Is My Full Retirement Age Earlier Since I’m Receiving Social Security Survivor Benefits?

Today’s Social Security column addresses questions about whether survivor’s benefits reduce full retirement age for all benefits and the earnings test, earning more or paying more to increase benefits and the earnings test and survivor’s benefits. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc.

See more Ask Larry answers here.

Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.

Is My Full Retirement Age Earlier Since I’m Receiving Social Security Survivor Benefits?

Hi Larry, I have been receiving survivor’s benefits for the past three years. I still work, so some of the benefits have been withheld. I will be 66 next month. Is my full retirement age 66 since I’m receiving survivors benefits or 66 and two months? Thanks, Nina

Hi Nina, Without knowing your year of birth I can’t give you a definitive answer. Here’s what I can tell you. People born in the years 1955 through 1961 have a different full retirement age (FRA) for Social Security retirement benefits than their FRA for survivor benefits. For those people, their FRA for survivor benefits can be from two to four months earlier than their FRA for retirement benefits.

However, the earlier FRA that applies in some cases to survivor benefits only affects the reduction percentage applied to the person’s survivor benefit rate. For Social Security earnings test purposes, the person’s retirement benefit FRA is controlling even if they are collecting survivor benefits.

So if your FRA for survivor benefits is 66 but your FRA for retirement benefits is 66 and two months, then the first month that the Social Security earnings test would no longer apply to you is the month you reach age 66 and two months. Best, Larry

Can I Up My Income Or Can I Just Up The Amount I Pay?

Hi Larry, We have a corporation and my husband and I are president & secretary. My daughter works for us too. I am 62 and I want to maximized my retirement. Should I file at 70 or 72? Also, should I up my income or can I just up the amount I pay in taxes? Thanks, Lisa

Hi Lisa, Once you turn 70, you no longer earn delayed retirement credits so waiting until 72 would just cause you to forgo two years of benefits with no subsequent increase in your benefit rate.

Here’s what I can tell you. You can’t voluntarily overpay Social Security taxes in order to increase your benefit rate. If you raise your salary you may be required to pay more Social Security taxes, which could potentially increase your benefit rate.

However, based on IRS and Social Security regulations, the amount that you pay yourself in salary must be commensurate with the services you perform. If fraud is determined, the penalties can be significant.

Furthermore, Social Security retirement benefits are based on an average of a person’s highest 35 years of Social Security covered wage-indexed earnings, so a relatively few years of higher earnings may not have as much of an effect on your future benefit rate as you may be thinking.

You and your husband may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to ensure your household receives the highest lifetime benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry

Can You Explain Why A Surviving Spouse Can’t Get Survivor Benefits If They Are Working Full Time?

Hi Larry, If you are married and the spouse passed away and you work full time, why isn’t the surviving spouse entitled to a survivor’s benefit? I was told that I was not entitled simply because I worked full time, but my son was entitled to receive the benefits. Would you be able to explain that to me please? Thanks, Zach

Hi Zach, Social Security has an earnings test that applies to people who are under full retirement age (FRA) and who are eligible for retirement or survivor benefits. The earnings test requires withholding of $1 of benefits for each $2 that such beneficiaries earn in excess of the earnings test exempt amount.

The applicable exempt amount in 2022 is $19,560. So whether or not people who are under FRA and eligible for benefits can actually be paid benefits depends on their benefit rate and how much they are earning.

The basic reason why Congress added an earnings test to the Social Security law is because Social Security is considered to be a social insurance program. The principle intent of the program is to replace at least some of the income lost due to a person’s retirement, disability, or death.

Congress concluded that people under FRA who are still working and earning a relatively high amount of income should be able to support themselves without as much, if any, of the replacement income that Social Security would otherwise provide.

Regardless of whether or not the earnings test is fair or justifiable though, it is part of the Social Security law as passed by Congress. Best, Larry