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SS Confusion
Old 03-25-2012, 02:16 PM   #1
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SS Confusion

Hi All,
I'm a bit confused about social security scenarios and can't figure it out from their website. Requesting advice from members here who may know.

Scenario #1. I retire from my career job at age 60 (now). My spouse is non-working and entitled to 50% of my SS benefit. She applies for SS when she reaches age 62, but I wait for my full benefit until 66. Does my spouse receive 50% of my estimated age 62 or age 66 benefit?

Scenario #2: I retire from my career job at age 60 (now). Both non-working spouse and I apply for early SS when we each turn 62 (about the same time). I know I will receive reduced SS because of early retirement. Does my spouse receive 50% of my age 62 reduced benefit or 50% of estimated age 65 full benefit?

Any thoughts much appreciated.

(By the way, I've read that a good SS strategy in a situation like this is for the non-working spouse to take early SS at 62, and the career working spouse wait until 66 for full benefit.)
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Old 03-25-2012, 02:23 PM   #2
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I am not a SS expert, but I believe that your spouses's benefit will be reduced if she takes it at age 62 - regardless of when you take yours.

BTW, the full retirement age now is 66.
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Old 03-25-2012, 02:29 PM   #3
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Originally Posted by dmdunca44 View Post
I am not a SS expert, but I believe that your spouses's benefit will be reduced if she takes it at age 62 - regardless of when you take yours.

BTW, the full retirement age now is 66.
This is my understanding as well. Her spousal pension is 50% of your full pension amount and qualifies for the entire 50% on her 66th birthday. If she takes an earlier benefit the amount will be reduced.
Check this calculator Benefits for Spouses
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Old 03-25-2012, 02:29 PM   #4
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Yes, that's right and almost forgot about spouse's penalty for also starting early at age 62. I believe that's a 25-30% penalty reduction. But still, is the non-working spouse's age 62 benefit before the early penalty based on working husband's age 62 or age 66 benefit?

(edited my initial post to reference full retirement as 66 not 65 - must have been wishful thinking on my part!)
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Old 03-25-2012, 02:32 PM   #5
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Originally Posted by Richard8655 View Post
Yes, that's right and almost forgot about spouse's penalty for also starting early at age 62. I believe that's a 25-30% penalty reduction. But still, is the non-working spouse's benefit before the penalty based working husband's age 62 or age 65 benefit?
Her benefit is based on the earning spouses PIA, so it is the full retirement amount.
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Old 03-25-2012, 02:32 PM   #6
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Originally Posted by Richard8655 View Post
Yes, that's right and almost forgot about spouse's penalty for also starting early at age 62. I believe that's a 25-30% penalty reduction. But still, is the non-working spouse's benefit before the penalty based working husband's age 62 or age 65 benefit?

I believe that the non working spouse's benefit is based on the working spouses's benefit at full retirement age (66). So if he takes his beneift at age 62, his benefit would be reduced. If she waited until she was 66, her benefit would be 1/2 of what his benefit would have been had he waited until FRA (66)....
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Old 03-25-2012, 02:40 PM   #7
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Okay, thanks all. It sounds like in all scenarios, the non-working spouse would always be entitled to 50% of the working spouse's age 66 FULL benefit. But the non-working spouse's benefit would be reduced to 35% rather than 50% of that amount if started at age 62.
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Old 03-25-2012, 03:04 PM   #8
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Try this calculator, it will show you some of the basic options.
Social Security calculator: retirement options for you and spouse.
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Old 03-25-2012, 03:34 PM   #9
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Originally Posted by homestead View Post
Try this calculator, it will show you some of the basic options.
Social Security calculator: retirement options for you and spouse.
Nice resource, thanks!
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Old 03-26-2012, 03:06 PM   #10
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I believe the working spouse would have to be receiving benefits prior the non-working spouse being able to file for spousal benefits. However, once she is receiving spousal benefits you could stop you benefits and resume taking them at a later date at the increased rate.
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Old 03-26-2012, 04:33 PM   #11
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Originally Posted by homestead View Post
Try this calculator, it will show you some of the basic options.
Social Security calculator: retirement options for you and spouse.
Cool but what about taxes on your benifits?
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Old 03-26-2012, 06:01 PM   #12
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I could be wrong but I don't believe there is any financial benefits for taking it early or waiting (assuming that the SS folks calculated everything correctly) while you are both still alive.

However the big benefit for you waiting to file until you are 66 or even 70 is when you die your spouse will get your entire check. So if your spouse is younger or more likely to live longer she will get more money.
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Old 03-26-2012, 07:05 PM   #13
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My understanding is the same as everyone else's here. It is based on your FRA benefits, but it is reduced based on her age and when she starts.

Quote:
  • If you start receiving spouse's benefits at age 62, your monthly benefit amount is reduced to about 32.5 percent of the amount your spouse would receive if his or her benefits started at full retirement age. (The reduction is about 67.5 percent.) The reduction for starting benefits as a spouse at age
    • 63 is about 65 percent;
    • 64 is about 62.5 percent;
    • 65 is about 58.3 percent;
    • 66 is about 54.2 percent; and
    • 67 is 50 percent (the maximum benefit amount).
Full Retirement Age
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Old 03-26-2012, 07:27 PM   #14
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I believe that the OP has been given some incorrect information by some of the earlier posts. If your spouse claims a benefit at 62 then the spouse will ultimately receive a smaller total (spousal plus individual) benefit than waiting until FRA... No free lunch there either.

Quote:
"Q. Is it correct that if my wife draws based on her own earnings at 62 she cannot switch to 50% of my benefit assuming I draw later than she (which would be more in our case)? ...

A. Your wife may begin her own reduced Social Security benefit and still qualify for an additional spouse benefit when you begin your benefit. However, a wife who retires early never receives the full 50 percent. Her own early retirement must be taken into consideration. A very simple example may help. Assume your wife's full retirement age benefit is $400 and your full-retirement age benefit is $1,400. If she begins her benefit at age 62, her early retirement reduction will reduce her benefit to approximately $300. Assuming she is full retirement age when you retire, her $300 will increase by $300 – the difference between her full benefit ($400) and half of your full benefit ($700). Her new monthly payment would be $600. "

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Old 03-27-2012, 10:06 AM   #15
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This video interview on SS was quite informative, she's a leading expert on maxing out SS:
Mary Beth Franklin | WealthTrack on Blip

Have you run the numbers on whether one person can survive with only one SS? It may make sense for the wife to claim early and you to wait until at least FRA, if not 70. Then the survivor will get one good benefit going forward.
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Old 03-27-2012, 10:37 AM   #16
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Originally Posted by PaddyMac View Post
This video interview on SS was quite informative, she's a leading expert on maxing out SS:
Mary Beth Franklin | WealthTrack on Blip

Have you run the numbers on whether one person can survive with only one SS? It may make sense for the wife to claim early and you to wait until at least FRA, if not 70. Then the survivor will get one good benefit going forward.
Really depends on your most likely longevity prediction, typically based on family history, known illnesses or you're just convinced you'll get hit by a bus. If you're not likely to live past 80, early may be best. If you're likely to live past 80, waiting until 70 may be most beneficial. And of course all the options in between...
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File Type: jpg SS%20Break%20Even.jpg (45.3 KB, 11 views)
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Old 03-27-2012, 10:50 AM   #17
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Watching that video I think I just learned something. DW and I are about the same age with similar SS benefit numbers. Our plan was for DW to start drawing her SS at 62 and me to start the spousal benefit at 66 and later take my enhanced SS at 70. From what I saw in the video I think I should take the reduced spousal benefit when DW starts drawing her SS at age 62. My thinking is that 8 years of 37.5% is more than 4 years of 50%. Is there a flaw in my logic on this subject?
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Old 03-27-2012, 12:06 PM   #18
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Originally Posted by jclarksnakes View Post
Watching that video I think I just learned something. DW and I are about the same age with similar SS benefit numbers. Our plan was for DW to start drawing her SS at 62 and me to start the spousal benefit at 66 and later take my enhanced SS at 70. From what I saw in the video I think I should take the reduced spousal benefit when DW starts drawing her SS at age 62. My thinking is that 8 years of 37.5% is more than 4 years of 50%. Is there a flaw in my logic on this subject?
Yes, there's a catch to that approach. If you start before FRA (presumably 66 from your example), you must begin with your benefit, and will only draw on hers if what you're entitled to as a spouse is more than your own benefit. You can only draw a spousal benefit without affecting yours if you've reached FRA. And what you draw as a spouse is reduced if she started early.
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Old 03-27-2012, 01:53 PM   #19
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Yes, there's a catch to that approach. If you start before FRA (presumably 66 from your example), you must begin with your benefit, and will only draw on hers if what you're entitled to as a spouse is more than your own benefit. You can only draw a spousal benefit without affecting yours if you've reached FRA. And what you draw as a spouse is reduced if she started early.
Bingo! Thanks for the clarification. I must have earlier arrived at decision to start spousal benefit at 65 based on that information and today got the wrong impression looking at the video.
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Old 03-27-2012, 03:05 PM   #20
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I'm a little confused from the video, maybe someone has an answer. I have not taken SS as of yet and I'll be 63 next month. DW will turn 62 in Dec. of this year. Let's say DW worked only about 12 years and on her own will get about $600 a month but will get $800 working off of my earnings. So in Dec. if DW takes SS and I don't will she be elligible for the $600 or the $800? Do I have to take my SS for her to get the $800 or do I have to start and then stop for her to get the $800.

If I wait another year to take mine and DW takes the lower amount in Dec. would she get the $800 when I take mine or does she get a larger benefit because I waited and she took the lower amount. Confusing!
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