Am I correct about Social Security Estimates?

[retire2020]

I've been trying to understand SS system and would like you to verify if I understood it correctly and if my assumptions below are correct. I can then plug in correct info. in FireCalc to run my scenario.


I've been working since 1984 and SS estimates at age 70 will be around 30K

DW has worked for 15 years but at a lower wage(50K) and stopped working nine years ago. No plan for her to work in future. She is estimated to receive about 9K of her SS benefits starting at age 62. She's 5.5 years younger to me.

* Can she collect her SS starting at age 62(about 9K) and then switch to 50% of mine(15K..larger than her own) when I start collecting at age 70? or she has to wait until I turn 70 when she'll be 65?

* I'm assuming our combined SS Benefits at my age 70 will be 45K, correct?

* Then if I die before her, she will continue to receive 100% of my benefits(30K), correct?

 

[heeyy_joe]

From a recent WSJ article:

With Social Security retirement benefits, the decision to start collecting before full retirement age brings a permanent reduction in the benefit a person receives versus if he or she had waited to begin. That includes cases in which someone starts out with a benefit based only on his or her own work record and later becomes eligible for a spousal benefit as well. If you have earned a lot more than your wife over the years, her switch from her earned benefit to a spousal benefit might bring an increase in her Social Security checks. But the amount would be smaller than if she waited until her full retirement age to collect at all.

As an example, consider a wife born between 1943 and 1954 who doesn't qualify for a benefit based on her work history. At her full retirement age of 66, her spousal benefit would be half of her husband's benefit at his full retirement age. If she starts to collect at her age 62, her spousal benefit would be 35% of his full benefit.

 

[timo2]

I have a similar situation in that my DW would only get around $3K per year SS benefits, and I would get almost $30K if I wait until 70 to get my benefits. and my DW is 5 years younger than me. From my research, I am under the impression that if DW files for her own benefit first, she can not later apply for a spousal benefit. SS benefit scenarios are confusing, and given that, I don't think it is even worth messing with your DW's small social security. She could be locked into a lesser amount of benefits. I recommend that she waits and puts in for her spousal benefit when she is her full retirement age, which would be about when you are 70, more or less. You should check with Social Security to be sure, but, but why chance the loss of the big spousal benefit for the very small amount of DW's own small benefit. The t.Rowe Price calculator helped me with this Social Security Benefits Evaluator - T. Rowe Price

 

[heeyy_joe]

I have a similar situation in that my DW would only get around $3K per year SS benefits, and I would get almost $30K if I wait until 70 to get my benefits. and my DW is 5 years younger than me. From my research, I am under the impression that if DW files for her own benefit first, she can not later apply for a spousal benefit. SS benefit scenarios are confusing, and given that, I don't think it is even worth messing with your DW's small social security. She could be locked into a lesser amount of benefits. I recommend that she waits and puts in for her spousal benefit when she is her full retirement age, which would be about when you are 70, more or less. You should check with Social Security to be sure, but, but why chance the loss of the big spousal benefit for the very small amount of DW's own small benefit. The t.Rowe Price calculator helped me with this Social Security Benefits Evaluator - T. Rowe Price

+1
Unless y'all need the money for food.

 

[sengsational]

I know very little about this (I'm at tail end of the boomers, so full retirement is almost 67), but I'll make an observation. Might be one that does not apply, but I don't see any mention of "file and suspend" in this thread.

 

[packrat44]

I've been trying to understand SS system and would like you to verify if I understood it correctly and if my assumptions below are correct. I can then plug in correct info. in FireCalc to run my scenario.


I've been working since 1984 and SS estimates at age 70 will be around 30K

DW has worked for 15 years but at a lower wage(50K) and stopped working nine years ago. No plan for her to work in future. She is estimated to receive about 9K of her SS benefits starting at age 62. She's 5.5 years younger to me.

* Can she collect her SS starting at age 62(about 9K) and then switch to 50% of mine(15K..larger than her own) when I start collecting at age 70? or she has to wait until I turn 70 when she'll be 65?

* I'm assuming our combined SS Benefits at my age 70 will be 45K, correct?

* Then if I die before her, she will continue to receive 100% of my benefits(30K), correct?

If your DW took spousal benefits it would be based on your benefit you would receive if you took it at your FRA. It will not be increased by your waiting until 70. If your benefits are $22K at your FRA date, your DW would receive 50% of $22K if she were to start spousal at her FRA. If DW were to begin receiving benefits at 62, the spousal benefits would be reduced to 70% of the 50% of $22K, or about $7.7K.

 

[retire2020]

timo2...thanks. I think it will be better to wait until her FRA. If spousal benefits are 50% of my FRA as pack mentioned below, opens an another possibility if it'll be better for me to collect at my FRA and not wait til 70..I'll plan for lesser amount for FireCalc input for now to run my numbers.

packrat44,
Thanks. I'll be 72 by the time she reaches her FRA(67) so it makes it complicated if we should wait that long. Let's say if she waits til 67 and I die before her - will she be able to get 100% of my benefits at the age when I die or it'll be 100% of age 70 when I started mine or will it be 100% of when she claimed at her FRA(my age 72)? Phew....this is very complicated matter..I wish they made it simpler.

 

[packrat44]

timo2...thanks. I think it will be best to wait until her FRA.

packrat44,
Thanks. I'll be 72 by the time she reaches her FRA(67) so it makes it complicated if we should wait that long. Let's say if she waits til 67 and I die before her - will she be able to get 100% of my benefits at the age when I die or it'll be 100% of age 70 when I started mine or will it be 100% of when she claimed at her FRA(my age 72)? Phew....this is very complicated matter..I wish they made it simpler.

The net result would be that she would receive the higher amount of what you or she is entitled to. If you were to die after 70, she would receive an amount equal to what you had been receiving (since that is the higher benefit). If you died at 69, she could receive 100% of what you were entitled to at the time of your death, if she waits until her FRA.

I think I am in a similar position as you. DW is 8 1/2 years younger. It appears to me that in most cases the window of opportunity to use the Spousal Benefit to your benefit is when the age difference between spouses is small (70 minus FRA of the other spouse).

We are going to use the 70 me, 62 her for a couple reasons. Survival benefits and we are maximizing our ROTH convervsions under more favorable tax rates prior to increasing our income.

 

[timo2]

timo2...thanks. I think it will be better to wait until her FRA. If spousal benefits are 50% of my FRA as pack mentioned below, opens an another possibility if it'll be better for me to collect at my FRA and not wait til 70..I'll plan for lesser amount for FireCalc input for now to run my numbers.

packrat44,
Thanks. I'll be 72 by the time she reaches her FRA(67) so it makes it complicated if we should wait that long. Let's say if she waits til 67 and I die before her - will she be able to get 100% of my benefits at the age when I die or it'll be 100% of age 70 when I started mine or will it be 100% of when she claimed at her FRA(my age 72)? Phew....this is very complicated matter..I wish they made it simpler.

Here is the link that has about spouse benefits.
Retirement Planner: Benefits For Your Spouse

 

[retire2020]

packrat/timo...Thanks a lot! That T-Rowe Calculator answered many questions and diff scenario for my specific case. DW's benefits at FRA will be little higher than 50% of mine at my FRA. I find following to be the best practice in my case:

>>>>>>>>>>>>
GOAL:
We want the surviving spouse to receive the maximum annual benefit available.

STRATEGY:
October 2034:You file for own benefits, at age 70, receiving approximately $29,760 per year.

April 2037:Your spouse files, restricts application to spousal benefits, receiving approximately $12,000 per year.

April 2040:Your spouse files for own benefits, at age 70, receiving approximately $15,803 per year.

Based on the life expectancy chosen, your spouse is assumed to receive the survivor's benefit of approximately $29,760 per year in October 2047.

 

[packrat44]

retire2020

I am glad you found a plan that will maximize benefits. In the case of my DW and I it does not work because our benefits are close to equal if taken at the same age. It would be nice if there were a free program that a person could enter their data and it would calculate what is most beneficial.

 

[Animorph]

packrat/timo...Thanks a lot! That T-Rowe Calculator answered many questions and diff scenario for my specific case. DW's benefits at FRA will be little higher than 50% of mine at my FRA. I find following to be the best practice in my case:

>>>>>>>>>>>>
GOAL:
We want the surviving spouse to receive the maximum annual benefit available.

STRATEGY:
October 2034:You file for own benefits, at age 70, receiving approximately $29,760 per year.

April 2037:Your spouse files, restricts application to spousal benefits, receiving approximately $12,000 per year.

April 2040:Your spouse files for own benefits, at age 70, receiving approximately $15,803 per year.

Based on the life expectancy chosen, your spouse is assumed to receive the survivor's benefit of approximately $29,760 per year in October 2047.

That was pretty much what I got as well. DW is 5 years younger than me but has roughly the same SS benefit. I think that is our plan for now.

I think my main takeaway from the article was to be sure to reach FRA before trying some of the more esoteric stuff.