Yet another SS question

[clifp]

My sister is turning 65 in March and is signing up for Medicare. She is in great shape (eats very healthy, exercises religiously)

She has a question about SS, which while I think I know the answer to I thought I'd double check with the board.

Her husband is 71 and took SS at around age 65. I am sure that 1/2 of his benefits are more than her individual benefits. Her full retirement age is 66, at 65 she get 93.5%.

I assume that number is based on the greater of her SS benefits or 1/2 of her husband's benefits is that correct?

Her husband is also in very good shape but is still likely to die before her.

Since she will get his benefits when he dies, when figuring out the breakeven
point, shouldn't I be using his expected life expectancy rather than hers?

So in general, won't she be better off taking her SS now (and in fact probably should have taken it at 62.)

 

[Independent]

If you're talking about the breakeven point on the decision on when to start her benefit, then the right mortality is their joint (first-to-die) mortality.

Her benefit will become irrelevant on the first death, whether is him or her.

 

[Running_Man]

My sister is turning 65 in March and is signing up for Medicare. She is in great shape (eats very healthy, exercises religiously)

She has a question about SS, which while I think I know the answer to I thought I'd double check with the board.

Her husband is 71 and took SS at around age 65. I am sure that 1/2 of his benefits are more than her individual benefits. Her full retirement age is 66, at 65 she get 93.5%.

I assume that number is based on the greater of her SS benefits or 1/2 of her husband's benefits is that correct?

Her husband is also in very good shape but is still likely to die before her.

Since she will get his benefits when he dies, when figuring out the breakeven
point, shouldn't I be using his expected life expectancy rather than hers?

So in general, won't she be better off taking her SS now (and in fact probably should have taken it at 62.)

You need to compare her spousal benefits at full retirement age to what she will earn at age 70, if her benefit at 70 is greater she should wait to age 66 to claim her spousal benefit and let hers grow then she will probably get her husbands amount upon his passing. Depending on how much larger that number is the expected life of her husband probably around 15 years would be what to use on the difference of getting the higher at 70 for 10 years and 4 years on spousal versus 15 years on her social security, the combined age expectancy is irrelevant to the discussion as only the additional social security, which is eliminated on his death will have an impact. There is the small impact of one year of social security benefits in the event of her early death but I doubt that has much impact

 

[Running_Man]

Ok using logical deduction and expected type of person your older sister would marry and based on your early retirement:

Husbands Social Security $2,150/mo

Wife's social security @ 66 $880
Wife Claiming Spousal @65 $1075
Wife Spousal @ 66 $1,156
Wives @ 70 $1,161

Years husband needs to live to have equality 13.8 Life expectancy of 71 year old male 14.8 - Math I am estimating says to wait, however is needs for money now more important than the 81/86/mo they will enjoy together in excess once your sister reaches age 66?

 

[pb4uski]

This tool will suggest the optimal strategy.

SSAnalyze - Bedrock Capital Management

 

[rayvt]

I worked all this out in my spreadsheet that I posted the link to awhile ago. However, the Bedrock Capital link is probably going to show you accurate figures.

The rules in a nutshell:

Survivor rules
He *did* file before death.
Note: "Early" means before FRA (normally 66).
Filed early: Larger of his reduced benefit OR 82.5% of his FRA amount
Not early: Her reduced spousal benefit (based on her age) applied to his increased amount

Widow benefit base:
If he filed early: His reduced benefit, but not more than 82.5% of his FRA benefit. ( 13 months of reduction)
If he filed not early His benefit (perhaps bumped up.)
Widow benefit reduction, based on her age vs. 66
Widow benefit base reduced by # of months before she is 66.
No increase past 66.

She will get either her own SS benefit or the widow benefit. Not both. She'll automatically get whichever is the higher.

As far as figuring the breakeven point: it barely matters at which starting age you go by. Myriads of people have gone through the same calculations, and come up with pretty much the same result -- the breakeven age is middle 80's (83-85), right around the life expectancy of a person between 62 and 70.

 

[rayvt]

Since he has already filed, a lot of the complexities go away, and it doesn't really matter if she has filed early or not.

In most cases, her benefit will be half of his benefit -- because 1/2 of his is higher than 100% of her own benefit.

When he dies, she will step into his shoes and get either the his existing benefit, perhaps capped at 82.5% of his FRA benefit.
One more rule:

Survivor reduction, can claim at 60, no increase for delay past 66
pct/mo % red
60 -0.395833 -28.50
61 -0.395833 -23.75
62 -0.395833 -19.00
63 -0.395833 -14.25
64 -0.395833 -9.50
65 -0.395833 -4.75
66 -0.395833 0.00

So in general, won't she be better off taking her SS now (and in fact probably should have taken it at 62.)

Yes. In general someone is better off by taking SS as early as possible.

 

[Hermit]

I worked all this out in my spreadsheet that I posted the link to awhile ago. However, the Bedrock Capital link is probably going to show you accurate figures.

The rules in a nutshell:


She will get either her own SS benefit or the widow benefit. Not both. She'll automatically get whichever is the higher.

As far as figuring the breakeven point: it barely matters at which starting age you go by. Myriads of people have gone through the same calculations, and come up with pretty much the same result -- the breakeven age is middle 80's (83-85), right around the life expectancy of a person between 62 and 70.

I haven't figured this all out and it is very confusing to me. From www.socialsecurity.gov "Social Security Benefit Amounts For The Surviving Spouse By Year Of Birth":

If a person receives widow's or widower's benefits, and will qualify for a retirement benefit that's more than their survivors benefit, he or she can switch to their own retirement benefit as early as age 62 or as late as age 70. The rules are complicated and vary depending on the situation, so talk to a Social Security representative about the options available.

I am currently collecting SS under my late DW's account. When I am 70, I will switch to collecting SS under my own account. I don't understand where the "automatically get whichever is greater" comes in to play.

 

[rayvt]

I haven't figured this all out and it is very confusing to me. From www.socialsecurity.gov "Social Security Benefit Amounts For The Surviving Spouse By Year Of Birth":



I am currently collecting SS under my late DW's account. When I am 70, I will switch to collecting SS under my own account. I don't understand where the "automatically get whichever is greater" comes in to play.

It is indeed very confusing. Lots of moving parts. That's why I spent several hours at the SSA site & other site's explanations to distill it all down so I could understand it -- and then wrote it down in my spreadsheet.

The "automatically": SSA has all the data for you and your spouse. In my experience, when we each filed, they figured out the spousal benefit structure so that the filee would get the maximum benefit allowed. We didn't have to do anything, didn't have to figure out if it was better to take "own" benefit or "spousal" benefit. The SSA did all that. Hence: automatic. Other people we know, when one spouse died, the survivor got the appropriate benefit adjustment without having to file anything. Hence: automatic. SSA gets notified of the death, and they take the necessary steps.

In your specific case, since you don't have to file anything when you turn 70, perhaps they won't automatically do anything -- you are not required to file for SS. But when/if you do file, they'll figure out both the "own" benefit or "spousal" benefit and pay you whichever is higher.

 

[Hermit]

It is indeed very confusing. Lots of moving parts. That's why I spent several hours at the SSA site & other site's explanations to distill it all down so I could understand it -- and then wrote it down in my spreadsheet.

The "automatically": SSA has all the data for you and your spouse. In my experience, when we each filed, they figured out the spousal benefit structure so that the filee would get the maximum benefit allowed. We didn't have to do anything, didn't have to figure out if it was better to take "own" benefit or "spousal" benefit. The SSA did all that. Hence: automatic. Other people we know, when one spouse died, the survivor got the appropriate benefit adjustment without having to file anything. Hence: automatic. SSA gets notified of the death, and they take the necessary steps.

In your specific case, since you don't have to file anything when you turn 70, perhaps they won't automatically do anything -- you are not required to file for SS. But when/if you do file, they'll figure out both the "own" benefit or "spousal" benefit and pay you whichever is higher.

Thanks, rayvt

When I retired and filed for DW's survivor SS, it was about 2/3 of my SS had I filed for mine at that time. By collecting on her benefits and waiting until 70 to collect under my benefits, my SS will be greater than 3 times what I collect under her benefits. It is my understanding that my benefits continue to grow as they would if I had not started benefits under DW's account.

The lady I talked to at SS was surprised I did not file for both and therefore take the larger of the two. That appeared to be very unusual from her point of view. I don't think she had a strong grasp of how it all worked.

The rules are so complex that I just hope I understand it correctly.

 

[Sunset]

This tool will suggest the optimal strategy.

SSAnalyze - Bedrock Capital Management

It's interesting, but kinda quirky.

I changed the COLA to 2%

It said Optimal was for DW to claim at 69, and me at 67.

When I changed it for DW to claim at 70 , the total combined income increased by 7K (which is a very small amount of total).

However, I always thought Optimal would be the best.