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Old 06-26-2015, 07:32 PM   #21
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NW-Bound,

You are correct!

Thanks
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Old 06-26-2015, 07:43 PM   #22
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I didn't see this linked in this thread yet, so I will add it here: Social Security Benefits Evaluator - T. Rowe Price

This tool allows you to put in your ages and the amounts from your social security statement. You can then run 7 different scenarios to look at what strategies might work out.

Regarding ERDs suggestion for 1/3 2/3 benefit amount, you can do that. In my situation, my benefit is almost exactly 2x that of my spouse. Tweaking her benefit up a few more dollars will sometimes change the strategies, but the impact on the total payout over many years is not a big difference. The one thing that is not flexible is the expected age of demise, which is set at 83 for one and 95 for the other.
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Old 06-26-2015, 08:04 PM   #23
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Quote:
Originally Posted by jpjr View Post
Here is another wrinkle that will apply to DW and me. She is 63 1/2 I am 65.
My FRA benefits are $ 2,358 and hers are $ 1,000.
I used 1 May 50 and 1 Nov 51 for birth dates. Life expectancy his 83, hers 95. Using the calculator, here are a few of the scenarios:

GOAL:
We want to maximize the survivor benefit and receive income early if possible.
We want to get the maximum benefit possible as a couple – over both our lifetimes.
We want to maximize our income over the years we have together.
We want the surviving spouse to receive the maximum annual benefit available.
We want to minimize drop in income for surviving spouse.


STRATEGY: (They all came out the same)
May 2016: He files and suspends so that She may apply for spousal benefits.
May 2016: She files for spousal benefits, receiving approximately $12,394 per year.
May 2020: He files for own benefits, at age 70, receiving approximately $37,351 per year.
Based on the life expectancy chosen, She is assumed to receive the survivor's benefit of approximately $37,351 per year in May 2033.
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Old 06-26-2015, 08:08 PM   #24
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Originally Posted by jpjr View Post
Here is another wrinkle that will apply to DW and me. She is 63 1/2 I am 65.
My FRA benefits are $ 2,358 and hers are $ 1,000.
DW is going to take her benefits earlier - age 64 1/2 when I am FRA at 66.
Her reduced benefits will be appx $ 855.
I will file for spousal benefits which will be 50% of $ 1,000. Since I am FRA I get the full 50% of spousal benefits, I am not penalized for her taking benefits early.
At a later date, hopefully at age 70 I will file for my own benefits. appx $ 3,100.
DW will then apply for spousal benefits which should be 50% of my $ 3,100 x's .85 which represents the "penalty" for her taking her benefits early.
Upon my demise, DW will get survivor benefits of $ 3,100.

If anyone sees an issue with the calculations, let me know, as I am very sure these options are available under the current SS program.
My understanding is that you cannot file for spousal benefits alone as you plan to do when you hit your FRA. My understanding is that you apply and will receive the higher of your benefit based on your work record and your age when you file or, if your spouse has filed, 50% of their benefit if it is higher than your benefit. So if your DW is collecting based on her own record and you apply at your FRA, you will receive benefits based on your work record and your FRA and will forgo the 8%/year increase in benefits from FRA to age 70.
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Old 06-26-2015, 08:10 PM   #25
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Quote:
Originally Posted by jpjr View Post
Here is another wrinkle that will apply to DW and me. She is 63 1/2 I am 65.
My FRA benefits are $ 2,358 and hers are $ 1,000.
DW is going to take her benefits earlier - age 64 1/2 when I am FRA at 66.
Her reduced benefits will be appx $ 855.
I will file for spousal benefits which will be 50% of $ 1,000. Since I am FRA I get the full 50% of spousal benefits, I am not penalized for her taking benefits early.
At a later date, hopefully at age 70 I will file for my own benefits. appx $ 3,100.
DW will then apply for spousal benefits which should be 50% of my $ 3,100 x's .85 which represents the "penalty" for her taking her benefits early.
Upon my demise, DW will get survivor benefits of $ 3,100.

If anyone sees an issue with the calculations, let me know, as I am very sure these options are available under the current SS program.
Your plan is addressed here (i think it is telling you it won't work as planned): Social Security Q&A: Can My Spouse File and Suspend at 63 to Enable Spousal Benefits? - Forbes

If she files before FRA she cannot switch to a bigger spousal benefit later but will be awarded it then prorated to her early filing. She would have to wait til FRA to be able to file and suspend as you describe. And since only one of you can do the file and suspend, you wouldn't be able to at FRA (and collect half her earnings) if she does.

ETA: DH filed in 2014 at FRA and I will file and suspend at my FRA to collect spousal on his record until I am 70 when mine will be a few thousand more per year. Amazing how much we have learned about collecting SS as we grew older and closer to taking it!
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Old 06-26-2015, 08:16 PM   #26
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Quote:
Originally Posted by jpjr View Post
Here is another wrinkle that will apply to DW and me. She is 63 1/2 I am 65.
My FRA benefits are $ 2,358 and hers are $ 1,000.
DW is going to take her benefits earlier - age 64 1/2 when I am FRA at 66.
Her reduced benefits will be appx $ 855.
I will file for spousal benefits which will be 50% of $ 1,000. Since I am FRA I get the full 50% of spousal benefits, I am not penalized for her taking benefits early.
At a later date, hopefully at age 70 I will file for my own benefits. appx $ 3,100.
DW will then apply for spousal benefits which should be 50% of my $ 3,100 x's .85 which represents the "penalty" for her taking her benefits early.
Upon my demise, DW will get survivor benefits of $ 3,100.

If anyone sees an issue with the calculations, let me know, as I am very sure these options are available under the current SS program.

jpjr, I hate to burst your bubble, but I don't think what you are planning can be done. First of all, if a spouse files for their own benefits before they are full retirement age, they cannot come back later and file for spousal. You are only allowed to do that if when you first file for any benefits that you have reached full retirement age. It is only at that point that you have the choice. Also, a spouse can only claim 50% of your amount you would receive at your full retirement age - they do not get 50% of the amount you receive if you wait until you are 70. You are correct that if you wait until you are 66 you can file for your full 50% of your souse's PIA benefits and then file under your own at 70. You can read about it here Benefits for Spouses
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Old 06-26-2015, 08:17 PM   #27
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jpjr, my understanding is that delayed retirement credits do not add to the spousal benefit. So, at your age 70 when you file for your benefits, your wife's spousal benefit will be calculated using 50% of your FRA benefit (your PIA). Since she is taking her benefit early, they calculate the extra she gets by subtracting what her FRA would have been from 50% of yours. So, using your previous numbers, 50% of $2358 is $1179 less $1000 equals a bump of $179 per month. (All would be adjusted by COLA each year as well.)

I have seen discussions that advocate for the lower earner to take SS as early as possible, with the higher earner taking spousal benefits first and delaying their own until 70. You are already waiting until 70 for the delayed credits, so you may want to evaluate if it makes any sense for your wife to file now and collect her SS for an extra year. Either way, the bump up for her at your age 70 would be calculated the same.


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Old 06-26-2015, 08:30 PM   #28
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jpjr, my understanding is that delayed retirement credits do not add to the spousal benefit. So, at your age 70 when you file for your benefits, your wife's spousal benefit will be calculated using 50% of your FRA benefit (your PIA). Since she is taking her benefit early, they calculate the extra she gets by subtracting what her FRA would have been from 50% of yours. So, using your previous numbers, 50% of $2358 is $1179 less $1000 equals a bump of $179 per month. (All would be adjusted by COLA each year as well.)...
I agree with the $179. But wouldn't the $179 spousal benefit as calculated above also be reduced because she is starting her benefits at 64 1/2 rather than at her FRA? So if her FRA benefit is $1,000 and her age 64 1/2 benefit is $855, if they both file at the same time as proposed, I think she will get $1,008 ($855 based on her own work record and $153 spousal benefit ($179 spousal benefit at her FRA but discounted because she is collecting benefits early... $153 = $179*$855/$1,000).
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Old 06-26-2015, 08:47 PM   #29
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Your plan is addressed here (i think it is telling you it won't work as planned): Social Security Q&A: Can My Spouse File and Suspend at 63 to Enable Spousal Benefits? - Forbes
If jpjr's plan does not work, it is not for the same reason. Jpjr does not talk about "file and suspend" at all. It is not the same case as discussed in that Forbes article.

The one thing questionable where jpjr's plan may not work as he, and the Black Rock article, thought was whether his wife will get 50% of his higher delayed-till-70 own benefit, or a derated amount because she started collecting before her FRA. This was pointed out by MissMolly and Never2L8 in their posts. However, that could still be higher than his DW's own early benefit.

Darn it! I said I hated SS benefit formulations.


PS. To be fair, the Black Rock article says that jpjr's wife "may be entitled to adjusted spousal benefits" when he claims his own at 70. They did not say that she would get 50% of his. See the word "adjusted". And jpjr talked about the "0.85x penalty" for his wife taking hers early.
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Old 06-26-2015, 08:55 PM   #30
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Pb4uski - based on the timeline that jpjr is using, he will file for spousal benefits only at his FRA when his wife is 64.5. When he files for his own retirement benefit at age 70, his wife will be over her full retirement age, so no reduction in the excess spousal benefit of $179. As long as she is full retirement age, no reduction.


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Old 06-26-2015, 09:19 PM   #31
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Pb4uski - based on the timeline that jpjr is using, he will file for spousal benefits only at his FRA when his wife is 64.5. When he files for his own retirement benefit at age 70, his wife will be over her full retirement age, so no reduction in the excess spousal benefit of $179. As long as she is full retirement age, no reduction.


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Yes, but if you file for benefits before FRA, SSA will determine which is higher, your own but reduced for filing early or 50% spousal reduced for claiming early. And then that's it. You don't get an opportunity to switch until the death of one of the spouses. The remaining spouse is then bumped up to the higher amount assuming the deceased spouse was collecting a higher amount.
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Old 06-26-2015, 09:38 PM   #32
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You guys are giving me a headache! I can see how *regular* people (like myself) would be so confused.
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Old 06-26-2015, 09:40 PM   #33
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MissMolly, it is true that when filing before FRA, the SSA considers or "deems" that you are filing for all benefits available. However, you are not eligible for spousal benefits unless your spouse has filed for his (or her) own retirement benefits first. So, to be safe, jpjr's wife could file one month earlier for her benefits. Not sure if that is necessary though, since he is going to restrict his filing to spousal benefits only. She is not eligible for spousal until he files for his retirement benefits at his age 70.


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Old 06-26-2015, 09:50 PM   #34
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You guys are giving me a headache! I can see how *regular* people (like myself) would be so confused.
I am still confused like hell. But when I talk to my relatives, they don't know what I am talking about. Ignorance is bliss. Just do what the people in SS office tell you to do. It's simpler that way.
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Old 06-26-2015, 09:53 PM   #35
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Originally Posted by Never2L8 View Post
MissMolly, it is true that when filing before FRA, the SSA considers or "deems" that you are filing for all benefits available. However, you are not eligible for spousal benefits unless your spouse has filed for his (or her) own retirement benefits first. So, to be safe, jpjr's wife could file one month earlier for her benefits. Not sure if that is necessary though, since he is going to restrict his filing to spousal benefits only. She is not eligible for spousal until he files for his retirement benefits at his age 70.


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You are correct and I thought about that after I posted but in trying to make my point about not getting a "do over" if you file early I forgot to mention it. I'm glad you clarified that. Thanks!

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Old 06-26-2015, 09:53 PM   #36
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Yes, but if you file for benefits before FRA, SSA will determine which is higher, your own but reduced for filing early or 50% spousal reduced for claiming early. And then that's it. You don't get an opportunity to switch until the death of one of the spouses. The remaining spouse is then bumped up to the higher amount assuming the deceased spouse was collecting a higher amount.
But is it true that you always get the higher of your own or the spousal benefit (if applicable), or survivor's benefit?

I know how your own benefit will get reduced or increased depending on when you file.

What I am not certain about is how the spousal or survivor benefit gets modified depending on when you or your spouse claim. Beware of the "special RIB-LIM formula" mentioned earlier.
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Old 06-26-2015, 10:10 PM   #37
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But is it true that you always get the higher of your own or the spousal benefit (if applicable), or survivor's benefit?

I know how your own benefit will get reduced or increased depending on when you file.

What I am not certain about is how the spousal or survivor benefit gets modified depending on when you or your spouse claim. Beware of the "special RIB-LIM formula" mentioned earlier.
Yes, you will always get the highest amount you qualify for at the time you file when filling before FRA and of course, survivor amounts don't enter into the calculations until your spouse is deceased. Survivor amount is not decreased. Whatever the highest amount was at the time of death, that is the amount the survivor will receive.
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Old 06-26-2015, 10:27 PM   #38
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... survivor amounts don't enter into the calculations until your spouse is deceased. Survivor amount is not decreased. Whatever the highest amount was at the time of death, that is the amount the survivor will receive.
True, if both were claiming SS at the time of death. The survivor gets the higher amount.

The complication that I just learned is that if the survivor has not started SS at the time of the spouse's death, then when the survivor starts collecting is important. The survivor can start her own benefit first, then switch to survivor benefit later.

The best time to make the switch to survivor benefit depends on when the deceased spouse took SS, if he did. That's the secret "RIB-LIM" formula that I just heard of today.
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Old 06-26-2015, 10:35 PM   #39
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True, if both were claiming SS at the time of death. The survivor gets the higher amount.

The complication that I just learned is that if the survivor has not started SS at the time of the spouse's death, then when the survivor starts collecting is important. The survivor can start her own benefit first, then switch to survivor benefit later.

The best time to make the switch to survivor benefit depends on when the deceased spouse took SS, if he did. That's the secret "RIB-LIM" formula that I just heard of today.
Oh, OK, I see now what you are saying. That makes perfect sense. Thanks!
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Old 06-26-2015, 10:38 PM   #40
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I found out what "RIB-LIM" is, right from the horse mouth.

Here's an excerpt paragraph:
Start with the RIB MBA to which the NH was entitled for the month before the month of death with the ARF and any recomputations that would have been due had the NH remained alive. Convert this forward to the WIB MOET.
Read https://secure.ssa.gov/apps10/poms.nsf/lnx/0300615320, and weep.
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