Chris Stein, CFP®
Delayed Claiming and Retroactive Benefits
Another good question regarding delayed claiming and retroactive benefits has come in from our listeners this week:
“I am over 70, and still working. Because of the problems with Retroactive Benefits reducing your benefit, I am waiting until I’m six months past my 70th birthday to make it easier and not run the risk of them backdating my benefit and reducing the amount. My question is about my wife. She will be drawing off of my work record. She is a little younger than me, but past her full retirement age. Should she wait until she is 70.5 for the same reason I have waited? Or can she apply as soon as my benefit starts? In other words, if she starts drawing off of my benefit at age 68, will her benefit increase if she waits until 70.5?”
Let me first describe the listener’s concern about retroactive benefits. A couple of years ago we found out that the default recommendation at the Social Security office was to process your application for benefits with a retroactive date if you qualified. Once you are over your full retirement age you have the option of filing retroactively back to your full retirement age month, or 6 months, whichever is less. A number of people had filed retroactively when they did not intend to do so, so we warned everyone to make sure that wasn’t happening, unless it was your intent. This listener is aware of that default action by the SS offices.
I think the listener’s solution is a bit drastic in this case, since all you have to do is make it clear on the application that you do NOT want retroactive benefits. Waiting to 70.5, then filing retroactively to age 70 seems like a much more complicated path to get to the same destination.
Regarding his wife’s spousal benefit, since she is over her full retirement age she should file as soon as he files. There is no benefit to her waiting, and since she cannot file until he does, this bolsters my recommendation for him to go in and file immediately. Spousal benefits do not get the benefit of delayed retirement credits so once the spouse reaches her full retirement age, her spousal benefits are maxed so should be claimed as soon as possible. In this case it would be when her husband starts his benefit.
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