Taking Social Security early vs. not

[RetiringAt55]

Quote:

Originally Posted by Badger Wife (66) is retired taking SS at $1000/month. I (65) delay taking my SS until 70 when it will be $2000/month. In the meantime for the next 5 years I apply and receive ½ of wife’s SS giving us a total of $1500/month. Then when I turn 70 I drop the payments that were based on my wife’s SS and start taking my own SS at the $2000/month. Now if I die first my wife can assume my SS that is a higher monthly payment. Does this sound right? I'm so confused. Cheers!

That is close. The only thing is that you cannot choose to take the spousal benefit at age 65 if your benefit would be higher. You would probably have to wait until full retirement age (66 or 67?) Otherwise that seems right.

[RetiringAt55]

Quote:

Originally Posted by GolfingDuo I am pretty sure it is opposite. You file for your SS ben and delay taking. Your wife files taking spousal ben of yours. Then when you reach 70 she drops spousal and you collect full. I am pretty sure that is how you should do it. I am sure others will chime in if I am wrong. That is based on your numbers that is how I would work it. Should she out live you then she resumes spousal. You out live her you take spousal.

I think Badger was talking about a different strategy, the one early and one late strategy. You are discussing the file and suspend strategy. I also think you are confusing the terms "spousal" benefit and "survivor" benefit. Spousal benefit is never more than 1/2 what your spouse is making and you can't take it if yours would be more unless you are full retirement age. Survivor benefit applies when your spouse is deceased and it is around what they were making if you are full retirement age and decreased if you take it between 60 and full retirement age.

I would recommend running the numbers with all the different cases as it is not a simple decision. It is very dependent on age differences, SS amounts, and expected life spans.

[GolfingDuo]

Quote:

Originally Posted by RetiringAt55 I think Badger was talking about a different strategy, the one early and one late strategy. You are discussing the file and suspend strategy. I also think you are confusing the terms "spousal" benefit and "survivor" benefit. Spousal benefit is never more than 1/2 what your spouse is making and you can't take it if yours would be more unless you are full retirement age. Survivor benefit applies when your spouse is deceased and it is around what they were making if you are full retirement age and decreased if you take it between 60 and full retirement age. I would recommend running the numbers with all the different cases as it is not a simple decision. It is very dependent on age differences, SS amounts, and expected life spans.

You are right. He did mention that at the end of survival benefits. It will still be approximately the same amount either way.

[gerntz]

Quote:

Originally Posted by Badger Wife (66) is retired taking SS at $1000/month. I (65) delay taking my SS until 70 when it will be $2000/month. In the meantime for the next 5 years I apply and receive ½ of wife’s SS giving us a total of $1500/month. Then when I turn 70 I drop the payments that were based on my wife’s SS and start taking my own SS at the $2000/month. Now if I die first my wife can assume my SS that is a higher monthly payment. Does this sound right? I'm so confused. Cheers!

This is exactly what we're doing except DW started her own benefits this past January at 65.5 because we're now both retired and we won't have near as much income in 2013 - lower tax rates. Before now, marginal tax rates on SS benefits made them less worthwhile than waiting & letting them build. I won't be FRA of 66 till next year when I'll file for spousal benefits. Then when I turn 70 four years later, we'll switch benefits as you propose . Our numbers are similar. Her starting at 65.5 vs. 66 will cost us 1-2% total benefits/yr long-term - nbd.

[mathjak107]

interesting enough i was looking at some of the rules for ex spouses vs current spouse.

there is a difference in amounts the 2 receive.

a spouse can get up to half the actual benefit her husband gets .

if the husband filed at 62 there is a reduction on the wifes 1/2.

on the ex spouse there is no reduction if the ex husband filed at 62. she is goverened strictly by her own age and how far away from full retirement age she is. her amount is always based of the full retirement age benefit her ex would have gotten even if he filed early.

once it shifts to survivor benefits it is based on what the husband was collecting so both wife and ex wife can be reduced if the husband filed early.

they both are goverened by their own age as well and can be double cut if the husband filed early and they are less than full retirement age.

filing early can really hurt survivor benefits for a younger wife or ex.

[Badger]

Quote:

Originally Posted by Badger I’m not sure if I understand this correctly. Let’s use the following scenario not using real numbers or considering any annual cost of living increases to make it simple. Wife (66) is retired taking SS at $1000/month. I (65) delay taking my SS until 70 when it will be $2000/month. In the meantime for the next 5 years I apply and receive ½ of wife’s SS giving us a total of $1500/month. Then when I turn 70 I drop the payments that were based on my wife’s SS and start taking my own SS at the $2000/month. Now if I die first my wife can assume my SS that is a higher monthly payment. Does this sound right? I'm so confused. Cheers!

I'm still confused since there are differences in opinions. I may not have been clear with the idea. Here are the actual ages and a clarification. In both cases the actual amounts of SS benefits for my wife and me are different but mine will be greater. I will just use a set amount for SS without consideration of cost of living increases to simplify. Being a bear of very little brain I don't have the math skills to do otherwise.

My wife took SS early at 64. She is now 66 and has been collecting $1000/month. I am presently 64 and will reach full retirement age at 66 in 2 years. When I reach FRA the idea is to delay taking my SS until I reach 70 when it will be a greater monthly amount than what it would have been at age 66. I would instead (at age 66) apply to recieve 1/2 of the amount of what my wife recieves. This would then make the total amount we recieve from SS to be $1500/month for the next 4 years. Once I reach 70 I would stop taking the $500/month based on my wife's SS and start taking my own SS which would be $2000/month. We would then be recieving her SS of $1000 and my SS of $2000 for a total of $3000/month.

Does this sound correct to do? Does the SSA allow a plan of this kind? If we are allowed to do this and have the additional $500/month for those first 4 years then we can wait until I reach 70 before I take my own SS. Then at that time our combined benefits will be greater. The advantage, aside from the extra $6000/year ($500x12) for the 4 years until I reach 70, is if I die first then she will be able to convert over to my SS under survivor benefit. She would then receive my SS of $2000/month instead of her SS of $1000/month.

If this can be done then I would think that most married couples would take advantage of this where one has a greater SS and plans to delay until 70.

Cheers!

[mathjak107]

at 66 you can take 1/2 your wifes early benefit and leave yours to grow to 70. we are going to do the same.

[RetiringAt55]

Yes Badger. This is exactly what you should do.

In my case, we have similar primary insurance amounts of SS and have a large age difference. I am 48 and DH is 58. So for us, we plan on my DH waiting until he is 70 and I will take my SS early two years later when I am 62. (My SS at that age is more that 1/2 of his.) When he passes, I would get the survivor benefit.

[RetiringAt55]

If anyone wants to get a good estimate of their SS PIA at different ages, the SSA has a nice little application you can download called the Anypia Social Security Benefit Calculator that will calculate what your benefits would be working different numbers of years, retiring at different ages, with estimated salaries. I was worried my PIA would be reduced because I will not have 35 years of SS work history when I retired. When I ran the numbers in their program, it turns out that those extra zero years did not affect the benefit much.

[rayvt]

Quote:

I am 48 and DH is 58. So for us, we plan on my DH waiting until he is 70 and I will take my SS early two years later when I am 62

.

That's 15 years from now. Pretty far ahead to be making plans for something that is essentially threading the needle.
Not to mention that it is quite likely that the SS payout & benefit rules will be changed by that time.

[RetiringAt55]

Quote:

Originally Posted by rayvt . That's 15 years from now. Pretty far ahead to be making plans for something that is essentially threading the needle. Not to mention that it is quite likely that the SS payout & benefit rules will be changed by that time.

Actually DH had originally planned to take his SS at 62, so it was doing planning for something that is only 4 years away.

[misanman]

Quote:

My wife took SS early at 64. She is now 66 and has been collecting $1000/month. I am presently 64 and will reach full retirement age at 66 in 2 years. When I reach FRA the idea is to delay taking my SS until I reach 70 when it will be a greater monthly amount than what it would have been at age 66. I would instead (at age 66) apply to recieve 1/2 of the amount of what my wife recieves. This would then make the total amount we recieve from SS to be $1500/month for the next 4 years. Once I reach 70 I would stop taking the $500/month based on my wife's SS and start taking my own SS which would be $2000/month. We would then be recieving her SS of $1000 and my SS of $2000 for a total of $3000/month.

This is what we are doing. I started drawing a spousal benefit last year. I encountered no problems doing this but was surprized that my Medicare number changed to align with DW's.

[gerrym51]

Quote:

Originally Posted by Badger I'm still confused since there are differences in opinions. I may not have been clear with the idea. Here are the actual ages and a clarification. In both cases the actual amounts of SS benefits for my wife and me are different but mine will be greater. I will just use a set amount for SS without consideration of cost of living increases to simplify. Being a bear of very little brain I don't have the math skills to do otherwise. My wife took SS early at 64. She is now 66 and has been collecting $1000/month. I am presently 64 and will reach full retirement age at 66 in 2 years. When I reach FRA the idea is to delay taking my SS until I reach 70 when it will be a greater monthly amount than what it would have been at age 66. I would instead (at age 66) apply to recieve 1/2 of the amount of what my wife recieves. This would then make the total amount we recieve from SS to be $1500/month for the next 4 years. Once I reach 70 I would stop taking the $500/month based on my wife's SS and start taking my own SS which would be $2000/month. We would then be recieving her SS of $1000 and my SS of $2000 for a total of $3000/month. Does this sound correct to do? Does the SSA allow a plan of this kind? If we are allowed to do this and have the additional $500/month for those first 4 years then we can wait until I reach 70 before I take my own SS. Then at that time our combined benefits will be greater. The advantage, aside from the extra $6000/year ($500x12) for the 4 years until I reach 70, is if I die first then she will be able to convert over to my SS under survivor benefit. She would then receive my SS of $2000/month instead of her SS of $1000/month. If this can be done then I would think that most married couples would take advantage of this where one has a greater SS and plans to delay until 70. Cheers!

on a straight line basis taking social security later then earlier usually gets one more money.

however , assuming it is not done in a vacuum, there is interest made on money gotten,lower taxes when you have to take mandatory withdrawals, and thef fact that the ss tax caluculation is not inflation adjusted. all these have to be considered

[homestead]

Quote:

Originally Posted by mathjak107 if the husband filed at 62 there is a reduction on the wifes 1/2.

Never seen this one , I thought there was only a reduction in spousal
benefit if the wife took SS earlier than FRA.

[mathjak107]

The wife can get up to half the husbands fra less a reduction if he filed earlier than fra as a reguler benefit.

When it comes to survivor benefits she gets whatever the husbands benefit was not his fra if he filed early.

She is then subjected to an additional reduction if she herself files for survivor benefits before her fra.

[Tadpole]

Have any of you run AnyPIA? I just ran it under the scenario that I collected the month I turned 70 and it used a PIA factor of 1.32. That is as expected. I tuned the data to the scenario where I died the month I turned 70 having never collected and my 72 year old husband switched to my benefit the month I died. His PIA factor showed up as 1.0, denying him my age 66-70 increase. Is this right or am I doing something wrong or is AnyPIA wrong about age 70 survivor benefits?

[homestead]

Quote:

Originally Posted by mathjak107 The wife can get up to half the husbands fra less a reduction if he filed earlier than fra as a reguler benefit. When it comes to survivor benefits she gets whatever the husbands benefit was not his fra if he filed early. She is then subjected to an additional reduction if she herself files for survivor benefits before her fra.

Where can I see this documented? I can't find this at ssa site and this
ss calculator shows no reduction in wife's spousal benefit if I take my ss at 62.

[Brett_Cameron]

Quote:

Originally Posted by homestead Where can I see this documented? I can't find this at ssa site and this ss calculator shows no reduction in wife's spousal benefit if I take my ss at 62.

Here: SSA Handbook § 724

Quote:

A spouse can choose to retire as early as age 62, but doing so may result in a benefit as little as 32.5 percent of the worker's primary insurance amount. A spousal benefit is reduced 25/36 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month. There is no reduction for the prior entitlement as a wife or husband.

Look through the Table of Contents for answers to your other questions.

[homestead]

Quote:

Originally Posted by gsparks2 Here: SSA Handbook § 724 Look through the Table of Contents for answers to your other questions.

That reduction you quoted is well documented on ssa site but mathjak107 was stating that the spousal benefit for my wife was reduced if I start ss prior to FRA.
I can't any documentation for that.

[Brett_Cameron]

Quote:

Originally Posted by homestead That reduction you quoted is well documented on ssa site but mathjak107 was stating that the spousal benefit for my wife was reduced if I start ss prior to FRA. I can't any documentation for that.

Here: SSA Handbook § 723

Quote:

Your benefit rate is reduced if you become entitled to the following benefits at the ages shown: Retirement insurance benefits at age 62 through the month before you reach Full Retirement Age (FRA); Husband's or wife's insurance benefits at age 62 through the month before you reach FRA, provided that you do not have in care a child of the worker either under age 16 or disabled and entitled to benefits; Widow(er)'s insurance benefits beginning at any time from age 50 through the month before you reach FRA; Widow(er)'s insurance benefits after the deceased worker has received a retirement insurance benefit reduced for age; Disability insurance benefits received after a reduced retirement insurance benefit; or Retirement or disability insurance benefits received after a reduced widow(er)'s insurance benefit. This applies only to workers born before 1928.

And Here:
SSA Handbook § 320 Specifically §320.1 C

Quote:

The benefit paid to you may be less than one-half of the worker's primary insurance amount if: The “family maximum” applies (see §§731-732 for an explanation of reduction in benefit rates because of this provision); You are entitled to a retirement, disability, or widow(er)'s insurance benefit that is smaller than your spouse's benefit rate (only the difference between the retirement, disability, or widow(er)'s benefit and the spouse's benefit rate is paid as a spouse's insurance benefit); or You qualified for a reduced spouse's benefit before retirement age. (See §§723-724 for an explanation of how the reduced rate is figured.) Note: If you have in care the worker's child under age 16 or disabled, who is entitled to child's insurance benefits, your benefits are not reduced. (See §312 for an explanation of “in care”.)

Both your and spouse's benefits are based on your Primary Insurance amount. If you take SS before your FRA your benefit amount is reduced based on how long before your FRA you start taking benefits. Your spouse's benefit at her FRA is 1/2 your PIA. That half is reduced based on how long before her FRA she starts taking the spousal benefits.