Another Spousal Social Security Benefit Question

[kannon]

Morning. I did a search online here for Spousal Benefits and I think I am getting a better picture but wanted to double check.

Our situation:
Me: Planning to take SS at age 62. I'm the higher income but Spouse still has a good SS pension at FRA.

Spouse: 5 yrs older. Planning to take SS at age 70.

What I think we can do. I file for SS at age 62 (my FRA is 67). Spouse files for spousal benefits at age 67. Spouse files for her own SS benefit at age 70.'

I plugged the numbers into a spreadsheet and seem favorable. Even though her own SS benefit at FRA would be a good bit more than her spousal benefit, the delay in taking SS benefit till 70 results in a better overall number. This scenario is even better than both of us taking SS at FRA. The only scenario better is we both wait till 70 which is nice but a cashflow issue.

And this does assume a living to a ripe old age.

So ... can we do this? Numbers are nice!

Thanks

Kannon

 

[Alan]

Have you tried this free estimator?

https://opensocialsecurity.com/

 

[kannon]

Yes - that is where I got the alternative idea. Just seems too good.

 

[braumeister]

What I think we can do. I file for SS at age 62 (my FRA is 67). Spouse files for spousal benefits at age 67. Spouse files for her own SS benefit at age 70.'

Pay attention to the "deemed filing" wrinkle in the law:

https://www.ssa.gov/planners/retire/deemedfaq.html

 

[kannon]

Based on "deemed" information, I think we are ok, spouse turned age 62 before Jan 2, 2016.

 

[Marc]

Have you tried this free estimator?

https://opensocialsecurity.com/

I used that calculator and now I am totally confused. Here is recommendation:

The strategy that maximizes the total dollars you can be expected to spend over your lifetimes is as follows:

You file for your retirement benefit to begin 11/2027, at age 70 and 0 months.
Your spouse files for his/her retirement benefit to begin 7/2020, at age 62 and 1 months.
Your spouse files for his/her spousal benefit to begin 11/2027, at age 69 and 5 months.

First, I am surprised that with new "deeming" rules my wife can file for benefits on her own and then change to spousal benefits. Second, and more surprising, my wife would change to spousal benefits when I turn 70 instead of FRA. I had thought that maximum spousal benefits are 50% of FRA benefit.

I can't believe calculator is wrong; so, what of my assumptions were wrong?

thanks,

Marc

edited to add another question:

Calculator came up with PV of $900K. Would this be a good number to add to my current assets to calculate withdrawal rate?

 

[braumeister]

Here's my take:

I can't believe calculator is wrong

Believe it. What you posted makes no sense.

Calculator came up with PV of $900K. Would this be a good number to add to my current assets to calculate withdrawal rate?

No. Just reduce your expected spending by the amount you will receive. Others will give you a different answer, but that's the most popular one.

 

[cathy63]

Quote:
The strategy that maximizes the total dollars you can be expected to spend over your lifetimes is as follows:

You file for your retirement benefit to begin 11/2027, at age 70 and 0 months.
Your spouse files for his/her retirement benefit to begin 7/2020, at age 62 and 1 months.
Your spouse files for his/her spousal benefit to begin 11/2027, at age 69 and 5 months.

First, I am surprised that with new "deeming" rules my wife can file for benefits on her own and then change to spousal benefits. Second, and more surprising, my wife would change to spousal benefits when I turn 70 instead of FRA. I had thought that maximum spousal benefits are 50% of FRA benefit.

While you and your wife are both living and married to each other, she can only claim spousal benefits if you have already filed your own claim. If you are waiting until 2027, then that's the earliest date at which she can file a spousal claim. Everything she gets prior to that date has to be on her own record.

 

[W2R]

Maybe off topic? kinda sorta - - divorced spousal SS

I worked really hard planning my retirement! But I am not perfect and missed a few things regarding SS. I was just planning to take it at age 70, and hadn't thought beyond that.

Thank goodness I was posting on this forum. In 2013, some very intelligent members of the Early Retirement Forum suggested an SS plan for me that I hadn't even thought of or heard of. I adopted it enthusiastically and it has worked out beautifully.

Here's how it goes: In 2014, I reached age 66 (FRA) and took divorced spousal SS (which in many ways is similar to spousal SS). This was half of his SS, but did not affect him and he never knew about it. My own SS based on my employment continued to grow as if I hadn't taken divorced spousal SS. This wouldn't have been the case had I started divorced spousal before FRA. Anyway, this month I turned 70, and will switch over to my own SS which is larger by now. I received a Letter of Award this week that says in writing (for the first time) that I will be getting what I calculated I would get, to the dollar.

The thing is, in 2015 there was a law passed to close this loophole. I think that I, and some others up to a certain age, were grandfathered in. But anyway I would be cautious to get up-to-date information if trying this approach. This is why I didn't post in the present thread until now; I don't want to give anyone outdated advice, and I really don't know what the present law dictates.

In about 3-4 weeks, I'll get the first deposit based on my own SS. I'll see a "raise" of $555/month.

 

[Independent]

Calculator came up with PV of $900K. Would this be a good number to add to my current assets to calculate withdrawal rate?

Since my retirement goal is a regular income, I would deduct the SS (monthly or annual) benefit from my target income.

Things like the 4% SWR guideline apply to people who want a constant income from their retirement savings. I assume you are planning to start SS some years after you retire, so you will probably want higher withdrawals before you start SS than after.

Note that Firecalc handles this for you.

 

[Marc]

While you and your wife are both living and married to each other, she can only claim spousal benefits if you have already filed your own claim. If you are waiting until 2027, then that's the earliest date at which she can file a spousal claim. Everything she gets prior to that date has to be on her own record.

Cathy, so the calculator is correct? My wife can claim on her own in 2020 and then switch to spousal benefits in 2027?

The $1000 bump starting in 2020 could be found money.

thanks,

Marc

 

[cathy63]

Cathy, so the calculator is correct? My wife can claim on her own in 2020 and then switch to spousal benefits in 2027?

The $1000 bump starting in 2020 could be found money.

thanks,

Marc

Yes, as far as I know, it's correct that she can claim on her own record and then switch to spousal when you file your own claim.

 

[skipro33]

Just to clarify;
If spouse is eligable for their own benefit, they must take that. THEN they can apply for spouse's 50%. What they get is the difference between the two so that they still get their benefit plus the difference to make up to the 50% of their spouse's.

Think of it like a mortgage with the 1st the individual's SS benefit. The 2nd is the difference to bring it up to what ever 50% of their spouse's benefit is, IF it' indeed is a greater amount. It is how SS manages the dollars against the account.

If the spouse only applied for their spouses 50%, then the bucket of money that has been accruing from there life time earnings isn't being reconciled. I know it sounds confusing, but it's all about the book keeping, keeping the records of what a wage earner has built up against what they are drawing. First from their own account, then up to 50% of their spouses.

You aren't 'switching' to 50% of spousal benefits, you are applying for the difference between the two.

In fact; to keep the two buckets of funding separate, you will get two checks from SS; one from your own earnings and one from the difference up to 50% of the spouses earnings.

 

[Alan]

In fact; to keep the two buckets of funding separate, you will get two checks from SS; one from your own earnings and one from the difference up to 50% of the spouses earnings.

Nice to know. That makes it all very obvious. Just about 3.5 years before I get to FRA, DW is 9 months younger than me so these threads are always of interest to me.

 

[joeea]

In fact; to keep the two buckets of funding separate, you will get two checks from SS; one from your own earnings and one from the difference up to 50% of the spouses earnings.

Is that true? I've never heard of anyone receiving two physical checks.

 

[Mike Piper]

While you and your wife are both living and married to each other, she can only claim spousal benefits if you have already filed your own claim. If you are waiting until 2027, then that's the earliest date at which she can file a spousal claim. Everything she gets prior to that date has to be on her own record.

Yes, this is the reason for the calculator's output in this case. Good explanation.

 

[Mike Piper]

I worked really hard planning my retirement! But I am not perfect and missed a few things regarding SS. I was just planning to take it at age 70, and hadn't thought beyond that.

Thank goodness I was posting on this forum. In 2013, some very intelligent members of the Early Retirement Forum suggested an SS plan for me that I hadn't even thought of or heard of. I adopted it enthusiastically and it has worked out beautifully.

Here's how it goes: In 2014, I reached age 66 (FRA) and took divorced spousal SS (which in many ways is similar to spousal SS). This was half of his SS, but did not affect him and he never knew about it. My own SS based on my employment continued to grow as if I hadn't taken divorced spousal SS. This wouldn't have been the case had I started divorced spousal before FRA. Anyway, this month I turned 70, and will switch over to my own SS which is larger by now. I received a Letter of Award this week that says in writing (for the first time) that I will be getting what I calculated I would get, to the dollar.

The thing is, in 2015 there was a law passed to close this loophole. I think that I, and some others up to a certain age, were grandfathered in. But anyway I would be cautious to get up-to-date information if trying this approach. This is why I didn't post in the present thread until now; I don't want to give anyone outdated advice, and I really don't know what the present law dictates.

In about 3-4 weeks, I'll get the first deposit based on my own SS. I'll see a "raise" of $555/month.

This strategy of applying for spousal-only while allowing your own retirement benefit to grow is known as a "restricted application." It is still available to people who were at least age 62 as of 1/1/2016 (i.e., people born 1/1/1954 or earlier).

An analogous strategy is also still available to widow(er)s, regardless of DoB.

 

[Mike Piper]

I've never heard of anyone receiving two physical checks.

In theory, if the checks are supposed to come from the same trust fund, they're supposed to be combined.

https://secure.ssa.gov/apps10/poms.nsf/lnx/0202401025

But people would get two separate checks in some cases. For instance:
*Spouse A is getting disability benefits (coming from DI trust fund)
*Spouse B is getting retirement benefits (coming from OASI trust fund) and a spousal benefit on Spouse A's work record (which comes from DI trust fund because it's based on a disability benefit).

In such a case Spouse B's two benefits would come as separate payments.

Also, it's certainly possible that benefits that are supposed to be combined might not actually get combined for whatever reason.

You aren't 'switching' to 50% of spousal benefits, you are applying for the difference between the two.

Just quoting this because I think it's an important point that many people misunderstand.

 

[ivinsfan]

Cathy, so the calculator is correct? My wife can claim on her own in 2020 and then switch to spousal benefits in 2027?

The $1000 bump starting in 2020 could be found money.

thanks,

Marc

Just be sure you are using the correct number for the spousal benefit. It is 50% of your benefit at FRA not 50% of your benefit at 70. The number is frozen at your FRA. This number is your spousal benny alone. You get either your own benny or a spousal benny...the cap is the higher of the 2 benefits.

 

[Marc]

Just be sure you are using the correct number for the spousal benefit. It is 50% of your benefit at FRA not 50% of your benefit at 70. The number is frozen at your FRA. This number is your spousal benny alone. You get either your own benny or a spousal benny...the cap is the higher of the 2 benefits.

Yes, I understand. As FRA is 66 and 6 months for me, the total when I turn 70 is:

100% + 28% +50% = 178% of FRA

Thanks to everyone on this forum!

Marc

 

[ivinsfan]

Yes, I understand. As FRA is 66 and 6 months for me, the total when I turn 70 is:

100% + 28% +50% = 178% of FRA

Thanks to everyone on this forum!

Marc

Where are you getting the 50% ….

do you mean your check 100+28

spouse 50% of 100

 

[skipro33]

Is that true? I've never heard of anyone receiving two physical checks.

I'm referencing my brother and SIL's experience. When she got two checks, she asked me to check into it. (My brother has Alzheimers and isn't able to) The SS office told us this is the reason two checks.


Deeming may or may not play a role in this. From SS website; "Deemed filing means that when you file for either your retirement or your spouse’s benefit, you are required or “deemed” to file for the other benefit as well."

 

[joeea]

I'm referencing my brother and SIL's experience. When she got two checks, she asked me to check into it. (My brother has Alzheimers and isn't able to) The SS office told us this is the reason two checks.

Does this mean one check was for her and the other check was for her spouse?

 

[joeea]

Just quoting this because I think it's an important point that many people misunderstand.

But it's a difference without a distinction, right?

Nobody really cares if they get two amounts derived from two different calculations or one amount - as long as the total is the same.

 

[joeea]

Yes, I understand. As FRA is 66 and 6 months for me, the total when I turn 70 is:

100% + 28% +50% = 178% of FRA

Yes.

By delaying until 70, you would receive 128% of your FRA, while your wife would receive 50% of your FRA. So between you, that's 178%.

When one of you passes away, the other would receive only the 128% of your FRA.