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Spouse SS strategy?
Old 05-19-2011, 10:34 AM   #1
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Spouse SS strategy?

I'm 5 years older than my wife. I will get max SS, she won't, because she has been a stay at home mom and then worked at a "hobby" type job for a lot less than she could have earned.

We have a stream of payments that is well secured and will last until I'm almost 69 (I'm 61 now). We have some rental income that is not as secure in my mind, but we can sell the property if we lose the tenant.

My plan has been to partially FIRE next year and work a lot less for less income and then, depending on how it goes, either completely FIRE at the end of 2012 or do some part time stuff.

Here's my question: If I understand SS correctly, my wife can take hers when she turns 62 and then, when I take mine at whatever age, she would be able to get either half of what I get or what she is entitled to based on her earnings, whichever is greater. Is that right?

That makes a real good case for waiting until 70, except that SS might not be around in 9 years.
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Old 05-19-2011, 10:41 AM   #2
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The wife at 62, you at 70 is a smart approach for people in your situation. that will maximize your family lifetime income.

SS will most certainly be around for 9 years and well beyond. Though the rules may become less favorable. However since you are 61 - I predict that the effects on you will be modest. It's those younger that will bear a bigger burden here.
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Old 05-19-2011, 11:09 AM   #3
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Sounds like your are secure at least until you turn 67 and your wife will be 62. If money is needed at that point I would file and defer and have my wife file for half of mine. Keep in mind your wife is entitled to 1/2 of your SS when you reach your full retirement age not what you would get at age 70. So the only question is do you want do delay your wife's SS so her benefit will not be reduced by taking it early. Lots of post here about that and IMHO it is a personal choice.
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Old 05-19-2011, 11:13 AM   #4
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Quote:
Originally Posted by Rustic23 View Post
Sounds like your are secure at least until you turn 67 and your wife will be 62. If money is needed at that point I would file and defer and have my wife file for half of mine. Keep in mind your wife is entitled to 1/2 of your SS when you reach your full retirement age not what you would get at age 70. So the only question is do you want do delay your wife's SS so her benefit will not be reduced by taking it early. Lots of post here about that and IMHO it is a personal choice.
How about if/when the OP dies? Would wife then get his entire age 70 benefit, or would she only get the entire FRA benefit that OP would have had had he not waited until 70?

Ha
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Old 05-19-2011, 11:20 AM   #5
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How about if/when the OP dies? Would wife then get his entire age 70 benefit, or would she only get the entire FRA benefit that OP would have had had he not waited until 70?

Ha
Under current SS rules, the wife would get 100% of the benefit that her spouse would have received, based upon the last full day of life of the spouse assuming she has reached FRA age.

DW/I are the same age. She will claim at her FRA age of 66 and I'll claim at age 70. If I happen not to live till age 70, she will get an amount (along with her current SS) that will equal 100% of my age "x" benefit when I die. If I live till age 70 (and beyond), she will get an adjustment equal to 100% of my age 70 benefit (and more, if I live beyond 70).

Here's the info from SS:

http://www.ssa.gov/survivorplan/survivorchartred.htm

Remember, you don't take over the deceased SS benefit, but rather have a supplemental benefit added to yours, based upon the benefit that would have been paid to the deceased at the time of death.
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Old 05-19-2011, 11:28 AM   #6
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Under current SS rules, the wife would get 100% of the benefit that her spouse would have received, based upon the last full day of life of the spouse assuming she has reached FRA age.

DW/I are the same age. She will claim at her FRA age of 66 and I'll claim at age 70. If I happen not to live till age 70, she will get 100% of my age "x" benefit when I die. If I live till age 70 (and beyond), she will get 100% of my age 70 benefit (and more, if I live beyond 70).

Here's the info from SS:

Widows, Widowers & Other Survivors: Benefit amounts for the surviving spouse by year of birth
Thanks.
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Old 05-19-2011, 11:36 AM   #7
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Thanks.
FYI, I modified my response to update the link and try to show that it is not a "takeover" of the deceased spousal benefit, but actually an adjustment to your SS, based upon the deceased SS claim/history.

A lot of folks think that they are taking over the actual deceased spouse's SS, but that in reality is not the fact. It's just a simple adjustment, based upon a lot of different possible factors "in the mix" at the time of death.
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Old 05-19-2011, 06:59 PM   #8
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Originally Posted by 67walkon View Post

Here's my question: If I understand SS correctly, my wife can take hers when she turns 62 and then, when I take mine at whatever age, she would be able to get either half of what I get or what she is entitled to based on her earnings, whichever is greater. Is that right?
I don't think that's right. She'd get 1/2 yours if she waits to take her own till full retire age - 66 for her I think. But if she takes hers at 62, her % of yours is reduced each year she is younger than 66 from 1/2 of yours when she reaches 66 - just like her own is reduced by not waiting till 66. I believe it's like 6-7%/yr. Net, if she took her spousal benefit at 62, I think she'd get like 72-75% of 1/2 of yours at 66. But then, perhaps I'm wrong.
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Old 05-20-2011, 12:44 PM   #9
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THis is apparently more complicated than I thought.

Assume I get maximum SS. If I wait until 70 to take it, the amount would be about $38,000 annually, without any COLA type adjustments. If Mrs. me takes hers at 62, she would get about $13,000 annually. Her full benefit would be about $17,000. She would be entitled to her early benefits when I was 67 or her full benefits when I turn 71.

Assumes she takes her $13,000 when she hits 62. Assume I wait until 70. Does that mean hers gets bumped up to half of my $19,000, or does it mean she gets 75% of $19,000, or $14,250, when I start, because she started before age 66?

And if I die at age 67, without having taken SS, does she get the bump up so that her total benefits plus survivor benefits are equal to what I would have recieved had I applied at 67?

Now it seems to me that the "break even" point for her maximimizing her benefits is me dying at 86 years old. Here's why: she can take $13,000 at 62 and bump it to $14,000(75% of my max) at 66, or she can wait until 66 and take $17,000, but she will be losing 4 years of $13,000, or $52,000. If she waits until full retirement and I live another 17 years, to 86, she will be making an extra $3,000 a year for 17 years, or $52,000 total, but she will have lost the $52,000 she gave up by delaying.

After I turn 70, if I delay until 70, she gets a total equal to whatever I get, so how long she lives doesn't affect the math. If I die before age 86, she is better off taking the early benefits. If I die after 86, she is better off waiting for full retirement.

The question I have for her is, do you feel lucky?

Could they make this much more complicated? I still tend to feel that she should take hers at 62 and I should wait as long as I can stand it.
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Old 05-20-2011, 08:30 PM   #10
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Originally Posted by 67walkon View Post
THis is apparently more complicated than I thought.

Assume I get maximum SS. If I wait until 70 to take it, the amount would be about $38,000 annually, without any COLA type adjustments. If Mrs. me takes hers at 62, she would get about $13,000 annually. Her full benefit would be about $17,000. She would be entitled to her early benefits when I was 67 or her full benefits when I turn 71.

Assumes she takes her $13,000 when she hits 62. Assume I wait until 70. Does that mean hers gets bumped up to half of my $19,000, or does it mean she gets 75% of $19,000, or $14,250, when I start, because she started before age 66?

And if I die at age 67, without having taken SS, does she get the bump up so that her total benefits plus survivor benefits are equal to what I would have recieved had I applied at 67?

Now it seems to me that the "break even" point for her maximimizing her benefits is me dying at 86 years old. Here's why: she can take $13,000 at 62 and bump it to $14,000(75% of my max) at 66, or she can wait until 66 and take $17,000, but she will be losing 4 years of $13,000, or $52,000. If she waits until full retirement and I live another 17 years, to 86, she will be making an extra $3,000 a year for 17 years, or $52,000 total, but she will have lost the $52,000 she gave up by delaying.

After I turn 70, if I delay until 70, she gets a total equal to whatever I get, so how long she lives doesn't affect the math. If I die before age 86, she is better off taking the early benefits. If I die after 86, she is better off waiting for full retirement.

The question I have for her is, do you feel lucky?

Could they make this much more complicated? I still tend to feel that she should take hers at 62 and I should wait as long as I can stand it.
I think she just gets bumped up to $14250 when she turns 66. But she'd be making up $4K/yr at 66: $17K - $13K by waiting to do anything & taking 1/2 yours (BTW, where does the $17K number come from?). Also, if you have IRA's, by holding off on SS, you can take more out at lower tax rates during those years plus lower your RMD's. So you're saving on taxes - a gain you're counting here. Did you try running OPP for the different scenarios? I think it takes these SS benefit changes into account.
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