to divorce and a difficult time with his ex and teenage twin girls. To unexpectedly start receiving money that will pay for private high schooling was a godsend. Thank you.

Now to my question. I turned 62 in December, and my wife will turn 62 in the beginning of May. She has worked part time for some 20 years and is entitled to $950 at age 66, $1,306 at age 70 and $681 at age 62, assuming she continues to earn $15,000 per year until full retirement age. My estimated benefits are $2,713 at age 66, $3,606 at age 70 and $2,043 at age 62. I intend to keep working (I earn $200,000 plus my annual bonus) while my wife’s job may end next year. My question is: Should she apply for and receive her own check beginning at age 62 and then receive 50 percent of my benefits when I retire?

Thank you. You are providing a wonderful service helping people navigate this complex system.

Larry Kotlikoff: Great to hear about your brother. Given the new law and your situation, it may be best to have your wife take her retirement benefit at full retirement age or sometime before age 70. At that time, you would collect just a spousal benefit on her work record, which will be half of $950. You would, under this plan, wait until 70 to collect you own retirement benefit. When you collect at 70, she should file to collect a spousal benefit.