My Notes on the Talk on Social Security at The Commonwealth Club of San Francisco, 14 August 2015

Social Security Benefits for Boomers and the Rest of You

                I’ve been on the library waitlist for the book Get What’s Yours: the Secrets to Maxing out Your Social Security by Laurence J. Kotlikoff, Philip Moeller and Paul Solman for months. I started at #54 and am now #7. I know I can buy the book for about $13.50, including shipping, from or go on Links Plus to order it from another library system. The reason that I am willing to wait is because I’m cheap and because I will not be 70, the magic age for claiming maximum benefits, for a little over two years. This afternoon I heard one of the authors, Paul Solman, speak at The Commonwealth Club of San Francisco. I assume I will learn much more from reading his book but I learned important things today that do not affect me; however, they may affect you if you have not yet filed.

I understand from friends who spent a lifetime working for the federal government or as California teachers who paid into CALPERS, not Social Security, this information probably does not apply. But for the rest of you, Get What’s Yours.

Mr. Solman shared that only a small percentage of people wait until they can earn the maximum benefit at age 70. He posits that there are very few reasons to claim at a younger age and take a lower amount.  Younger claimants have an opportunity to borrow from Social Security and repay at 70 to collect the maximum. He says to read the book for his tennis partner and co-author Larry Kotlikoff’s detailed explanation of this.

Solman shared that the reason that he, a business and economic correspondent, decided to write the book is that he thought he had investigated all the information about collecting Social Security until Larry Kotlikoff mentioned spousal benefits to him.  Solman and his wife thought the only way to collect maximum benefits was to wait until age 70. They were wrong.

Let me address my own spousal benefit story. In December of 2012, I turned 65, had been widowed for over 9 years and had not worked full time for about 14 months. I called Social Security to claim surviving spouse benefits. The representative put me on hold and then came back on the line to say, “You made too much money to qualify.”  When my sons were in college and we tried to apply for grants, we were told the same thing; therefore, I accepted the proclamation. In April of 2013, I made a new friend who happened to have worked for Social Security at one time, years before, and had retired from another federal job a few years before we met. We were both widows and in discussing our experiences, I mentioned the surviving spouse benefit. She said that I was given the wrong information. She called a friend who still worked for Social Security to confirm. The next day, I called Social Security again. The young man on the other end of the phone verified my name, SS number, address, my deceased husband’s information and said that I would start receiving checks soon. What changed? I have no idea. I did write to request payment retroactive to when I first tried to apply. The letter in reply advised that the policy is to award only one retroactive month. I was afraid that if I asked again, I would get an answer that there was a mistake and I was not eligible for any of it. I did not pursue additional back payment.

Those of you who are still married, or are divorced but were married a minimum of 10 years, can apply for spousal benefits. Read the book or the SS website for clarification. If I understand it correctly, the higher-earning spouse files with Social Security but defers payment (preferably until age 70). The lower wage earner then applies for the spousal benefit. I think he said that only one spouse can claim at a time. Read the book to clarify. In the case of divorce, multiple former spouses can all claim from one spouse, as long as the marriage lasted at least ten years. For example, if Beulah were married to five different men/women at least 10 years, each of the five can collect spousal benefits based on Beulah’s contribution.

I encourage you to read the book and have it marked at relevant passages in case someone at Social Security denies your claim. In fact, Solman joked that his tennis partner Kotlikoff is so steamed when people are denied benefits for which they qualify, he has been known to write to Social Security for them.

Please share this information with people you feel may not know about it. In the interview at Commonwealth Club today, 14 August 2015, Paul Solman said he can’t count the times that he has told friends about the spousal benefit and they have gone right to the phone.

This is something I found on the Internet from “Money Magazine’s” Philip Moeller, March 9, 2015. Mr. Moeller, I hope you don’t mind that I share it with my friends.

Q: My wife was born in 1950 and will be 65 this year; I was born in 1953 and will be 62. As I have earned more in my lifetime, my Social Security benefit is estimated to be larger than hers at full retirement age. But her spousal benefit would be less than half of her individual retirement benefit. When the younger spouse has a higher estimated benefit, what are some strategies to explore? —Jack

A: If there’s one set of rules worth understanding, it’s spousal benefits. Every year, couples leave literally billions of dollars on the table because they make the wrong claiming choices. Here are three secrets to getting this claim right, and how they apply to your situation:

  1. To get spousal benefits, the primary earner must file for retirement benefits first.Spousal benefits can equal as much as half of the amount the person would receive in individual Social Security benefits at full retirement age (FRA). For anyone born in 1943 through 1954, FRA is 66; it will gradually rise to 67 for people born in 1960 or later.
  2. If you file for a spousal benefit before your FRA, you will end up with a smaller amount.You can file as early as age 62 but if you do, you will be hit withbenefit reductions. Retirement benefits will rise each month they are deferred between FRA and age 70. Spousal benefits peak at FRA, so there is no reason to defer claiming them past that point.

An early filing will also trigger a Social Security provision called deeming—this means the agency considers you to be filing both for your individual retirement benefit and you spousal benefit. You will be paid an amount roughly equal to the greater of the two benefits. But you lose the opportunity to get increases for delayed claiming on your individual benefits. This is a bad deal.

  1. Use a file-and-suspend strategy.If both spouses defer claiming until FRA, the higher-earning spouse can file and suspend benefits then. This way, the lower-earning spouse can file for spousal benefits, allowing his or her individual retirement benefit to grow due to delayed retirement credits. Then you can each file for maximum retirement benefits at age 70.

So what’s the right approach for you? If you both defer filing, you can file and suspend your benefit at age 66. This will enable your spouse, who will have turned 69, to file for her maximum spousal benefit. Meanwhile, she can continue to allow her individual benefit to grow due to delayed credits up to age 70.

My friends, perhaps this information is of service to you or someone you cherish. We didn’t know that Landon Jones would coin the term “Baby Boomer” and explore our lives in a book, Great Expectations: America and the Baby Boom Generation, but we always knew our generation would redefine “Old.” The time when Paul McCartney suggested we would “grow older, losing our hair, many years from now” arrived. We want to make the most of our days; we want to live a bountiful life and make sure that others do, as well.