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Hi.. Question re spouse social security
Old 02-01-2009, 10:33 PM   #1
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Hi.. Question re spouse social security

hi, i'm new here. not sure if i am in right place... if not maybe someone knows where can get answer. i am female 43 years old. my husband has been unemployed for past several years. he turns 62 next year. i know he can collect his own social security then, but can he collect on mine instead as it would be higher. thanks...
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Old 02-01-2009, 10:47 PM   #2
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Hello alvwms, I think he would have to stand on his own. If yours is higher and you take it at 62 then he can get 1/2 of yours if its more than he's already getting. I may be wrong so you should check the IRS web site for clarification.
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Old 02-02-2009, 08:17 AM   #3
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No, he would only be able to take his at 62 (and will suffer a PERMANENT reduction). When you reach 62 or 67 his could be increased to 50% of yours BUT it will then be reduced to something like 37.5% since he elected to take his at 62 which creates a PERMANENT (25%) reduction, or if his benefits are more at that time he, of course, continue on his own record at reduced benefits.

I suggest you call or go down to the SSA or search the site (Social Security Online - The Official Website of the U.S. Social Security Administration) for additional information.
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Old 02-02-2009, 08:26 AM   #4
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Here's a link to an ssa webpage:
Answer

Not sure of the real answer but it sounds like you
have to file first which, I assume you can't do now, since you have to be age 62 in order to be
eligible. My guess is that the answer you have been given twice already is correct.

Second OAG's suggestion that you call ssa for the official answer.
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Old 02-02-2009, 10:39 AM   #5
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Social Security Spousal Benefit

This is a link to an extensive and thoughtful discussion of spousal social security benefits. You have to read the entire discussion because early in the discussion there were some misunderstandings.

A short answer: A married person cannot collect on their spouse's record until the spouse files for their own SS benefits.
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Old 02-04-2009, 03:39 PM   #6
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Bankrate.com has a summary article on spouse SS options:
Super-size Social Security (Page 1 of 2)

Unfortunately if we're reading about do-overs on sites like Bankrate.com then it'll only be a matter of time until SS tightens up on approvals...
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Old 02-04-2009, 03:41 PM   #7
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I posted a while back, can't find it now, that the SSA had a report done on the effects of the "do over." I'll see if I can dig up the link. Because the report was done I think that there is a good chance that the SSA will change its policy.

EDIT: The Inspector General issued a report to the SSA regarding the loophole which allows people to pay back SS without interest and then reapply to get the higher benefit. http://www.ssa.gov/oig/ADOBEPDF/A-05-08-28110.pdf
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Old 02-04-2009, 04:51 PM   #8
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We identified cases where it appeared beneficiaries were withdrawing benefits to obtain a higher monthly benefit, though the volume was small. Nonetheless, SSA’s open-ended policy on application withdrawals allows individuals to bypass the Agency’s retirement policies that encourage delayed retirement. Moreover, the policy allows the beneficiaries to deny the
Trust Fund use of these monies prior to withdrawal without being required to pay interest or penalties for the use of these Federal funds. Finally, while the number of beneficiaries using this process may be small at this time, the workload could grow and SSA will need to decide if this is where it wants to invest its scarce resources.
Thanks, Martha. Seems the IG already has an opinion...

I guess the big issue is the possibility of paying eight years of taxes on withdrawals between ages 62-70, having to write a large check to pay it all back, and then correcting no more than three years of tax returns. It's possible that the taxes paid between ages 62-66 would never be recovered.

The recipient loses the use of the growing lump sum that he's been holding on to all those years and then has to wait another 10-15 years (until age 80-85) to catch up on payback. All to hedge mortality between ages 62-70 and to have the ability to leave a higher survivor's benefit to spouse. Who, in our case, is only 16% behind my earnings record anyway.

Guess I'll review the latest version of this report in 2019 and run a bunch of spreadsheets. You'd think that a smart insurance company would leap into the breach on this calculation.
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Old 02-04-2009, 05:00 PM   #9
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Thanks, Martha. Seems the IG already has an opinion...

I guess the big issue is the possibility of paying eight years of taxes on withdrawals between ages 62-70, having to write a large check to pay it all back, and then correcting no more than three years of tax returns. It's possible that the taxes paid between ages 62-66 would never be recovered.

The recipient loses the use of the growing lump sum that he's been holding on to all those years and then has to wait another 10-15 years (until age 80-85) to catch up on payback. All to hedge mortality between ages 62-70 and to have the ability to leave a higher survivor's benefit to spouse. Who, in our case, is only 16% behind my earnings record anyway.

Guess I'll review the latest version of this report in 2019 and run a bunch of spreadsheets. You'd think that a smart insurance company would leap into the breach on this calculation.
Not true, you do not amend any tax return. You calculate the impact of the taxes because of the SS Benefits and then you have 2 options. Number 1 is to take a deduction on schedule A in the year of payback OR Number 2 is to take a credit on line 68 of IRS Form 1040 for the year of payback. You select the option you want to take (hint: #2 is probably the one most will take). Look at the instructions for Form 1040 or at IRS Publication 915 available at the IRS Site.

BTW the recovery of taxes, along with the interest earned, and using a low rate HELOC, will get the payback down to about 5 years (or less, depending on the interest rate).
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Old 02-04-2009, 05:38 PM   #10
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Number 1 is to take a deduction on schedule A in the year of payback OR Number 2 is to take a credit on line 68 of IRS Form 1040 for the year of payback. You select the option you want to take (hint: #2 is probably the one most will take). Look at the instructions for Form 1040 or at IRS Publication 915 available at the IRS Site.
BTW the recovery of taxes, along with the interest earned, and using a low rate HELOC, will get the payback down to about 5 years (or less, depending on the interest rate).
No kidding?! Only in America! I don't carry life insurance or survivor's benefits, so this may be the only remaining method of proving to my spouse that I'm worth more alive than dead. Or at least not worth the price that she'd pay...

IIRC someone on this board has submitted their withdrawal request and was awaiting SSA approval. I don't remember the result-- was it you or someone else?
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Old 02-04-2009, 06:49 PM   #11
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For those ambitious souls planning a redo.....a cautionary tale from bogleheads.org
Go down the linked thread to a Jan 28 10:47PM posting by Nonnie .....there's a brief summary and then a link to more details: Bogleheads :: View topic - SSA form 521 downside?

I just briefly skimmed it but it sounds basically that this redo is kind of not well known among the recipients of SS and almost equally well known (or not known) by the SS people who are going to help you do it. So it may not go as well/smoothly as you imagine.
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Old 02-05-2009, 05:17 AM   #12
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No kidding?! Only in America! I don't carry life insurance or survivor's benefits, so this may be the only remaining method of proving to my spouse that I'm worth more alive than dead. Or at least not worth the price that she'd pay...

IIRC someone on this board has submitted their withdrawal request and was awaiting SSA approval. I don't remember the result-- was it you or someone else?
There were 2 that did AIR. I withdrew Age 62 application in 2008, reapplied at age 67.5 (YOB 1940), now drawing increased benefits (63.5% increase in my benefits; DW went up 59%). All did go according to plan; if it bogs down it will help to get a supervisor involved. Taxes filed for 2008 (line 68 is a $9K tax credit for taxes paid on repaid benefits); awaiting refund. Repaid with PENFED HELOC (Current IR 2.75%) vs using CD $$ IR 6.25% APY for next 6 yrs).
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Old 02-05-2009, 09:20 AM   #13
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. I withdrew Age 62 application in 2008, reapplied at age 67.5 (YOB 1940), now drawing increased benefits (63.5% increase in my benefits; DW went up 59%). .
OAG....sounds like yours went smoothly. Just curious, how did you calculate those % increases ? new benefit divided by original starting benefit? or divided by most recent benefit calculated by the original application? I thought benefits increased
5/9% /month which would make the increase about 37% or so after 5.5 yrs.....your benefits increased much more than that.......I know the increase is larger after you get to FRA and I know there are COLA increases but you had been getting the COLA even with the old application so seems like you should not be including those in the comparison.
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Old 02-05-2009, 09:50 AM   #14
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62 to FRA is 22%, each month after FRA is 7/12 of 1% per month (about .058 a month), or 7% per year, COLA's en-route to new application date. If I calculated by your suggested method it would be 22% + 14% or a total of 36% (which excludes the 5 years of COLA; or about another 17%). I just took the amount I had on day one of the payback (2008) versus what I am getting now (2009)(probably not a apples to apples comparison as I know it includes one COLA (most recent one @ 5.8%). Also, I had 21 years of Military Credits which may or may not have been included in the initial award of benefits (I am not sure of this). This also does not consider the earnings on the "payback" or the (for which I used "after tax" amounts over the 5.5 years) or the refund of taxes paid over about 4 years. This stuff can give you a headache after a while so I just look at it as it is today.
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Old 02-05-2009, 02:15 PM   #15
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There were 2 that did AIR. I withdrew Age 62 application in 2008, reapplied at age 67.5 (YOB 1940), now drawing increased benefits (63.5% increase in my benefits; DW went up 59%). All did go according to plan; if it bogs down it will help to get a supervisor involved. Taxes filed for 2008 (line 68 is a $9K tax credit for taxes paid on repaid benefits); awaiting refund. Repaid with PENFED HELOC (Current IR 2.75%) vs using CD $$ IR 6.25% APY for next 6 yrs).
sounds good, your new computation was probably made using the wage index (which is normally higher then cpi) which would make a difference and since you started with an amount less that what you would of recieved at FRA & your percentages are based on the amount at FRA the % increases will appear higher.

i do have a question for you OAG, how did you calculate your tax credit? did you have to redo all those tax returns but exclude ur SS income to get what you would have paid in taxes if you hadnt gotten the SS in those years?
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Old 02-05-2009, 02:43 PM   #16
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Set up a SS in Excel. 6 Cols, with Rows for TY 2003, 4, 5, 6, 7. Cols were 1: Taxable income on Original Return, 2: Taxed SS Benefits, 3: Tax on Orig Return, 4: Taxable Income w/o SS, 5: Tax w/o SS, and 6: Difference between tax with SS and tax w/o SS equals the Credit for each year. It was easier since I was in the 15% bracket for every year with or without SS. 2003 was the first year SS was taxable and every year after that. The taxable amount was the amount actually taxed (example line 20b, of the current 1040).
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Old 02-05-2009, 03:16 PM   #17
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I believe you also have the option to take a deduction against income in the year the repayment is made. This might be more beneficial, especially if you repaid in the year you turned 70.5 and could use the deduction to offset an RMD and maybe even an additional IRA withdrawal. Since this would lower your IRA balance, it would reduce RMD's going forward, as well.

So far as the tax credit goes, I think the easiest way to calculate it, would be to set your SS to zero each year in your tax software, and enter the difference in tax owed into a spreadsheet, or other ledger. This would automatically pick up any "tax torpedoes" that might have occurred. Then just sum the numbers when you repay to determine the credit, which you can then compare with the savings from taking the deduction.
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Old 02-05-2009, 03:40 PM   #18
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I believe you also have the option to take a deduction against income in the year the repayment is made. This might be more beneficial, especially if you repaid in the year you turned 70.5 and could use the deduction to offset an RMD and maybe even an additional IRA withdrawal. Since this would lower your IRA balance, it would reduce RMD's going forward, as well.

So far as the tax credit goes, I think the easiest way to calculate it, would be to set your SS to zero each year in your tax software, and enter the difference in tax owed into a spreadsheet, or other ledger. This would automatically pick up any "tax torpedoes" that might have occurred. Then just sum the numbers when you repay to determine the credit, which you can then compare with the savings from taking the deduction.
That is exactly what I did with EXCEL. Cheaper and easier than keeping all those old tax programs or PAYING for them now. BTW the DEDUCTION is a % (your tax rate) reduction in taxes. The CREDIT is a $ for $ reduction in taxes (which can, and in my case did exceed the DEDUCTION). There is, to my knowledge, no carry forward for a DEDUCTION that wipes out BEYOND taxes due in a year.
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Old 02-05-2009, 04:04 PM   #19
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T BTW the DEDUCTION is a % (your tax rate) reduction in taxes. The CREDIT is a $ for $ reduction in taxes (which can, and in my case did exceed the DEDUCTION). There is, to my knowledge, no carry forward for a DEDUCTION that wipes out BEYOND taxes due in a year.
I agree. I was thinking of the case where the RMD plus the higher SS would push you into a higher bracket, thereby making it more advantageous to take the deduction.

I also agree that there is no carry forward for the deduction. I was thinking that one could increase the IRA withdrawal in the repayment year to utilize all of the deduction against higher-bracket income, and that this further reduction of the IRA year-end balance could lead to lower RMDs going forward, since the RMDs are a percentage of the year-end balance.

BTW, another interesting twist might be to repay in the year you turn 71. This would allow you to offset two RMD's, since you can take the first one in the year after that in which you turn 70.5. I know there is no additional increase in SS after age 70 (other than COLA's, of course), but depending on the numbers, one theoretically might save more in taxes doing it this way than what they would lose in extra SS benefits by delaying one more year.
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