Another SS Staff Story

[Pilot2013]

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Originally Posted by Independent My post was intended to be about the possibility of getting different answers from different staffers. In this case, I'm betting the local person is correct. I'll know for sure when I get my first check. The "when to start?" question is debated on many threads. In my case, it's significant that my wife will get my increased benefit if I die first, so the actual benefit years will be until the second death, not just until my death. You mentioned "invest". It's correct that if you want to calculate a breakeven year, you need to make some assumption about investment returns. Of course, if we did breakeven calculations for auto, home, life, or health insurance, we'd always find that companies pay fewer dollars in benefits then they get in investment-adjusted premiums. On that basis, we'd never buy private insurance. Deferring SS is a little like buying longevity insurance. For me, deferring is a defensive strategy. As others have said, my heirs will come out with less if I die sooner. I don't care, my goal isn't to maximize my heirs upside potential, but protect me from the downside that could occur in the case the actual investment returns for my retirement years are lousy and I (or my wife) live a long time. But, it's a very close call. I entirely understand why other people with other health, financial, and personality situations will make the other call. There are lots of valid pros and cons. I will say there are two arguments I sometimes see that I believe are not valid: Some say if you take SS early you can spend more in the earlier retirement years. For anyone who accepts something like the 4% guideline (or 3% these days), that is not true. You can actually spend a little more in the early years by delaying SS. Some say that the roughly 8% annual increase in benefits is like an 8% investment return. It isn't. The 8% increase comes at the cost of losing a year's benefit. The actual IRR depends very much on how long you live, but it is well below 8%.

Really good points. I agree on the "higher earning spouse waiting" theory for increased survivor benefit, but am just trying to determine if the benefit is capped at my FRA for the surviving spouse. If so, I won't wait until 70 to start SS (just 67), if not... I will have to re-evaluate my plan once again.

I also think about delaying SS, and taking more from 401k's earlier to lower the amount subject to RMD after 70. So much to think about and strategize, sometimes I'm ok that I have 3-5 more years!

[CRLLS]

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Originally Posted by Pilot2013 From EN-05-10084: How much will I receive? We base the benefit amount on the earnings of the person who died. The more the worker paid into Social Security, the greater your benefits will be. Social Security uses the deceased worker’s basic benefit amount to calculate the percentage survivors can get. The percentage depends on the survivor’s age and relationship to the worker. If the worker who died was getting reduced benefits, we’ll base your survivor’s benefit on that amount. In most typical claims for benefits: • A widow or widower, at full retirement age or older, generally gets 100 percent of the worker’s basic benefit amount; • A widow or widower, age 60 or older, but under full retirement age, gets about 71-99 percent of the worker’s basic benefit amount Now, what I am trying to understand is the bold/underlined statements. I think that is the deceased persons FRA amount.

I thought I had answered that up above. The SSA uses the term PIA (Primary Insurance Amount) as the amount the earner gets at FRA, (Full Retirement Age). Within the SS, PIA and "Basic Benefit Amount" are synonymous. " We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount.”

The worker's PIA, increased by any delayed retirement credits accrued prior to the death of the insured individual, is deemed to be the PIA on which the widow's or widower's benefit is based.

To simplify for many couples, If both are living and both collecting SS and above their FRA, the widow or widower will receive what is essentially, the larger of the two benefits. If one worker dies before the other or either are under FRA, then other formulas apply. I hope this is clear.

[gerntz]

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Originally Posted by Texas Proud You must not be married... Most women live longer than men... and most men marry a younger woman... so that means the woman will more than likely live past those 12 years you seem to be worried about... I know the estimate is that my DW will get more money from my SS than I will....

While this is true and important, another factor is the tax torpedo that high SS benefits and high RMD's cause to assure high tax rate & higher Medicare premiums as well as not letting you fall under the "hold harmless" Mc provision. In some (many?) instances, taking earlier mitigate those costs. It's too late for me given I'm approaching 70, but wish I had studied these points early on.

[Keim]

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Originally Posted by 2017ish And I'm still trying to understand why the primary PIA in a married couple would ever take before 70, barring some particular health/longevity risk to the female in the couple.

And I'm trying to understand what PIA stands for. Pain In the Ass? Cuz that alternates in my house. I'm the current title holder, but could change any moment now.

[2017ish]

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Originally Posted by CRLLS Quote: Quote: Originally Posted by 2017ish View Post And I'm still trying to understand why the primary PIA in a married couple would ever take before 70, barring some particular health/longevity risk to the female in the couple. That could be taken as somewhat of a sexist question. I assume that you are talking about major breadwinner and minor breadwinner and a health issue with the minor breadwinner. ...

Umm. No, I don't believe so. Perhaps you could be so kind as to explain it to me.

Hypothesize a male and female couple of roughly equivalent age at retirement. (I hope this is not "sexist") I don't care who makes more, but one does. (again, I don't think it is sexist to assume divergent incomes over career). Assuming that the female has no unusual health/longevity risks, she has a notably longer life expectancy. (This is not sexist; it is fact, as you observe in a later post) No matter which has the larger PIA, why would that higher PIA be drawn before 70 if they could live fine without it?

FWIW, DW has the higher PIA in our household, since I stayed home with the kids for 15 years. Sexist or not, she won't be drawing until 70--particularly since she is likely to live beyond the average even for for her demographics.

[Pilot2013]

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Originally Posted by CRLLS I thought I had answered that up above. The SSA uses the term PIA (Primary Insurance Amount) as the amount the earner gets at FRA, (Full Retirement Age). Within the SS, PIA and "Basic Benefit Amount" are synonymous. " We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount.” The worker's PIA, increased by any delayed retirement credits accrued prior to the death of the insured individual, is deemed to be the PIA on which the widow's or widower's benefit is based. To simplify for many couples, If both are living and both collecting SS and above their FRA, the widow or widower will receive what is essentially, the larger of the two benefits. If one worker dies before the other or either are under FRA, then other formulas apply. I hope this is clear.

I'm sorry I am being a PIA (as someone else had defined it ).

As you have defined it above (Basic benefit and PIA are the FRA benefit). Based on the quote from the SSA document I found, that to me would mean waiting to 70, and the associated increase ABOVE FRA benefit, would not go to the surviving spouse, just the Basic Amount, otherwise defined as the FRA amount....

That is why I had in my plan to start at FRA, not before as it would detract from Survivor benefit, and not after as it doesn't increase it.

[fosterscik]

You are missing the important phrase:

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The worker's PIA, increased by any delayed retirement credits accrued prior to the death

Your spouse would get your age 70 benefits...

[Texas Proud]

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Originally Posted by gerntz While this is true and important, another factor is the tax torpedo that high SS benefits and high RMD's cause to assure high tax rate & higher Medicare premiums as well as not letting you fall under the "hold harmless" Mc provision. In some (many?) instances, taking earlier mitigate those costs. It's too late for me given I'm approaching 70, but wish I had studied these points early on.

I do not disagree with what you post... but it is a smaller subset than what I was talking about when most people have a knee jerk stmt saying 'take it at 62 in case you die young'....


BTW, what you mention is actually more likely to happen after one spouse dies... the surviving spouse is now considered single and the tax brackets are reduced and the higher Medicare premiums kick in at a lower income... this has hit my oldest sister.... she was surprised that after she lost her husband she lost a check from SS AND she is now paying more income tax AND her Medicare premiums have increased...

[CRLLS]

I read the original post as assuming that the woman earns less than the male. This may or not be the case. I did have a smiley face because there is no tongue in cheek emoji

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barring some particular health/longevity risk to the female in the couple

If I read it wrong, or if my attempt at humor came across poorly, I apologize,

As to why the higher PIA would want to wait under your stated conditions, I guess they wouldn't need to. One might say that, if a couple were st\et-for-life with other income streams, neither would even have to claim SS at all. But maybe you could ask your DW why she is waiting? It would be interesting.

In my case, I / we are planning on one or both of us to live till 100. We are well-off compared to the surveys and reports that I read and the calculators, Our finances are far below some of the members here. I have to continuously plan, evaluate, adjust, plan....... But maybe it is just the engineer in me doing constantly re-evaluating options for the best result until it is time to "put it in production". I'd hate to think that if I go first, that my DW would run out of money and become a charity case. Or in the other case where DW goes first, it would be me running out. More SS $ in the later years will help to mitigate that situation. If we both go early, I will not worry for eternity "Why did I delay SS?"

[Pilot2013]

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Originally Posted by fosterscik You are missing the important phrase: Your spouse would get your age 70 benefits...

I don't see that statement anywhere in the SS Online document that I cut and pasted. In fact, it specifically says "workers basic amount"...

Is the statement you quote above in a document on the SS website? If so, could you tell me the document number? Thanks!

[2017ish]

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Originally Posted by CRLLS ... As to why the higher PIA would want to wait under your stated conditions, I guess they wouldn't need to. One might say that, if a couple were st\et-for-life with other income streams, neither would even have to claim SS at all. But maybe you could ask your DW why she is waiting? It would be interesting. ...

We don't have any other income stream, just portfolio.

If we get SS$, we expect to give it to hypothetical grandkids' education, as it isn't included in our planning yet (we are 57/56). But, planning (like you) for longevity. DW for 105. If the SS law doesn't change to prevent us from drawing, if our portfolio fares worse than any historical run in the US despite heavy international diversification, if/when she declines mentally, if our sons predecease her, or are otherwise unable to assist her monetarily, and if the US government continues to function, delaying SS to 70 provides her with a last ditch COLA'd revenue stream (at near the maximum SS amount) that would allow her to more than keep food on the table.

Putting it that way makes me sound like a member of the tin-foil hat brigade!

[fosterscik]

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Originally Posted by Pilot2013 I don't see that statement anywhere in the SS Online document that I cut and pasted. In fact, it specifically says "workers basic amount"... Is the statement you quote above in a document on the SS website? If so, could you tell me the document number? Thanks!

See: https://www.ssa.gov/OP_Home%2Fhandbo...book-0407.html

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407.1 How Is The Widow(Er)'S Benefit Rate Computed? The widow(er)'s insurance benefit rate equals 100 percent of the deceased worker's primary insurance amount plus any additional amount the deceased worker was entitled to because of delayed retirement credits. (See §720.)

[pacergal]

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Originally Posted by stepford It's also an assertion allocation issue. SS is a COLA"d income stream. Those that already have a large COLA'd pension already have longevity insurance and may see less of an advantage in delaying SS than the rest of us.

This scenario is our household. Our pension covers our expenses. All of our calculations ran to age 100 to be safe. If the SHTF, our investments will provide more and our long term care plan if needed.

The SS calculators show about $200,000 difference between taking at 62 and 70 over our lifetime.
DH and I will get approx the same amount, and we are the same age, so we are frequently trying to decide when to take SS. We are leaning towards 62.

AM I missing something?

[Pilot2013]

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Originally Posted by fosterscik See: https://www.ssa.gov/OP_Home%2Fhandbo...book-0407.html

Thanks for the info! More to think about now...

[H2ODude]

This thread for me was first alarming, then confusing, then in the end reassured me we were on right track. We're both 66, don't really need the SS, but both claimed on hers (the lower) and will claim on mine at 70. Well, the SS at 70 will all go to pay the taxes on the RMD's. Texas P's paragraph has been concerning me a lot:

"BTW, what you mention is actually more likely to happen after one spouse dies... the surviving spouse is now considered single and the tax brackets are reduced and the higher Medicare premiums kick in at a lower income... this has hit my oldest sister.... she was surprised that after she lost her husband she lost a check from SS AND she is now paying more income tax AND her Medicare premiums have increased..."

This is the reason I'm figuring just how much tax pain I can take now in Roth conversions to minimize these effects. The fact that the survivor will be paying at a single person rate alone makes it attractive to move more now.

[Pilot2013]

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Originally Posted by H2ODude We're both 66, don't really need the SS, but both claimed on hers (the lower) and will claim on mine at 70.

Ok. This one is making me think now. So, can the lower earner start at 62, 63... whatever age, and then the higher earning spouse file on the lower spouses SS until they hit 70? If so, I have not put that in to my calculation.

[MissMolly]

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Originally Posted by Pilot2013 Ok. This one is making me think now. So, can the lower earner start at 62, 63... whatever age, and then the higher earning spouse file on the lower spouses SS until they hit 70? If so, I have not put that in to my calculation.

If the higher earning spouse was born on or before Jan 1, 1954 and if they wait until their full retirement age (which is probably 66) then they can file for 50% spousal while allowing their own to grow until they are 70.

[Pilot2013]

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Originally Posted by MissMolly If the higher earning spouse was born on or before Jan 1, 1954 and if they wait until their full retirement age (which is probably 66) then they can file for 50% spousal while allowing their own to grow until they are 70.

What if you were born after 1954?

[Bestwifeever]

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Originally Posted by Pilot2013 What if you were born after 1954?

You should live longer than we will.

[MissMolly]

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Originally Posted by Pilot2013 What if you were born after 1954?

Then you can't do it. For those born after Jan 1, 1954, whenever you file, you are "deemed' to be filing for all amounts you are eligible for and will be awarded the highest amount available to you. Which means you stop accruing credits.