Mr. Kotlikoff,

We discussed my issues a few months back, and after thinking i had your strategy down, I did file in April. Yesterday an agent out of Baltimore called to finalize the numbers. Then he put doubt in my mind, so I put everything on hold. I couldn't explain to him the strategy you suggested. My particulars: 66 in Feb 2021. A wife, age 50, and 4 dependents under 18. Currently make $70,000 a year. I was hoping to start my and the kids benefits. Close estimates: full retirement age; $2818 a month filed in April: $2630 Total family benefits cannot be more than $4956 a month. Not exact until finalized, but close enough to work with. i understand the reduction for filing early: $70,000 - $18240 / 2 = $25,880. If I continue the file from April, that's 8 months at $2630, for a total of $21,040. Leaves me approx $4,000 short, as explained by the agent. Wouldn't make sense to file. I don't collect, the kids don't collect. He stated the dependents money comes from a different "pool". However, I thought, when you worked the numbers, you stated I would be able to collect starting in Oct, collecting a month later. But I don't remember how you calculated that. I do remember you saying don't ask S.S., they often are not trained sufficiently, but they are signing the check. I want to be able to explain it to the agent. Did I get it wrong the first time? And if i did, and the agent is correct, reaching full retirement age, 66 and 2 months, would be April 2021. When should i file? End of 2020, or beginning of 2021? This shouldn't be this confusing, unless it's almost done on purpose. I really am sorry to bother you again, but i am hoping this will affect me for the next 30 years or more. Hope. thank you for what you do.

joe

Hi Joe,

It sounds like the Social Security representative you spoke with gave you misinformation. You may want to direct his or her attention to the example in B.2 of section RS 02501.095 of the Social Security operations manual (https://secure.ssa.gov/apps10/poms.nsf/lnx/0302501095) for an explanation of how the earnings test works. The auxiliary benefits payable to your wife and children would not be paid from a different 'pool', and their benefits would be subject to withholding just like your benefits in order to cover the $1 of benefits that needs to be withheld for each $2 that your earnings exceed the earnings test exempt amount.

Here's how it would work in your case, assuming that your figures are accurate. If your primary insurance amount (PIA) is $2818 and the family maximum benefit (FMB) is $4956, that would leave approximately $2138 (i.e. $4956-$2818) per month potentially available to be split amongst your eligible family members. And, If your reduced benefit rate is $2630 that would make a total monthly amount of $4768, all of which would be withheld for as long as it takes to withhold the $1 for $2 required by the earnings test. So, if your earnings in 2020 requires the withholding of $25880 of benefits, then withholding 6 months of your and your children's benefits would more than cover the amount needed.

Therefore, if the benefit rates above are accurate and if you applied in April 2020, Social Security would withhold all of your and your children's benefits for the months April through September. They would then start paying all of you effective with October 2020, which are the payments issued in November 2020. And, when the year is over and your exact 2020 earnings are verified, Social Security would refund any excess amount of benefits that were withheld.

Best, Jerry