Social Security Question

[LXEX55]

In order for my wife to get 1/2 of my Social Security amount, I know that I have to work until my full retirement age, which is 66 and two months. I believe, and am not certain, that she must also work until her full retirement age. Can anyone verify that this is true.

 

[joeea]

In order for my wife to get 1/2 of my Social Security amount, I know that I have to work until my full retirement age, which is 66 and two months. I believe, and am not certain, that she must also work until her full retirement age. Can anyone verify that this is true.

It doesn't matter when you begin collecting.

If she waits until her full retirement age, and if you have already filed for your own benefits, she would be eligible to collect 1/2 of your full retirement benefit amount as her spousal benefits, assuming it would be more than her own benefits.

Survivor benefits, on the other hand, depend on exactly how much you were receiving, including any deferred retirement credits. If she is the survivor, she would receive whatever you were receiving, assuming it is more than she is receiving.

That's why many folks choose to have the higher earner delay until 70 years of age before beginning benefits.

 

[kaudrey]

You don't have to WORK until those ages. But to get full amounts, neither of you should COLLECT before your full retirement ages.

 

[Perryinva]

One other thing to remember; if you do file before your FRA, then your PIA amount is then fixed at that amount. This only really matters if you were considering filing before FRA and your spouse is already filed and at or past their FRA. If your PIA at age 60 is predicted to be say, $2000 at age 62, and $2900 at FRA, then even just working until 62, along with COLAs can bring your PIA up another $120/mo or more. Even if you stop working at 62, the COLAs on a large benefit continue to increase the PIA substantially until you reach FRA, beyond the predicted amount. If your spouse was older and filed at 62, then their PIA is fixed and on e past their FRA, the potential spousal benefit rises every year until the last year your FRA increases due a COLA.

 

[homestead]

I started SS at 62 and my wife is collecting 50% of my FRA amount.
She started her SS at her FRA and the following year jumped up to 50% of my FRA amount when I started SS. So she is 5 yrs older than me.

 

[Perryinva]

Yes, that is the circumstances I was mentioning. In my case, @ age 60, my PIA is just less than double wifes PIA. By the time I retire at 62, it will be above it, and she will be past her FRA, so she will get an adder whenever I file. I was just pointing out that her adder increases every year (actually month) I delay filing. If you had filed at 64 instead of 62, besides your actual SS being higher, your FRA PIA would also have increased at least by the COLAs , which also would have increased hers. If you kept working, same thing, only more. Not a judgement call, just pointing out that when calculating the added annuity fron delaying SS, the number MAY be more up until FRA PIA is fixed, for both, which is whenever you file, before FRA (assuming you stop working) or when you reach FRA. With an older spouse making little SS, that can be a big difference.

 

[Crabby Mike]

Yes, that is the circumstances I was mentioning. In my case, @ age 60, my PIA is just less than double wifes PIA. By the time I retire at 62, it will be above it, and she will be past her FRA, so she will get an adder whenever I file. I was just pointing out that her adder increases every year (actually month) I delay filing. If you had filed at 64 instead of 62, besides your actual SS being higher, your FRA PIA would also have increased at least by the COLAs , which also would have increased hers. If you kept working, same thing, only more. Not a judgement call, just pointing out that when calculating the added annuity fron delaying SS, the number MAY be more up until FRA PIA is fixed, for both, which is whenever you file, before FRA (assuming you stop working) or when you reach FRA. With an older spouse making little SS, that can be a big difference.

I'm having a hard time following your story here. I assume that SS COLAs affect evrybody by the same percentage, whether collecting yet or not -- am I mistaken? Because if I'm right, I don't see how, if your PIA is slightly less than twice your wife's now, it will ever be more than twice hers -- won't they rise at the same rate?

 

[Perryinva]

No, you are incorrect, they don’t if there is a time difference between your ages and when you both file. Once you file to collect your SS, your PIA is fixed (assuming you no longer work enough to change your AMIE) . Wife retired at 57 & filed at 62, 4 years ago.. Her PIA is FIXED at ths amount and is never adjusted again. When she is 67 or 80 it will still be the same, $1512/mo. Mine is CALCULATED today at age 60, but will change every year I work & until I file, increasing every year (in my case because my income is always higher than max SS, so current year always replaces an earlier year. Earlier years are no longer indexed to adjust AMIE once you are 61)

Once you file, the PIA has zero to do with your benefit except to be used for the first years calculation (again assuming no further AIME adjustments). Once filed, All COLAs affect current collecting benefit, not the PIA. It is however, the only thing used to determine spousal and ex spousal benefits.

That was why I posted this info. It is not a clearly understood facet, especially when there is a large age difference.

 

[Crabby Mike]

I think we are using the SSA term "PIA" somewhat differently. Per ssa.gov:


PIA definition
The "primary insurance amount" (PIA) is the benefit (before rounding down to next lower whole dollar) a person would receive if he/she elects to begin receiving retirement benefits at his/her normal retirement age. At this age, the benefit is neither reduced for early retirement nor increased for delayed retirement.


So I'm not sure what you mean about your PIA being fixed once you file. In any case, I agree that it doesn't matter after that point. But as to COLAs, yes, they do apply to PIA after age 62. Again per ssa.gov:


You’re eligible for cost-of-living benefit increases starting with the year you become age 62. This is true even if you don’t get benefits until your full retirement age or even age 70. We add cost-of-living increases to your benefit beginning with the year you reach 62, and up to the year you start receiving benefits.

 

[Perryinva]

I never said it stops at 62. Reread what I wrote. The Primary Insurance Amount is your Full Retirement Age amount. And as long as you don’t file, it can/will change. Once you file and have no more income, COLAs do not affect it. It only affects your current benefit. Your starting benefit and subsequent COLA increases are based on the fixed PIA at that time. I have checked this out via multiple calculators.

 

[marko]

Now I'm confused! I thought the 1/2 benefit was done away with a few years ago. No?

I took SS at 62. Does that mean DW can collect 1/2 my benefit when she turns 62 and wait until her FRA?

Her SS at 62 benefit is almost identical to mine.

 

[joeea]

Now I'm confused! I thought the 1/2 benefit was done away with a few years ago. No?

No. Spousal benefits are still available.

I took SS at 62. Does that mean DW can collect 1/2 my benefit when she turns 62 and wait until her FRA?

Her SS at 62 benefit is almost identical to mine.

No.

Unless she was born before Jan 1 1954, she cannot take a spousal benefit now and have her own benefits continue to grow. She will be "deemed" to be taking all benefits available to her if she files when she turns 62.

 

[marko]

No. Spousal benefits are still available.


No.

Unless she was born before Jan 1 1954, she cannot take a spousal benefit now and have her own benefits continue to grow. She will be "deemed" to be taking all benefits available to her if she files when she turns 62.

Ok now I remember. I forgot about the deemed aspect.

 

[Running_Man]

I never said it stops at 62. Reread what I wrote. The Primary Insurance Amount is your Full Retirement Age amount. And as long as you don’t file, it can/will change. Once you file and have no more income, COLAs do not affect it. It only affects your current benefit. Your starting benefit and subsequent COLA increases are based on the fixed PIA at that time. I have checked this out via multiple calculators.

So if your wife is 50 when you retire at full retirement age and file for benefits, the inflation for 12 years does not affect the calculation of spousal income? I find that very difficult to believe.

 

[Perryinva]

That is what the calculators say. I just tried opensocialsecurity with that scenario. Remember, your PIA is specifically calculated from your AMIE, Adjusted Monthly Indexed Earnings, based on your 35 highest earning years. Once you turn 61, all previous earnings are no longer Indexed. If you have earnings after age 61, they are taken at non (and never) indexed face value value to replace older lower indexed amounts. You COULD conceivably work at a salary for many years past 61, until you die, that replaces a lower year, so your PIA would continually change every year, and so if you were collecting after FRA, every year you would see both a COLA and PIA calculated increase. But because the older earnings are no longer indexed, if inflation takes off after you are 61, their value falls behind faster than yor new earnings advance with inflation and your benefit adjusts for COLA.

But the “normal “ retirement is what SS based its calculations on, so once you stop working at FRA, you file and collect, and your PIA stays fixed. This is all in the SS site.

So if your wife is 50, never worked, and you filed at age 66 FRA, inflation works against you. One would have assumed when you turn 83 and your life wife filed at her FRA of 67, she would get half of what you are getting at that time. According to the calculators she would only get half of what your PIA amount was when you were 66. If she filed at 62 it would be reduced further. Try it. Only her death benefit would be equal to what you were getting at the time of your death.

 

[Perryinva]

OK, so now I have found something that contradicts what the calculators say, and that appears to supports Crabby Mike, and Running Man's position. From the SS site:


Each Social Security benefit is based on a "primary insurance amount," or PIA. The PIA in turn is directly related to the primary beneficiary's earnings through a benefit formula. It is the PIA that is increased by the COLA, with the result truncated to the next lower dime.
Example
If the initial PIA is $1,463.50 and it is increased by a 2.0-percent COLA, the new PIA would be $1,492.70 after truncation to the next lower dime.
Early or delayed retirement affects your benefit amount
If you choose to retire before your normal retirement age, your benefit will be lower than your PIA. On the other hand, if you choose to retire after you attain your normal retirement age, your benefit will be higher than your PIA.

Steps leading from the PIA to the benefit amount

1. A factor is applied to the PIA to account for early or delayed retirement, with the result truncated to the next lower dime
2. Any offset to the benefit, such as payment of the Medicare Supplementary Medical Insurance (SMI) premium, is subtracted
3. Finally, the resulting amount is truncated to the next lower dollar

Summary
When a COLA occurs, we increase the PIA as described above, and we repeat the steps required to calculate the new benefit amount based on the new, higher PIA. Due to the rounding, possible offsets, and final truncation in these steps, the increase in the new monthly benefit amount over the previous amount may differ somewhat from the COLA.




What STILL isn't crystal clear is if that is still the case once a person is already filed and collecting off their original PIA. Base donthe above, they would have to maintain the previous years PIA COLA adjust calculation for everyone, and then apply the new COLA to that. What is written here definitely applies to pre filing based on how it's worded.

 

[marko]

No. Spousal benefits are still available.


No.

Unless she was born before Jan 1 1954, she cannot take a spousal benefit now and have her own benefits continue to grow. She will be "deemed" to be taking all benefits available to her if she files when she turns 62.

So why would someone want to take half of a spouse's benefit when they'd be eligible for their own full benefit?
Unless their full is less than the spouse's half?

 

[SumDay]

So why would someone want to take half of a spouse's benefit when they'd be eligible for their own full benefit?
Unless their full is less than the spouse's half?

Well, here's why we're doing this. I turn 62 early next spring, and DH will reach full retirement age (FRA) next summer. I will file at 62, and he'll take 1/2 mine in the summer when he reaches FRA. At 70, he'll file for his own, as his will be "percolating" (growing) while he's drawing mine. Every SS calculator we've used has proved this is the most beneficial $trategy for us.

He was born before 1/1/54, which is why this works. If you're born after that, it's no longer an option.

DH will get ~$1300 until he turns 70, then it's ~$3200.

 

[homestead]

So why would someone want to take half of a spouse's benefit when they'd be eligible for their own full benefit?
Unless their full is less than the spouse's half?

My wife's benefit was $700/mo and when she switched to 1/2 of my benefit she got $1200.

 

[joeea]

Unless their full is less than the spouse's half?

That happens in a lot of cases.

 

[joeea]

He was born before 1/1/54, which is why this works. If you're born after that, it's no longer an option.

Yup.

I missed out by less than a year. That year cost my wife and I around $40,000.

Oh well.

 

[GravitySucks]

You don't have to WORK until those ages. But to get full amounts, neither of you should COLLECT before your full retirement ages.

Shhhhh! Stop telling people that!
OP, yes have to keep paying into the system till FRA and I suggest maybe ten years longer.

(Kaudrey is, of course, correct.)