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I will be 66 in July, 2018. Thus January 2018 will be the…

I will be 66 in...
I will be 66 in July, 2018. Thus January 2018 will be the year of my full retirement age (born in 1952). I am thinking about taking my SS starting in January. My benefit- at age 65, 0 months is $2389 and at age 66 0 months- will be $2553 (each will be a bit higher because I got a raise starting in July). I believe my benefit starting in January 2018 will be $2468 (increase 5/9 of 1% per month for the 6 months from July, 2017 through Dec 2017). My wife, who is already receiving SS would be electing to take her spousal share also starting in January and would see about a 50% increase. I am working full time and my gross salary from Jan- June 2018 will be over $44,880 which means I will take a penalty because of making over the maximum salary allowed before the penalty kicks in. I understand that beginning in January, 2018, for every $3 over the $44,880 I make in salary, my SS benefit would be reduced by $1. I also understand the penalty would be taken from my January benefit first. Then if the penalty isn't paid in full, my February benefit would also be reduced to coverage the remaining penalty amount. I also understanding if there is still money due in February that the entire monthly benefit would be taken but then I'd get a refund for the overpayment at the end of 2018.
1. Is my understanding listed above correct?
2. Will the $44,880 threshold go up in 2018? When is that figure released?
3. Will any of my wife's spousal share be used to pay the penalty?
4. Will the spousal share be based on my age 65 amount, my age 65 6 months amount or my age 66 amount.
5. What percentage of my monthly benefit be her spousal benefit? (50% of whatever I receive?)
6. Would her increase start in January or when I actually start receiving a SS check in the mail?
Thank youmike
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Answered in 18 minutes by:
9/22/2017
lev-tax
lev-tax, Tax Advisor
Category: Social Security
Satisfied Customers: 31,240
Experience: Taxes, Immigration, Labor Relations
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Hi Mike

I will address all your concerns.

1. Is my understanding listed above correct?

You are correct that your FRA is 66.
If you start your social security benefits before reaching 66 - your benefits will be permanently reduced depending on the number of months you start earlier.

If you continue to work and your earning will be high enough - your benefits will be recalculated - but only from the following January.

The SSA will recalculate your benefits every year based on additional earning.

Your spouse will be eligible for spousal benefits (based on your working record) as soon as you start your benefits.

Spousal benefits are 50% of yours - but may be further reduced depending when your spouse started her benefits.

.

Now regarding your earning - you may receive benefits and work at the same time - but when your earning is above certain limit in teh year you reach your FRA - your benefits are reduced up to the month preceded your FRA.

It might be not correct to call that reduction a penalty...

If you know your earning - you might want to tell the SSA and they will recalculate your benefits accordingly.

If not - at the end of the year the SSA will send you a letter regarding overpaid amount and will ask to pay back.

2. Will the $44,880 threshold go up in 2018? When is that figure released?

The limit on your earnings for the months before full retirement age is $44,880 for 2017. For 2018 that limit might be slightly higher - but not yet published.

3. Will any of my wife's spousal share be used to pay the penalty?

That will affect your wife's spousal benefits as well.. so she might be asked to pay back some social security benefits.

4. Will the spousal share be based on my age 65 amount, my age 65 6 months amount or my age 66 amount.

The spousal benefits will be 50% of benefits paid to you - and may be further reduced.

5. What percentage of my monthly benefit be her spousal benefit? (50% of whatever I receive?)

That will be 50% of your benefits if she started her benefits at HER FRA.
IF she started before her FRA - her spousal benefits will be reduced based on the number of months she stated earlier.

6. Would her increase start in January or when I actually start receiving a SS check in the mail?

Any recalculation based on additional earning or because of delay or COLA will be done annually and will affect your January benefits.

lev-tax
lev-tax, Tax Advisor
Category: Social Security
Satisfied Customers: 31,240
Experience: Taxes, Immigration, Labor Relations
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Customer reply replied 5 months ago
My wife was born in 1950. I believe she started receiving her SS when she was 62. If I read your answer correctly, she could be asked to pay back some of those benefits if she applies for spousal benefits? She receives about $800/month right now so if she applied for the spousal share in January 2018- when I apply for my SS benefits, how would the amount she receives be affected?( BTW, I've called the SS office 3 separate times and received 3 different answers). How would her benefits be affected if I waited until I reached 66 to start collecting SS
Customer reply replied 5 months ago
on line answer will be just fine
Phone call session started

In continue our conversation as you are looking for possible reduction for your wife's spousal benefits

See here

https://www.ssa.gov/planners/retire/1943.html

So if she started her benefits exactly at 62

- her own benefits woudl be 75% of her base amount

- her spousal benefits woudl be 35% of YOUR benefits

Then the SSA will compare both - and she will be entitled to the larger of these.

I hope that helps.

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Customer reply replied 4 months ago
if I take the spousal share now but I'm still working full time, will I be subject to the same penalty that i would be if I took my SS before FRA in July, 2018. Also, when I reached 66, would I then be able to drop my spousal share, pick up my own SS benefit and would my wife then be able to take her spousal benefit off of my benefit?
Customer reply replied 4 months ago
i don't want a phone call. if you cant reply by email, please dont reply

If you now start YOUR social security benefits before YOUR FRA - regardless if these are benefits based on YOUR working record or spousal benefits - they will be reduced based on the number on months you start earlier.

But if you delay your benefits and start spousal benefits - and later will switch to your benefits later - these benefits will NOT be reduced.

Your wife will be able to keep benefits based on her working record OR switch to spousal benefits when you start your benefits or reach FRA. But her benefits will always be reduced because she started earlier.

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lev-tax
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