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Social Security Help 9.5 years age difference
Old 08-09-2014, 09:34 AM   #1
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Social Security Help 9.5 years age difference

DW and I are 9.5 years different in age. Both of us have good Social Security (SS) benefits in the future assuming minimal changes to SS. I also have a pension that will be 100% survivor for her. Older, DW, has $5k more per year in (near max) SS benefits available in about 5 years (FRA). Any suggestions on file/suspend, spousal benefits, etc. that would optimize the SS benefits collected. We can fund or makeup the funds need for the various options but none seem financially beneficial (like a file/suspend for a couple with close ages and wide income differences).

Due to age difference and close to equal amounts on benefits I can't see a beneficial strategy besides waiting until FRA or 70 for each of us.

Any insight would be appreciated as I can't find anything that covers this situation due to age difference and near equal benefits.
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Old 08-09-2014, 01:40 PM   #2
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File and suspend wouldn't help you because of the age gap, but if you are both healthy, expect to live long lives, and want to wait to get the maximum benefits for both at age 70, the younger spouse can still file for spousal benefits only at FRA and then file for his/her own benefits at age 70. The spousal benefit amount is calculated based on the other spouse's FRA amount, so the other spouse waiting till age 70 is not required, it only increases the age 70 amount for the older spouse.
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Old 08-09-2014, 01:54 PM   #3
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I am 12 years older than the DGF.

I make more money, generally max out Social Security lately. I am waiting until age 70 to collect.

The way I understand it is this...
If I get married ~9 months before I turn 70, and then die right after, she would get my full Social Security at age 60.

If I live and we were married, and she turns 62, she can collect 50% of mine, or her full amount (reduced), whichever is greater. The longer she waits, the more she gets. If 50% of mine is larger than her full amount at 70, it makes no sense for her to wait.

I think the larger the age difference, the more it makes more sense for the older one to wait to age 70.

Of course if I get bad news from the Dr. at age 62, I'm collecting right then.
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Old 08-09-2014, 02:40 PM   #4
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My husband is 9.5 years older than me. He's collecting, started at age 62. The reason he started younger is we have minor age children who can also collect. I ran the calcs and he'd have to a live to 97 to have it make sense for him NOT to start at 62 when you factor in the kids SS. (We're setting aside the kids SS for their college funds - but that means we don't have to find another source for their college funds.)

I've been noodling around with claiming spousal benefit at FRA - and suspending my benefit till age 70. But that's in the future. 14-15 years in the future. We'll have to see what our portfolio looks like, any changes to the law between now and then, etc... If we have a long term bear cycle that depletes our savings... I will adapt accordingly. If the political climate changes enough to mess with the third rail - I'll adapt accordingly.
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Old 08-09-2014, 04:47 PM   #5
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Quote:
Originally Posted by Snoopy View Post
Due to age difference and close to equal amounts on benefits I can't see a beneficial strategy besides waiting until FRA or 70 for each of us.

Any insight would be appreciated as I can't find anything that covers this situation due to age difference and near equal benefits.
There are several free online calculators. AARP, T Rowe Price, Financial Engines, ... AARP says you apply at FRA (67?) for spousal only before you switch to your own at 70. Try the other calculators yourself.
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Old 08-09-2014, 05:08 PM   #6
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Originally Posted by N02L84ER View Post
File and suspend wouldn't help you because of the age gap, but if you are both healthy, expect to live long lives, and want to wait to get the maximum benefits for both at age 70, the younger spouse can still file for spousal benefits only at FRA and then file for his/her own benefits at age 70. The spousal benefit amount is calculated based on the other spouse's FRA amount, so the other spouse waiting till age 70 is not required, it only increases the age 70 amount for the older spouse.
Sounds like what we'll probably do:

DW will file at 70 for max benefits.

When I hit FRA (64? we'll see, it's over a decade away) I'll file for spousal benefits, then when I hit 70 I'll get my own max benefits.

Or maybe the rules will change by then...
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Old 08-09-2014, 05:09 PM   #7
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Thanks for everyone's replies. I'll redo my spreadsheet budget to reflect taking Spousal SS at 67 unto 70 and rerun the numbers. This does sounds like a way to also decrease the overall income loss if the older spouse dies first.

Thanks again.
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Old 08-09-2014, 10:02 PM   #8
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I'll be sorting out those issues within a year or so. My wife is 10 years younger than I am (I'm 64 at the end of the month and she's 54 in December). My SS will be much higher than hers.

I'm still working now (she's not--well . . . not at all true -- she blogs, writes, makes art and takes care of the house--worth a lot!) and I'll sort out sometime this year how long to keep at it. I'm a university professor and enjoy what I do, so could keep going for some time.

My assumption is that I'll wait until 70 to give her the highest possible SS whenever I die (well, highest possible for me as long as I live, too). She'll likely take whatever she can take based on mine when she's 62, although we'll use one or more of the services like Kotlikoff's ESPlanner to give a better look at all the option(s). I don't count her SS in any of my calculations for retirement, since it won't matter when I'm gone (it'll just be a bonus for however long she gets it separately in addition to mine).

Being that far apart in age makes for very different calculations.
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Old 08-10-2014, 08:35 AM   #9
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If I live and we were married, and she turns 62, she can collect 50% of mine, or her full amount (reduced), whichever is greater.
Are you saying that she can collect 50% of yours at age 62, with no reduction due to being less than full retirement age? I was under the impression that there would be an age based reduction whether she takes yours or her own.
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Old 08-10-2014, 08:52 AM   #10
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Even if one's spouse is too young for spousal benefits at your FRA, it could still be a good idea to file and suspend. If during the time between FRA and 70 something happens to your health that makes waiting to claim no longer a good choice, you can back-date your claim to FRA and collect full accumulated benefits retroactively.
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Old 08-10-2014, 10:00 AM   #11
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Even if one's spouse is too young for spousal benefits at your FRA, it could still be a good idea to file and suspend. If during the time between FRA and 70 something happens to your health that makes waiting to claim no longer a good choice, you can back-date your claim to FRA and collect full accumulated benefits retroactively.
I had never thought of this. It makes total sense.
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Old 08-10-2014, 10:09 AM   #12
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Senator:
Small correction, I think. At 62 she can get half of what your SS would be at 67 or what ever age you reach full SS age. She does not get 50% of your increase. At least that is the way it was explained to me. As it did not effect us I did not listen real close.
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Old 08-10-2014, 10:42 AM   #13
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Senator:
Small correction, I think. At 62 she can get half of what your SS would be at 67 or what ever age you reach full SS age. She does not get 50% of your increase. At least that is the way it was explained to me. As it did not effect us I did not listen real close.
additionally, I was under the impression that the 'half of what your SS would be at FRA' feature only applies if your spouse files at their FRA. If the spouse files at 62, their benefit is about 1/3 of your FRA, IIRC.
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