bug in opensocialsecurity tool?

[Spock]

A lot of people recommend the opensocialsecurity tool on this board, so I thought I would ask if you're seeing the same behavior as I am.

Either I'm "doing it wrong" (again) or there seems to be a bug in the opensocialsecurity.com tool regarding the spousal benefit calculation.

First off, my understanding is:
* DW will draw "either her own earned benefit OR the spousal benefit, whichever is greater".
* Once DW starts her benefits, her %'s are fixed. My PIA might go up due to COLAs, but her % of my PIA will remain the same.

* Since DW started benefits at 63, her spousal benefit will be 35.63% of my PIA per https://www.ssa.gov/OACT/quickcalc/spouse.html and not 50% if she had waited until her FRA.
"You choose to receive benefits 45 months before normal retirement age. Your benefit will be 35.63 percent of the worker's primary insurance amount."
​

* DW spousal benefits can not start until I start drawing my benefit.
* DW spousal benefits are a % of my PIA and not my reduced benefit if I start before my FRA (or increased if I start after FRA).

Her own benefit is $563/mo
35.63% * my PIA=1120
MAX(563,1120)=1120
Therefore DW's monthly benefit (once I start mine) will be = $1120
This is extremely close to the benefit estimate received from SSA 12/29/21 (she started several months later so the numbers are slightly different).

The spousal benefit amount in opensocialsecurity is changing quite a bit based on when I start my SS benefit in the "Test an alternative strategy" section of the tool.

If I start my benefit at age 62, opensocialsecurity is showing DW=(6790 base + 7793 spousal)/12=1215 per month
If I wait to start my benefit at 65, opensocialsecurity is showing a significantly different spousal benefit of $10020/yr plus her own benefit of $6790/yr. (6790+10020)/12=1400.83 per month.
If I wait to start my benefit at 70, opensocialsecurity shows the same for spouse: (6790+10020)/12=1400.83 per month.

I emailed with the opensocialsecurity.com owner about it and was told (politely) "you're wrong, buy my book".

What am I missing that would cause the spousal benefit to increase based on when I start my benefit? (and top out at my age 65 vs my FRA at 67?)

 

[oldtimer]

A lot of people recommend the opensocialsecurity tool on this board, so I thought I would ask if you're seeing the same behavior as I am.

Either I'm "doing it wrong" (again) or there seems to be a bug in the opensocialsecurity.com tool regarding the spousal benefit calculation.

First off, my understanding is:
* DW will draw "either her own earned benefit OR the spousal benefit, whichever is greater".
* Once DW starts her benefits, her %'s are fixed. My PIA might go up due to COLAs, but her % of my PIA will remain the same.

* Since DW started benefits at 63, her spousal benefit will be 35.63% of my PIA per https://www.ssa.gov/OACT/quickcalc/spouse.html and not 50% if she had waited until her FRA.
"You choose to receive benefits 45 months before normal retirement age. Your benefit will be 35.63 percent of the worker's primary insurance amount."
​

* DW spousal benefits can not start until I start drawing my benefit.
* DW spousal benefits are a % of my PIA and not my reduced benefit if I start before my FRA (or increased if I start after FRA).

Her own benefit is $563/mo
35.63% * my PIA=1120
MAX(563,1120)=1120
Therefore DW's monthly benefit (once I start mine) will be = $1120
This is extremely close to the benefit estimate received from SSA 12/29/21 (she started several months later so the numbers are slightly different).

The spousal benefit amount in opensocialsecurity is changing quite a bit based on when I start my SS benefit in the "Test an alternative strategy" section of the tool.

If I start my benefit at age 62, opensocialsecurity is showing DW=(6790 base + 7793 spousal)/12=1215 per month
If I wait to start my benefit at 65, opensocialsecurity is showing a significantly different spousal benefit of $10020/yr plus her own benefit of $6790/yr. (6790+10020)/12=1400.83 per month.
If I wait to start my benefit at 70, opensocialsecurity shows the same for spouse: (6790+10020)/12=1400.83 per month.

I emailed with the opensocialsecurity.com owner about it and was told (politely) "you're wrong, buy my book".

What am I missing that would cause the spousal benefit to increase based on when I start my benefit? (and top out at my age 65 vs my FRA at 67?)

Your understanding is close but not quite correct. Assuming DW PIA is less than half of your PIA, then your DW will receive her current benefit plus the difference of your half PIA minus her PIA. Thus if she claimed her benefits prior to FRA and thus receive less than her PIA, then her total SS benefit her reduced plus spousal delta will be less than half your PIA. It is not a % of your PIA.

 

[mathjak107]

Unless you were grandfathered in by being at least 62 in 2015 then you always get your own benefit first ..there is no choice .

There is a spousal adder for those not grandfathered in when they have their own benefit if they qualify .

So as an example let’s say your fra amount is 2800 a month

Your wife’s fra amount is 1200 .

Her 62 amount is 800 …

So they take half your full which is 1400 and subtract her full which is 1200 .

The two hundred dollars difference is added to her own benefit ..

If she was fra she gets a total of 1400 .

If she was 62 she gets 800 plus the 200 for a total of 1000

 

[G-Man]

When can the spouse start collecting Spousal benefits? If my wife start collecting spousal benefit, will that reduce my social security amount when I start collecting at age 70?

My wife will start collecting social security at age 62; however, I am 3 years younger.

 

[mathjak107]

When can the spouse start collecting Spousal benefits? If my wife start collecting spousal benefit, will that reduce my social security amount when I start collecting at age 70?

My wife will start collecting social security at age 62; however, I am 3 years younger.

earliest you can collect is 62 unless survivor benefits which are 60 .

spousal has no effect on yours. however she can not get spousal unless you file .

you cant take 1/2 hers and let yours grow unless grand fathered in by being at least 62 in 2015

 

[pb4uski]

Your understanding is close but not quite correct. Assuming DW PIA is less than half of your PIA, then your DW will receive her current benefit plus the difference of your half PIA minus her PIA. Thus if she claimed her benefits prior to FRA and thus receive less than her PIA, then her total SS benefit her reduced plus spousal delta will be less than half your PIA. It is not a % of your PIA.

+1 Her benefit, reduced for taking early, plus the excess of half of your PIA over her PIA.

 

[mathjak107]

here is a nice chart with the before and after changes in ss

 

[mathjak107]

+1 Her benefit, reduced for taking early, plus the excess of half of your PIA over her PIA.

it is important for all to understand that the spousal adder as i will call it is based on both fra amounts regardless of when one files as you pointed out .

as in my example above , if someone files early then the excess gets added to their early amount so it is always going to be less then half

 

[Spock]

Your understanding is close but not quite correct. Assuming DW PIA is less than half of your PIA, then your DW will receive her current benefit plus the difference of your half PIA minus her PIA. Thus if she claimed her benefits prior to FRA and thus receive less than her PIA, then her total SS benefit her reduced plus spousal delta will be less than half your PIA. It is not a % of your PIA.

According to https://www.ssa.gov/OACT/quickcalc/spouse.html
the spousal benefit is indeed a % of the higher earners PIA.
Can you point me to the source of the alternate math you refer to?

 

[CardsFan]

According to https://www.ssa.gov/OACT/quickcalc/spouse.html
the spousal benefit is indeed a % of the higher earners PIA.
Can you point me to the source of the alternate math you refer to?

It appears your reference is dealing with a spouse that does not have a record to claim on.

Having gone though this, I know for a fact that @oldtimer is correct.

 

[Spock]

+1 Her benefit, reduced for taking early, plus the excess of half of your PIA over her PIA.

That math is new to me (haven't seen it anywhere)... but the number does match two of the three calculated opensocialsecurity scenario spousal amounts.
But since the math is based on PIAs (which don't change), why does the "start at 62" scenario spousal amount different than the "start at 65" and "start at 70" spousal amounts?
Can you point me to a resource showing the "Her benefit, reduced for taking early, plus the excess of half of your PIA over her PIA." math?
Everything I find on the SSA.gov site is % of PIA (spousal=50% if she started at FRA, less if she started early).

 

[Spock]

It appears your reference is dealing with a spouse that does not have a record to claim on.

Having gone though this, I know for a fact that @oldtimer is correct.

That link states "If a spouse is eligible for a retirement benefit based on his or her own earnings, and if that benefit is higher than the spousal benefit, then we pay the retirement benefit. Otherwise we pay the spousal benefit.", which led me to believe it applies to both.

I'm looking for a source for this alternate "my PIA - her PIA" math to code into my spreadsheet.

 

[oldtimer]

That link states "If a spouse is eligible for a retirement benefit based on his or her own earnings, and if that benefit is higher than the spousal benefit, then we pay the retirement benefit. Otherwise we pay the spousal benefit.", which led me to believe it applies to both.

I'm looking for a source for this alternate "my PIA - her PIA" math to code into my spreadsheet.

Mike Piper is considered an authority on Social Security benefits and created the opensocialsecurity.com calculator. Here is a link to a blog posting of his titled The Three Biggest Social Security Misconceptions that includes an example that matches yours scenario - How is a Spousal Benefit Calculated?.

 

[pb4uski]

Yup, just like I wrote..

Example: Sandra’s PIA is $2,000. Her husband Mark’s PIA is $600. Mark files for his retirement benefit four years prior to his full retirement age, so he gets a retirement benefit equal to 75% of his PIA, or $450. Later, after Mark reaches his FRA, he becomes entitled to a spousal benefit as well (because Sandra has filed for her own retirement benefit).

Mark’s spousal benefit is calculated as half of Sandra’s PIA, minus the greater of his own PIA or his own retirement benefit. That is, $1,000 – $600 = $400.

So his total monthly benefit is $450 + $400 = $850.

 

[niven]

I think the part that is confusing OP is why his DW's spousal benefit is lower when he starts at 62 vs say 65. I assume it is because she would not be at her full retirement age when he starts at 62. That reduces her spousal benefit.

Per oldtimer's link:

"If Mark’s spousal benefit had begun prior to his full retirement age, it would have to be multiplied by the applicable reduction factor for early entitlement. For example if his spousal benefit also began four years prior to his FRA, it would be multiplied by 70%. So it would be ($1,000 – $600) * 0.7 = $280"

 

[oldtimer]

I think the part that is confusing OP is why his DW's spousal benefit is lower when he starts at 62 vs say 65. I assume it is because she would not be at her full retirement age when he starts at 62. That reduces her spousal benefit.

Per oldtimer's link:

"If Mark’s spousal benefit had begun prior to his full retirement age, it would have to be multiplied by the applicable reduction factor for early entitlement. For example if his spousal benefit also began four years prior to his FRA, it would be multiplied by 70%. So it would be ($1,000 – $600) * 0.7 = $280"

Careful with the pronouns. The example in is that the DH is the lower earner, while Spock's scenario is the opposite - his DW is the lower earner. In either case the lower earner own benefits and lower earner's spousal benefits (once higher earner claims own SS benefits) portions of SS can both be reduced if each are claimed prior to reaching lower earner's FRA. But if lower earner claims own benefits early and spousal benefit at FRA, then only the lower earner's own benefit portion is reduce, while claiming the spousal benefit portion is not reduced - the end result is less than 1/2 the higher earners PIA, but not as much less than if claiming both portions early.

It is my understanding that if higher earner claims own benefits prior to FRA, that will only impact the survivors benefits, not the spousal benefit portion of lower earner.

 

[niven]

Careful with the pronouns.

The pronouns were correct.

DW is already collecting. OP will trigger her spousal benefits when he files. My assumption is the stated lower spousal benefit for her is because she will not be FRA if he files at 62.

 

[oldtimer]

The pronouns were correct.

DW is already collecting. OP will trigger her spousal benefits when he files. My assumption is the stated lower spousal benefit for her is because she will not be FRA if he files at 62.

My understanding is if DW is already receiving SS benefits based on her earnings, she has the option to delay claiming for spousal benefits until her FRA even if DH claims his benefits at 62 that is earlier than her FRA. I don't believe spousal benefits are automatically received.

 

[niven]

My understanding is if DW is already receiving SS benefits based on her earnings, she has the option to delay claiming for spousal benefits until her FRA even if DH claims his benefits at 62 that is earlier than her FRA. I don't believe spousal benefits are automatically received.

According to the Open Social Security calculator, the new deemed filing rules apply in this scenario as well and you cannot delay spousal benefits if you become eligible for them after taking your own benefit.

If you try entering that in the calculator - lower earning spouse already collecting and you attempt to delay spousal benefits past the higher earning spouse's filing date, you get this error message "Per new deemed filing rules, a person's spousal benefit date must be the later of their own retirement benefit date, or their spouse's retirement benefit date."

 

[qwerty3656]

Yup, just like I wrote..

Example: Sandra’s PIA is $2,000. Her husband Mark’s PIA is $600. Mark files for his retirement benefit four years prior to his full retirement age, so he gets a retirement benefit equal to 75% of his PIA, or $450. Later, after Mark reaches his FRA, he becomes entitled to a spousal benefit as well (because Sandra has filed for her own retirement benefit).

Mark’s spousal benefit is calculated as half of Sandra’s PIA, minus the greater of his own PIA or his own retirement benefit. That is, $1,000 – $600 = $400.

So his total monthly benefit is $450 + $400 = $850.

My wife and I are the same age and I have the bigger benefit. I plan to wait til 70, but I always thought my wife could take her benefit early (eg 62) w/o consequence (meaning once I started, she would get half my PIA). Looks like she would be getting s permanent haircut unless she waits til 67?

 

[pb4uski]

My wife and I are the same age and I have the bigger benefit. I plan to wait til 70, but I always thought my wife could take her benefit early (eg 62) w/o consequence (meaning once I started, she would get half my PIA). Looks like she would be getting s permanent haircut unless she waits til 67?

Yes, unless she waits until her FRA then there will be a discount for her starting early. From what you wrote it sounds like her FRA is 67.

DW and I are the same age (same birth year, she's actually 8 months older... a cougar) and she waited until her FRA but to wait y longer would have had no benefit to her. I'll be deferring until 70 since my PIA is a lot higher than hers.