How Does Deeming Work?

Category: 
Jun 27 2016 - 2:00pm

I turn 62 in September 2016, and want to start collecting Social Security. I was laid off from my job last year, and made about $92,000 in 2015. My husband will be 63 in November 2016, and will retire then and begin collecting SS. He is currently making about $57,000 annually. I am confused about "deeming". Since he has not filed yet, will I receive my own benefit, or whichever is the higher of the two? And, then will he just collect on his own benefit when he retires a few month after me? Is his benefit affected by me retiring a few month before him?

Hi,

I hope that you will reconsider before following through with the above strategy. Since you were born after 1953, deeming will apply for you regardless of when you file for benefits. If your husband is already entitled on his account when you file, your application will be deemed as an application for benefits on both your own account and for spousal benefits. Or, if you file for benefits before your husband does, you will be deemed to have filed for spousal benefits whenever he eventually starts drawing on his account. That may or may not be of significance, because if your own full benefit amount (PIA) is more than one-half of your husband's PIA, you won't be eligible for spousal benefits anyway.

Your husband on the other hand, was born prior to 1954 so he still has the option of filing just for a spousal benefit on your account at age 66, then switching to his own account at age 70. That would permit him to receive one-half of your PIA for 4 years, and then switch to his own account when his benefit amount will be at it's highest possible rate, specifically 32% more than if he starts at age 66, and 65% higher than if he starts at age 63. Furthermore, that higher benefit would carry over to your potential widow's benefit, so if you follow through with your original plans, both you and your husband will be receiving significantly reduced rates for as long as either of you lives.

Before the two of you file for benefits, you should strongly consider running the maximization software available on this website. That will sort out all of your options in terms of dollar amounts, permitting both you and your husband to make the best possible choice.

Best, Jerry