Social Security Question

[LXEX55]

My understanding is, that for my wife to get a social security check equal to one half of my amount, it does not make a difference when I begin collecting, but, she must wait until her full retirement age for this to happen. Am I correct on this? Any clarification would be welcome.

 

[Walt34]

Not correct. If you want your wife to be able to collect half of your FRA amount, you cannot begin SS until you reach FRA. Then, she must ALSO wait until her FRA to begin spousal SS.

 

[Perryinva]

That is correct. You can file later than FRA, which may raise your FRA PIA a small amount, but then she can not get an amount equal to 1/2 yours until you do file.

 

[Red Badger]

Not correct. If you want your wife to be able to collect half of your FRA amount, you cannot begin SS until you reach FRA. Then, she must ALSO wait until her FRA to begin spousal SS.

I don't think that is correct. I understand that her (spousal) benefit is based on other's PIA, not the early, FRA, or late claim.

 

[homestead]

Not correct. If you want your wife to be able to collect half of your FRA amount, you cannot begin SS until you reach FRA. Then, she must ALSO wait until her FRA to begin spousal SS.

Not true, I started at 62 and my wife started at her FRA and she collects exactly 50% of my FRA amount.

 

[MissMolly]

My understanding is, that for my wife to get a social security check equal to one half of my amount, it does not make a difference when I begin collecting, but, she must wait until her full retirement age for this to happen. Am I correct on this? Any clarification would be welcome.

Yes and no. If she waits until she is full retirement age and you have filed (regardless of when you filed) she will get 1/2 you full retirement age amount, not 1/2 of what you are collecting.

 

[Spock]

Nobody has corrected this from another thread so...

I oversimplified spousal benefits into the following rules:
1. Spousal benefits (lower earner) are always a % of the higher earners PIA benefit amount, regardless of when the higher earner starts their benefit. (ex. spousal benefits do not go up if the higher earner delays their benefits until age 70.)
2. Spousal benefit can not start until the higher earner starts their benefits.
3. Spousal benefits max at 50% of the higher earners PIA benefit when the spouse delays collecting any benefits until spouse reaches their FRA. If the spouse starts their own benefits before the spouses FRA, the spousal benefit will be reduced.
see https://www.ssa.gov/OACT/quickcalc/spouse.html


Please correct me if this is wrong.

But if you play with the SSA spousal benefit calculator, the only numbers that are used are the higher earners PIA amount and lower earners benefit start age. The only thing the higher earner contributes to the calculation is their PIA and the higher earner has to start collecting their benefits for the spouse to collect spousal benefits.

 

[ivinsfan]

Nobody has corrected this from another thread so...

I oversimplified spousal benefits into the following rules:
1. Spousal benefits (lower earner) are always a % of the higher earners PIA benefit amount, regardless of when the higher earner starts their benefit. (ex. spousal benefits do not go up if the higher earner delays their benefits until age 70.)
2. Spousal benefit can not start until the higher earner starts their benefits.
3. Spousal benefits max at 50% of the higher earners PIA benefit when the spouse delays collecting any benefits until spouse reaches their FRA. If the spouse starts their own benefits before the spouses FRA, the spousal benefit will be reduced.
see https://www.ssa.gov/OACT/quickcalc/spouse.html


Please correct me if this is wrong.

It's not wrong but it's really confusing to read, as it's not very clear.



Spousal benefits or SB let's call it...
Cap out at 50% of the higher earning spouse's benefit at their own full retirement age.

Can not be collected until the higher earning spouse files for their own benefit.

If you file for either your own benefit or a spousal benefit before your own FRA your own payment will permanently reduced.

 

[Octogirl]

What if it is an ex- spouse ?

My DH is fuming bec. his ex-spouse (yes, married >10 years) is claiming her spousal Soc Sec benefit. He was required by Social Security to provide proof of his birth certificate SO she could claim. (Just happened last week)

DH and I are delaying SS until at least FRA, but she is only 62.

(All of us born after Jan 1954)

NOt the whole story but enough.

 

[gwraigty]

Nice summary, Spock. Thanks for including that calculator.

Octogirl, I wonder what would happen in a case where the person being asked to provide the birth certificate is less than cooperative, especially when they and their spouse are delaying. It must happen once in awhile. Anyway, I'd guess the answer is the same as if she wasn't an ex-spouse.

 

[Philliefan33]

What if it is an ex- spouse ?

My DH is fuming bec. his ex-spouse (yes, married >10 years) is claiming her spousal Soc Sec benefit. He was required by Social Security to provide proof of his birth certificate SO she could claim. (Just happened last week)

DH and I are delaying SS until at least FRA, but she is only 62.

(All of us born after Jan 1954)

NOt the whole story but enough.

Why is he fuming? Neither his benefits nor yours will affected by what the ex-spouse does.

 

[CRLLS]

I'm curious as to what would happen if your DH refused to supply his Birth Cert? I mean, it's not really his problem or concern, right?

 

[Rianne]

I had it all wrong

Sorry, had to say this since Social Security is the title. There are so many SS threads.


I just (today) discovered on i-orp calculator that SS is not taxed (federal) if your income outside of SS is < $44K. I always thought, if your total income including SS is < $44K, SS does not get taxed.

SS = $34K + $43K (portfolio), no income tax on SS.

Then if total income including SS > $77K, 85% of SS is taxed. We spend way less than that.

Smack me down

 

[Octogirl]

Yes, we know his benefits will not be affected by what the ex-spouse does.

(Why is he fuming ? He raised the kids, she never worked or helped, etc)

Now she needs a favor - even got the kids involved- "ask your Dad to do this"



Agree- but we wondered, what would happen if he refused until he was ready to claim.



In the end, he supplied birth cert.

 

[carnivalday]

Sorry, had to say this since Social Security is the title. There are so many SS threads.


I just (today) discovered on i-orp calculator that SS is not taxed (federal) if your income outside of SS is < $44K. I always thought, if your total income including SS is < $44K, SS does not get taxed.

SS = $34K + $43K (portfolio), no income tax on SS.

Then if total income including SS > $77K, 85% of SS is taxed. We spend way less than that.

Smack me down

Im pretty sure you are incorrect.

https://www.ssa.gov/planners/taxes.html

 

[Rianne]

Im pretty sure you are incorrect.

https://www.ssa.gov/planners/taxes.html

• file a joint return, and you and your spouse have a combined income* that is
  • between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
  • more than $44,000, up to 85 percent of your benefits may be taxable.
  Combined income, not including SS. That is what I understand.
  
  

 

[Rianne]

From i-orp.com


"Taxing Social Security Benefits: 85% of Social Security benefits are taxable as personal income if non Social Security income exceeds $44,000 ($34,000 for a single person). A complex computation applies to income of lesser amounts. ORP assumes that the retiree will have non Social Security income in excess of $44,000 and that 85% of Social Security benefits are taxed. ORP will slightly over estimate your taxes if your non Social Security income is less than this amount"

 

[gwraigty]

Im pretty sure you are incorrect.

https://www.ssa.gov/planners/taxes.html

• file a joint return, and you and your spouse have a combined income* that is
  • between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
  • more than $44,000, up to 85 percent of your benefits may be taxable.
  Combined income, not including SS. That is what I understand.
  
  

According to the link provided, combined income does include 1/2 of your Social Security benefits. It was almost immediately below the section you copied, Rianne.

"Your adjusted gross income
+ Nontaxable interest
+ ½ of your Social Security benefits
= Your "combined income""

 

[Rianne]

According to the link provided, combined income does include 1/2 of your Social Security benefits. It was almost immediately below the section you copied, Rianne.

"Your adjusted gross income
+ Nontaxable interest
+ ½ of your Social Security benefits
= Your "combined income""

Ah, OK. Still, I always thought 100% SS is income. That still puts us in a bracket of no SS taxes.
Savings: 32K * .85 = $27.2K
$27.2K * .12 = $3264 in taxes we don't have to pay.

 

[gwraigty]

From i-orp.com


"Taxing Social Security Benefits: 85% of Social Security benefits are taxable as personal income if non Social Security income exceeds $44,000 ($34,000 for a single person). A complex computation applies to income of lesser amounts. ORP assumes that the retiree will have non Social Security income in excess of $44,000 and that 85% of Social Security benefits are taxed. ORP will slightly over estimate your taxes if your non Social Security income is less than this amount"

Do you have an exact link to this? I'm not going to hunt all over some 3rd party website to try and refute this. Bottom line. Believe what is on the Social Security website itself. Believe what is in the Social Security Benefits Worksheet in the instructions for Form 1040, lines 1 and 2.

Here's another official link:

https://taxmap.irs.gov/taxmap/pubs/p915-002.htm#en_us_publink100097889

"The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly)."

 

[gwraigty]

Yes, we know his benefits will not be affected by what the ex-spouse does.

(Why is he fuming ? He raised the kids, she never worked or helped, etc)

Now she needs a favor - even got the kids involved- "ask your Dad to do this"



Agree- but we wondered, what would happen if he refused until he was ready to claim.



In the end, he supplied birth cert.

You made me look.

Maybe this might help others. Actually, it doesn't look like there would be any consequences for an ex-spouse who doesn't want to provide their birth certificate. It's not the only way for the ex who is trying to claim.

Wading through the info from these links:

https://maximizemysocialsecurity.com/there-any-way-around-having-obtain-my-ex-wifes-birth-certificate

https://secure.ssa.gov/apps10/poms.nsf/lnx/0200302370

"Procedure For Developing Age Or DB When Worker Doesn't Cooperate

Treat the evidence at issue as if it were nonexistent, and try to obtain other evidence (if necessary, from lower order of priority).

NOTE: Records that may be useful and available in such circumstances include:

•
SSA record

•
Marriage license

•
Financial record

•
Children's records which show parent's age or DB, such as:

–
Birth record

–
School record

–
Medical record."

From what I can interpret, had your DH not cooperated, the worse case scenario is the ex's claim would have been disallowed until your DH filed to start his benefits or signed up for Medicare, both of which would have proven his age. There would have been no negative consequences for him. At least not from Social Security.

 

[Rianne]

If you use firecalc.com, i-orp is listed as another highly regarded calculator to use. This section is in "How it works." The link is in the last sentence.



Why don't you have a space for taxable portfolio and another space for nontaxable portfolio?
FIRECalc ignores taxable versus nontaxable portfolios right now. Since it only uses historical data to determine how a portfolio would behave, with no guesses by anyone about what will happen to inflation, market performance, and so forth, and we don't have historical tax rates for the period for which I have market data, I can't add tax planning without changing the philosophy of the program. Just planning on x% tax rates would make all the historical examples meaningless, when changing tax rates would have at least some effect on the market returns.
If I can figure out how to do this in a way that would not corrupt the results, I'll do it. For now, I prefer to leave the tax planning portion to programs like www.i-orp.com -- an outstanding tool!


Under "Why use i-orp" "need more info" is this:
Why use ORP

Employer managed pensions are disappearing. Self directed individual retirement accounts are flowering in their stead. The responsibility for managing your retirement saving is shifting from professional pension managers to you.
Withdrawals from your Tax-deferred retirement savings account (401K, IRA, SEP, etc.), other savings accounts (Roth IRA, taxable accounts), and other sources of income (Social Security income, pensions, etc.) are subject to personal income tax.
Because of income taxes the order and amounts you withdraw from your tax-deferred, Roth IRA, and taxable accounts affects your total retirement disposable income.
Need more info? Click here

Click ^

​

 

[Independent]

From i-orp.com


"Taxing Social Security Benefits: 85% of Social Security benefits are taxable as personal income if non Social Security income exceeds $44,000 ($34,000 for a single person)...."

This isn't the way I've done our taxes for the last three years. We have non-SS income over $44,000, but I've included less than 85% of our SS income in our taxable income. I use the worksheet in gwraighty's link.

Say SS is $40,000 and non-SS is $50,000 and no minor complications.
Then (.50 x $40,000) + $50,000 = $70,000, and ...

Line 8	70,000
Line 9	32,000
Line 10	38,000
Line 11	12,000
Line 12	26,000
Line 13	12,000
Line 14	6,000
Line 15	6,000
Line 16	22,100
Line 17	28,100
Line 18	34,000
Line 19	28,100

For this case, and many others, the math simplifies to

.50 x (70,000 - 32,000) + .35 x (70,000 - 44,000) = 19,000 + 9,100 = 28,100

 

[wmc1000]

Sorry, had to say this since Social Security is the title. There are so many SS threads.


I just (today) discovered on i-orp calculator that SS is not taxed (federal) if your income outside of SS is < $44K. I always thought, if your total income including SS is < $44K, SS does not get taxed.

SS = $34K + $43K (portfolio), no income tax on SS.

Then if total income including SS > $77K, 85% of SS is taxed. We spend way less than that.

Smack me down

Rianne, the link below will give you an idea of the tax amount due on SS received. I think in your case approx. 50% of your $34000 SS will be taxable at your marginal tax rate.

How much of my Social Security benefit may be taxed?

 

[gwraigty]

If you use firecalc.com, i-orp is listed as another highly regarded calculator to use.

<SNIP>

Withdrawals from your Tax-deferred retirement savings account (401K, IRA, SEP, etc.), other savings accounts (Roth IRA, taxable accounts), and other sources of income (Social Security income, pensions, etc.) are subject to personal income tax.
Because of income taxes the order and amounts you withdraw from your tax-deferred, Roth IRA, and taxable accounts affects your total retirement disposable income.
Need more info? Click here


​

I haven't used firecalc or any other calculator. Yet. I'd be hesitant to use i-orp based on what I think is incorrect info from their website. Incorrect Social Security taxation info and now the above bold part. (Bolding is mine.) Withdrawals from Roth IRAs are not normally subject to personal income tax. That is a major appeal of them.