Making it on Social Security

[PBAT]

Martha I think that the survivor benefit is based on his full retirement age, but the spousal benefit is based on the amount he is actually receiving.

 

[Martha]

Martha I think that the survivor benefit is based on his full retirement age, but the spousal benefit is based on the amount he is actually receiving.

No, I don't think so. Read the "Best of" thread I linked to above. We carefully went through the analysis of the amount of a spousal benefit. There are a number of supporting links.

 

[PBAT]

My fault, just when I think I have it right....

 

[Martha]

Spouse’s benefits

A spouse who has not worked or who has low earnings can be entitled to as much as one-half of the retired worker’s full benefit. If you are eligible for both your own retirement benefits and for benefits as a spouse, we always pay your own benefits first. If your benefits as a spouse are higher than your retirement benefits, you will get a combination of benefits equaling the higher spouse benefit.
If you are receiving a pension based on work where you did not pay Social Security taxes, your spouse’s benefit may be reduced. Additional information on pensions from work not covered by Social Security can be found in Pensions from work not covered by Social Security
If spouses want to get Social Security retirement benefits before they reach full retirement age, the amount of the benefit is reduced permanently. The amount of reduction depends on when the person reaches full retirement age.
For example:

• If full retirement age is 65, a spouse can get 37.5 percent of the worker’s unreduced benefit at age 62;
• If full retirement age is 66, a spouse can get 35 *percent of the worker’s unreduced benefit at age 62;
• If full retirement age is 67, a spouse can get 32.5 percent of the worker’s unreduced benefit at age 62.

The amount of the benefit increases at later ages up to the maximum of 50 percent at full retirement age. If full retirement age is other than those shown here the amount of the benefit will fall between 32.5 percent and 37.5 percent at age 62.
However, if your spouse is taking care of a child who is under age 16 or disabled and gets Social Security benefits on your record, your spouse gets full benefits, regardless of age.
Here is an example:
Mary Ann qualifies for a retirement benefit of $250 and a spouse’s benefit of $400. At her full retirement age, she will receive her own $250 retirement benefit, and we will add $150 from her spouse’s benefit, for a total of $400. If she takes her retirement benefit before her full retirement age, both amounts will be reduced.
NOTE: Your current spouse cannot receive spouse’s benefits until you file for retirement benefits.
Retirement Benefits

 

[Zoocat]

Here's a fun catch-22 situation for homemakers who think they'd be just fine in retirement , even if divorce comes, because their spouse has gainful employment and a good retirement plan with STRS.

If you are divorced from a spouse who is covered under the government's STRS system (state teacher's retirement system), you get ZIP. STRS does not allow payouts from the employee's funds. So in the divorce, you had better hope that your ex can pony up the cash or will sign an agreement to pay you part of his STRS retirement. Also, you will get ZIP from your spouse's SS because he will be getting STRS. Hopefully, you built up your own SS credits.

The lesson is, Build your own retirement fund! Don't count on your spouse for anything!

Please don't ask how I happened to learn all this.

 

[cute fuzzy bunny]

I note that the social security web site says that they wont pay a benefit smaller than one dollar.

So I think the minimum is pretty minimal...a buck?

 

[PBAT]

OK, now that I look at it again, I realize I had them reversed.

DH has always planned to take SS at 62 (in 9 years), figuring we could then withdraw that much less from savings each year. But I am much younger and my earnings will be significantly less, therefore I would rather he wait til 66. Or even 70 if our investments are doing well. OTOH, I don't know what the SS system will look like in 30 years when I turn 67 - they may not be paying full survivor at that point. At any rate, we have several years and many market fluctuations to go before making this decision.

Either way we will meet the one dollar minimum!

 

[CuppaJoe]

Lived in a 2 flat for a few months 3 years ago in Chicago, and learned a real life lesson on living on SS from the tenant in the basement.
I figured he probably got something like $800 or less a month, so he had this tiny, tiny studio in a 2 flat basement with the dryer and washer outside his door. Not classy living but it looked sparkling clean from what I could see.
This guy was always dressed in a nice style, very clean, had friends he went to dinner with and lots of social contact.
He had no car, so he bused or subway/elevated all over Chicago.
He cooked alot for himself, and watched alot of t.v. because it didn't seem he was into the library reading much.
He was 74, and a happier guy I never met. Just a normal intelligence, smiling, happy, healthy older man.
Meeting and knowing him was a great experience for me, because I constantly worry about how my lifestyle is going to be when I get older...and I have gobs more than he does.
Humbling experience.

Yeah, I had an elderly neighbor who always told me when oatmeal was on sale at the supermarket. I didn't realize "Alpo" was code for "oatmeal" until I noticed my neighbors had found creative ways to share food with her. Now, I look for signs of hunger in others. She moved out at 86 at the peak of the dot.com bubble. They rented her apt. for 5 times what she was paying. Maybe the landlord gave her a break beyond the rent control rules--charity takes many forms.

 

[Freein05]

I think Helena may be trying to sale books. The same exact post was made to the Simple Living forum.

 

[old woman]

They rented her apt. for 5 times what she was paying. Maybe the landlord gave her a break beyond the rent control rules--charity takes many forms.

I managed a building once that the owner never raised anyone's rent. Some tenants had been there decades, many single older women.
I decided not to live on SS when I lived in Chicago in 1967. The building was a old house divided into small apartment. We paid $13 a week for a one bedroom where you had to share a bathroom with two other apartments.
The women living in that building had been wifes without jobs. When they were widowed they lost the husband's pension and SS was about $200 a month. They had to carry groceries up flights of stairs after walking to the store or pay a boy to bring the groceries. I was 18 I didn't mind being poor at 18 poor is an adventure but these ladies were stuck in a place where they were lucky to have a parakeet and didn't even have a bathroom. Nothing to look forward to.
My grandma was waiting tables in her 60s, when I saw that I decided I didn't want to be doing hard work in my old age.

 

[catramsey]

Social Security Question

If I stay at my current job until I retire, I should qualify for 20K a year pension. My SS stmt shows I will receive aprox. 1500 a month. However, there was a section that said if my pension was not funded with taxed earnings, that my SS benefit would decrease based on how much pension I receive.

Anyone know about this and can explain how they calculate this? I thought I would have approx. 3400 a month to live on, but now I am not sure.

Thanks,

Cathy
age 51

 

[JohnP]

Cat

You will likely be subjected to the Windfal Elimination Provision when you retire and then apply for SS. the WEP is intended to reduce SS payments when you have a pension that is mainly funded in a system where one did not pay into SS such as the Federal CSRS program and many state teachers retirement system. Both I and DW receive reduced SS due to the WEP - You will not be impacted if you are in the fed FERS program since half of their retirement benefit is from SS - Details on the WEP are found at the site below.

Windfall Elimination Provision

JohnP

 

[catramsey]

Thanks John,

I don't work for the State or Federal government. I work for a private corporation that provides me a pension when I retire. I pay SS taxes, just thought since the pension was a benefit wasn't sure if it would reduce my SS benefit. I also have a 401K, but not much in that. So I may have work until I drop.

 

[Independent]

I'd guess that lots of working couples are "living on just Social Security".

Suppose you've got a mortgage and children. Your wages are subject to FICA and FIT (and possibly SIT). You pay the principle and interest on the mortgage. You pay for food, clothing, medical care, transportation, and education for your kids. The remainder pays for house upkeep plus food, clothing, medical, transportation, etc. for you and your spouse.

I'm guessing the "remainder" is about what you would get from SS if you worked to "normal retirement age". In numbers, the full SS benefit for a median worker is about 40% of indexed wages. So I figure that taxes, mortgage, and kids are about 60%.

This is my situation. We've had above median earnings, but that means above median FIT as well. I know that our actual expenses for just the two of us are about what SS will be if we both start benefits at 66. We saved through 401k's and IRAs, that made it possible to retire early.

The catch here is that this works only if you buy house, pay it off before retirement, and work to NRA. The house is a form of saving for retirement. The "living on just SS" horror stories are usually about people who didn't buy a house and/or retired "early".

I wonder how many working people have done the math to see what they will actually need to maintain their current lifestyle after the house is paid for and the kids are gone.

 

[Helena]

I think Helena may be trying to sale books. The same exact post was made to the Simple Living forum.

Egads... imagine that... I posted the same info
on two different forums... will wonders never cease.

Nice conspiracy theory. But you're wrong.



Years ago I was banned from a Russian forum for
calling Vladimir Putin TSAR... someone accused me
of being KGB

From KGB agent to book peddler...
my, how the mighty have fallen.

 

[haha]

From KGB agent to book peddler...
my, how the mighty have fallen.

LOL!