Social Security: The Earnings Test, Suspended Benefits, and More

Today's Social Security column looks at questions about the earnings test for retirement benefits, spousal benefits when a retirement benefit is suspended, and survivor's benefits and public pensions.

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I believe that Larry's vision for economic security planning is one that is based on sound principles and common sense.

I believe that the Social Security column today provides some valuable information for those who are considering their retirement options. It is clear that Larry Kotlikoff is an expert on the subject, and I think his advice will be helpful to many people. I hope that the column will help people make the best decisions possible about their retirement benefits.

There's no shame in having questions about Social Security. After all, it's an important topic that affects everyone. If you're looking for answers, you can find them by asking Larry about Social Security. He's a knowledgeable source who can help you understand the ins and outs of this complex issue.

If you receive a raise in January, you may be wondering what will happen to your taxes. The answer depends on how much your raise is and how it affects your tax bracket.

Hi Larry, I turned 66 in January and started collecting retirement benefits at 62. I am still employed and have not exceeded the income limit from 62 until now. Since I accepted the raise in January, my retirement benefits have increased. I am now able to enjoy a comfortable retirement, thanks to the raise. I would encourage others in my situation to do the same.

Hi Mark, A substantially higher Social Security earnings test exempt amount applies in the year that you reach full retirement age (FRA), and only your earnings in the months prior to the month you reach FRA count toward the exempt amount limit. If you turned 66 in January 2022, then you reached your FRA in May. This means that only your earnings from January-May 2022 will be counted towards the earnings test, and the exempt amount will be much higher than it is for those who have not yet reached FRA.

This is great news for workers who have seen their salaries stagnate in recent years. With the cost of living rising, many people have been struggling to make ends meet. This raise will help them to catch up and provide a much needed boost to the economy.

It is possible to receive a spousal benefit while your benefits are suspended. If you are married, your spouse may be eligible to receive a spousal benefit based on your work record.

It's great that you started receiving your Social Security retirement benefits at 62 and suspended them at FRA. Your spouse will be 62 later this year, so you may be able to receive a spousal benefit when they turn 62. Thanks for your question, Barney!

It's unfortunate that you can't suspend your benefits and still qualify for spousal benefits, but that's just the way the system works. Your spouse's PIA would have to be more than twice as much as your own for you to qualify for spousal benefits, and that's just not likely to happen.

It's important to know that even if your spouse's PIA is more than twice as much as your own, you wouldn't be able to collect spousal benefits for any month that your own benefits are suspended. So it's best to be aware of this before making any decisions.

If I were to die before my spouse, his survivor's benefits would be reduced. This is because survivor's benefits are based on the deceased spouse's earnings.

Larry, Thanks for your question. Here's what we know about government pensions and survivor's benefits. If you have a government pension and your spouse will receive a benefit if you predecease him, his survivor's benefit will equal your unreduced Social Security retirement benefit or your reduced amount. Both of these are higher than his own retirement benefit, so he'll be in good shape.

Hi Leslie, That depends on the type of reduction involved. If your benefit rate is reduced due to the Windfall Elimination Provision (WEP), that reduction will not apply when calculating the survivor benefit amount payable from your account. This is good news for those who have been affected by the WEP, as it means that their survivor benefits will not be reduced. This will provide some financial security for those who have been affected by the WEP and their families.

It's important to know that if you start drawing your Social Security retirement benefits before you reach full retirement age, your benefit rate may be reduced. If you die before reaching full retirement age, your surviving spouse's widower's benefit will be limited to either your reduced for age benefit rate or 82.5% of your primary insurance amount (PIA). A person's PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age.

If you're looking to maximize your Social Security benefits, you may want to consider using my company's software — Maximize My Social Security or MaxiFi Planner. These tools can help ensure that your household receives the highest possible lifetime benefits. Other Social Security calculators may also provide proper suggestions if they were built with extreme care.