Ask Larry: Does My Husband Need To File Retroactively To 2021 For Social Security’s 5.9% 2022 COLA?

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Today’s Social Security column addresses questions about whether the 2022 5.9% COLA applies to benefits filed for after December 2021, when one child’s benefit cessation can increase another child’s benefits and when the Windfall Elimination Provision (WEP) might not be applied. 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,

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


Does My Husband Need To File Retroactively To 2021 For Social Security’s 5.9% 2022 COLA?

Hi Larry, Our plan had been that my husband collect his Social Security retirement benefit at 70 in June 2022. Is there an advantage to claiming retroactively to last year in November or December to take advantage of a huge cost of living increase. He is no longer working so no advantage in collecting based on current income.

I don’t turn 70 until November of this year. When he does claim, should I collect a spousal benefit and then could I receive my own higher benefit when I turn 70 and it will be higher? Thanks, Marcia

Hi Marcia, The answer to your first question is no. Your husband will receive credit for the 2022 5.9% cost of living (COLA) increase regardless of whether he starts drawing benefits this year or last year retroactively.

And the answer to your second question is yes. Since you were born prior to 1/2/1954, you could file a restricted application for just spousal benefits only when your husband starts his benefits, and you could then apply to switch to drawing your retirement benefits at 70.

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


Will My Daughter’s Benefits Be Redistributed To My Son When She Turns 18?

Hi Larry, Both my children receive survivor benefits from their father who passed earlier this year. They are the only 2 survivors to receive benefits on his record. When my daughter turns 18, what will happen to her portion of the benefits? Will the funds be redistributed to my son? Thanks, Cheryl

Hi Cheryl, I’m sorry for your loss. Your son’s benefit rate will not go up when your daughter’s benefits stop. The maximum surviving child’s benefit rate is equal to 75% of the deceased worker’s primary insurance amount (PIA). Up to two surviving children can always be paid their full maximum benefit rate if they are the only survivors drawing benefits on a deceased worker’s record.

The only time that a surviving child’s benefit amount is reduced below 75% of the worker’s PIA is if there are more than two eligible children, or at least two eligible children plus a surviving spouse drawing benefits. In that case, they must split the family maximum benefit (FMB)
FMB
) amount that can be paid on the worker’s record.

So your son’s benefit rate won’t go up when your daughter’s benefits end because he’s apparently already being paid his maximum rate of 75% of his father’s PIA. The only times that a child’s benefit goes up when another child stops getting benefits is if their benefit rates were reduced due to the FMB. Best Larry


Is It Correct That I Wouldn’t Have A WEP Deduction If My Pension Ends Before My Social Security Payments Start?

Hi Larry, I have been contributing to both Social Security and a non-covered pension, Calstrs. The non-covered pension is in a cash balance plan that allows me to take the benefit as a three to 10 year term annuity.

I was told by my local Social Security office that if I wait to start collecting Social Security until after the annuity from Calstrs ends, I won’t have a WEP reduction of my Social Security benefit. Is this correct?

For example, if I begin collecting my Calstrs five year annuity at 58 and don’t start collecting Social Security until 65, will I still have a WEP deduction? Thanks Sean

Hi Sean, Yes, it sounds like what they told you is correct based on your description. Basically, any Windfall Elimination Provision (WEP) reduction would only apply in months that you’re paid both Social Security retirement or disability benefits and a non-covered pension.

Sometimes, though, the WEP can still apply even after a person stops receiving payments from their pension plan if they receive a lump-sum payment in lieu of a pension. In the case of lump sum payments, Social Security prorates the lump sum over period of years.

However, if your pension is just payable for a set number of months or years and if that period ends before you start drawing your Social Security benefits, then the WEP wouldn’t apply to your benefit rate.

Keep in mind, though, that I’m basing my answer solely on the limited information in your question. If there is something I’m unaware of with regard to your pension options, that could change how Social Security would treat your pension for WEP purposes. Best Larry


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