Calculation of Primary Insurance Amount (PIA)

[JerryS109]

I was reading a thread on spousal benefits when I came across a reply from someone who referred to something called Open Social Security which bills itself as a free, open-source Social Security strategy calculator. I went to that web site, plugged in some information and the calculator spit out a bunch of numbers regarding my current SSA benefit and recommendations for my wife's application for her SSA benefit. The numbers in the calculator looked right. 

Question #1: Has anyone else used this open-source calculator and, if so, is it reliable?

Inside the Open Social Security web page, there was a reference to (and a link to) a PIA calculator in something called SSA.tools. THIS GETS TO THE POINT OF THIS TOPIC.

I always thought that the PIA was set (when I reached 66 yrs old) and didn't change. However, the PIA calculator in SSA.tools says that the PIA changes and gets larger each year. Now, this is important since my wife's spousal benefit is a percentage of my PIA. So...

Question(s) #2: Does the PIA, in fact, increase each year? And, if so, which one is used to calculate my wife's spousal benefit?

Thanks!

[RobertH514774]

Mike Piper's Open Social Security website is the go to source for claiming strategies, collecting the most possible based on govt actuary tables.

PIA can increase for the following two reasons.

- You are still working and replacing a lower income year of the 35

- PIA x any annual COLA

[fffred]

@JerryS109 

The PIA increases with the COLA, cost of living  increase, if any, each year. See https://www.ssa.gov/oact/cola/colaapplic.html for discussion at the SSA site.

I have used the Open Social Security program, more so after I was already pretty set on my own plan for filing. But I find that it is quite accurate, comparing to the SSA's own "anypia.exe" software (which you must download and install on a computer). Unlike anypia.exe though it will optimize for various situations (and the results can be verified with the SSA program). The analysis is well documented (speaking as a retired engineer) so one can have confidence in the results. The program is also flexible, it will give you its "optimal" filing method but the user can also specify their own filing ages for a comparison. The site itself provides a lot of useful references. I used a paid software for a year and find this free version is just as good. (I used "maximize my social security" by Larry Kotlikoff, himself is a renowned expert on Social Security).

Good luck!

[JerryS109]

Thanks @fffred for the response and information on the Open Social Security tool.

Yes. I have read that the PIA increases with COLA each year. That much I understand. But here is where my specific confusion lies. 

I have heard that my wife's spousal benefit uses my PIA that was calculated at my Full Retirement Age (FRA). I have also heard that my wife's spousal benefit is calculated based on my current PIA.

My FRA is 66 and occurred in 2019. For the sake of an example, let's say my PIA in 2019 was $1,995.00 and use the following table that calculates PIA using COLAs:

                                     COLA    

2019 PIA = 1,995.00  + 1.6%  = 2,026.90 for 2020

2020 PIA = 2,026.90  + 1.3% =  2,053.20 for 2021

2121 PIA = 2,053.20  +  5.9% = 2,174.30 for 2022 

2022 PIA = 2,174.30  +  8.7% = 2,363.40 for 2023

(Note: the table, above, is similar to a table found in the Open Social Security tool.)

I filed for my own SSA benefit in 2023. If my wife applies for her SS benefit in 2023, "my PIA" will be used to calculate her spousal benefit.

HERE'S THE REAL QUESTION: Will my wife's spousal benefit be calculated from my 2019 PIA ($1,995) or will her spousal benefit be calculated using my current (2023) PIA ($2363.40)? 

Thanks!

[fffred]

@JerryS109 

I just ran the SSA's program "anypia.exe" and it is reporting my wife's spousal benefit would be (she is not yet taking this) as 1/2 of my current, 2023, PIA.  ...not my age 66 (FRA) PIA but my PIA for current 2023 benefits.

Larry Kotlikoff addresses this nicely, in his "Ask Larry" column (Larry is a renowned economics professor and author of the "Maximize My Social Security" software). His answer here agrees with my observation (that spousal benefit is based on the PIA of the worker at the time that the spouse applies). See https://maximizemysocialsecurity.com/what-pia-used-calculating-spousal-benefit

Edit to add:  I'm sure this can be found in the SSA rules, but Larry's Q&A came up first in my Google search

[GailL1]

Her spousal benefits are gonna be based on the benefit that you are getting at the time that she applies.

In this instance, the COLA has already been added up to the date which you filed for benefits ( and her too if she files at the same time).

However, there is one thing that will be different.  

You are over your FRA by several years and will have Delayed Retirement Credits added to your benefit ( 8% per year for those years or portion thereof that you have delayed your full retirement up to age 70.)

SPOUSAL BENEFITS DO NOT INCLUDE ANY DELAYED RETIREMENT CREDITS - 

[fffred]

@JerryS109 

hi Jerry, I'm not GailL (she is smarter than me and nicer looking). Your situation is much like mine.

I also started at age 70, so I have those DRCs, My benefit amount is 1.32 times my PIA. And the SS program (anypia.exe) shows my wife's spousal benefit "would be" if she applied now as 1/2 of my (current) PIA (as indicated in the program).

I have actually kept track of my annual reported PIA since my FRA and it simply increases by the COLA each year.

To answer your question, referring to the table, your wife's spousal benefit would be based on your 2022 PIA.

[JerryS109]

Yes. I know that Delayed Retirement Credits (DRCs) are added to my benefit since I filed at age 70. And I know that the spousal benefit does not include those DRCs. By contrast, if I had filed for benefits at my FRA (age 66), then my benefit amount would have been my PIA (without DRCs) which would have increased each year because of COLAs. That much I fully understand.

So, @GailL1 , referring to the example in my table, above, are you saying that if my wife files in 2023, then her spousal benefit will be based on a 2023 PIA (which, in the example table = $2,363.40)? 

[GailL1]

@JerryS109  WROTE

So, @GailL1 , referring to the example in my table, above, are you saying that if my wife files in 2023, then her spousal benefit will be based on a 2023 PIA (which, in the example table = $2,363.40)? 

===========================

YES  -  50% of that figure less any % reduction If she is not her own retirement age yet.  

[JerryS109]

Hi @fffred . I just now read your reply. 

Yes, the Open Social Security tool also calculates my wife's spousal benefit using my 2023 PIA. I just was not sure I could trust it. I was looking for some confirmation. 

Thanks for the Larry Kotlikoff referral. I have read some of his other articles  and have found them very useful and informative. The next thing I am going to do is read the article in the link you included.

Thanks!

[JerryS109 · Accepted solution]

OK. I'm going to try something here that I hope does not break any Community rules of etiquette. Since @GailL1 and @fffred both provided valuable information, I will mention those replies here, recap those replies as best as I can, and accept my own reply as the solution. So ...

In this thread/discussion, I gave an example of how the PIA increments based on COLAs. My question was which of the PIAs is the one used for my wife's spousal benefit. Was the PIA that was used for the spousal benefit the PIA when I reach FRA (66 for me), was it my current PIA (with COLAs applied), or was it some other PIA? 

Both @GailL1 and @fffred agreed and verified that the PIA used for my wife's spousal benefit was whatever PIA was in effect at the time my wife applied for benefits. In my case, since my wife will apply this year, the PIA used is my current PIA for this year ... which is what @GailL1 and @fffred said. Also, @fffred offered a link to an "Ask Larry" column that also verified this information (See the link in the thread, above). 

Question answered. Problem solved.

Thanks MUCH to @GailL1 and @fffred .