Does it make sense to delay the younger, lower wage earning spouse Social Security?

[Camas Lilly]

I am really on the fence whether or not to collect SS early. I am 7 years younger than DH. I am 60.5 and I am wanting to retire at 62-63. We are still going to have two debts to pay off at that point, mortgage and a new truck, but do plan on selling the house and downsizing to another state with enough money left over to pull most of that off although that is going to take a good chunk of the equity, about 1/3. Actually considering starting dividend withdrawals to help pay these two debts down.

My husband is 67.5, retired and collecting a pension and early Social Security.
When I turn 62-63, we could just make it on his pension, Social Security, Dividend income and 3% RMD without having to touch my Social Security.

I keep waffling between taking it at 62 or holding off as long as I can. Wouldn’t it be a no-brainer that even delaying my Social Security it will only max out at approximately what he is getting right now and if something happened to him, I would collect his Social Security anyway. To me it seems like a waste if it could possibly go away anyway. This money would really come in handy and we could possibly back off on the dividend income. If we collect all 4, we would be sitting pleasantly.

I also realize time is short, and I want to be active in his retirement years while he can still get around OK because we will probably have 1-3 acres and he is wanting a shop to tinker, granted he still can, when we get there. There is also the possibility we are going to have cows and chickens too, so really looking forward to working together on the “farm”. ☺

He is not the healthiest – arthritis, knee replacement, shoulder needing replacement, previous back surgery, smokes a cigar, has pretty high blood pressure and is about to go on meds for diabetes. So I am really trying to look at the facts. First he is 7 years older, secondly his (male) life span should be shorter than mine and then with the health issues on top of that to shorten life expectancy even further. I am petty healthy, have never had anything wrong with me other than recently “normal” slightly elevated blood pressure, although I don’t get enough exercise while still working. I have quit all my bad habits – quit smoking, lost 50 lbs and also now eat very well. I am expecting I could very well live at 15-20 years on my own, unless something kills me first. LOL. Yes, Alzheimers and diabetes runs in both sides of the family, but I am thinking positively!

So, I thought I would get input from the good smart people on the forums here. ☺

Thanks

 

[HillCountry]

He should delay SS to 70 while you take it early. As you will assume his after him passing away. I would think you should file now.

 

[ivinsfan]

He should delay SS to 70 while you take it early. As you will assume his after him passing away. I would think you should file now.

She clearly states that he is already collecting his SS.In her shoes I would probably collect my SS when I quit working.

 

[CardsFan]

OP: If your SS at FRA (or at 70) would be greater than his current (early) payment, there COULD be a reason to wait. If not, then it is probably sensible for you to take it when you retire.

 

[ckelly78z]

Life is short, enjoy it while you can. I would take it at 62, and get more years, but less per month, and enjoy the money while you are still active, and young.

I think the break even point is right around 80 years old when you will have made more cumulative money by taking SS at 65 rather than at 62. You will most likely need less money the older you get to maintain lifestyle (doing less).

 

[Al18]

If you take SS at 62, keep it mind the payment will be reduced at 65 if you are signing up for Medicare.

 

[joeea]

I am 7 years younger than DH. I am 60.5 and I am wanting to retire at 62-63.

My husband is 67.5, retired and collecting a pension and early Social Security.

When did your husband begin collecting his Social Security benefits? It's probably unfortunate that he already started to collect. Depending on the numbers, it may be advantageous for him to suspend his benefits now and wait until he is 70, in order to accrue some delayed retirement credits and increase eventual survivor benefits.

You haven't actually provided enough information to suggest a good plan. Your benefits, his benefits - both matter regarding your choice.

Check out https://opensocialsecurity.com/. It's a good tool for playing with possible collection strategies and their outcomes.

Actually considering starting dividend withdrawals to help pay these two debts down.

If you are going to sell the house in a few years anyway, don't pay down the mortgage now.

 

[Camas Lilly]

My SS would max out a bit less than what he is getting now. I do have a good job with decent income. I have always been a hard worker, possibly a workaholic, so leaving that nice paycheck will be hard, not to mention financing a second home before we can move. Being in debt is not my cup of tea, but I have to focus on the end result I guess.

The only reason we have fallen behind on the mortgage payoff is DH just bought a newer, bigger truck. One of those he's always dreamed of having and on top of that he got it for roughly $10,000 less than it was really worth. Now even I couldn't pass up a deal like that. It is what it is. We have two trucks to sell now to pay for half of the new one which would put it right on track with payoff in two years.

I was pleasantly surprised that I can carry my health insurance including dental and vision for both of us through Cobra for 18 months right at about $550 or so.

 

[Camas Lilly]

If you take SS at 62, keep it mind the payment will be reduced at 65 if you are signing up for Medicare.

Yes, I have health insurance priced into the progressive budget.

 

[Camas Lilly]

When did your husband begin collecting his Social Security benefits? It's probably unfortunate that he already started to collect. Depending on the numbers, it may be advantageous for him to suspend his benefits now and wait until he is 70, in order to accrue some delayed retirement credits.

You haven't actually provided enough information to suggest a good plan. Your benefits, his benefits - both matter regarding your choice. Check out https://opensocialsecurity.com/.

It's a good tool for playing with possible collection strategies and their outcomes.

He was 63.5 when he started collecting SS, so I believe it is too late. Also he wasn't going to wait around as long as he had the pension to supplement, so that wasn't going to happen anyway. It was just one of those things, when you are done working, you are done working and it's time to go.

 

[joeea]

He was 63.5 when he started collecting SS, so I believe it is too late.

No. It's not too late. He could still earn a few years of delayed retirement credits. And that could potentially help boost your eventual survivor benefits.

Also he wasn't going to wait around as long as he had the pension to supplement, so that wasn't going to happen anyway. It was just one of those things, when you are done working, you are done working and it's time to go.

I understand. But retiring doesn't imply that you must begin collecting.

I urge you to either talk with a fee-only fiduciary financial planner for an hour or two before making your decision. Or, use the tool at https://opensocialsecurity.com/

 

[Camas Lilly]

When did your husband begin collecting his Social Security benefits? It's probably unfortunate that he already started to collect. Depending on the numbers, it may be advantageous for him to suspend his benefits now and wait until he is 70, in order to accrue some delayed retirement credits and increase eventual survivor benefits.

You haven't actually provided enough information to suggest a good plan. Your benefits, his benefits - both matter regarding your choice.

Check out https://opensocialsecurity.com/. It's a good tool for playing with possible collection strategies and their outcomes.


If you are going to sell the house in a few years anyway, don't pay down the mortgage now.

It actually suggests that he suspend his until FRA and I start mine in 1.5 years. If we did that, he would have to go back to work for us to pay the bills between now and then. How does that work anyway? I thought I read that if you suspend, you have to pay back all the money you have collected so far.

 

[joeea]

It actually suggests that he suspend his until FRA and I start mine in 1.5 years.

Please double check your entries. He is already past his FRA. Perhaps the tool suggested that he suspend until he is 70?

If we did that, he would have to go back to work for us to pay the bills between now and then. How does that work anyway?

I don't think I understand your question. How does what work?
Can you pay your bills for the next 2.5 years using your income plus his other benefits along with using some of your retirement assets?

I thought I read that if you suspend, you have to pay back all the money you have collected so far.

No. It's too late to pay back the money (you only have 12 months after starting benefits to do that).

But he could suspend now and earn some delayed retirement credits to increase his benefit for the rest of his life (at the rate of 8% for each year he suspends). And that might increase your eventual survivor benefits as well.

 

[Camas Lilly]

Please double check your entries. He is already past his FRA. Perhaps the tool suggested that he suspend until he is 70?


I don't think I understand your question. How does what work?
Can you pay your bills for the next 2.5 years using your income plus his other benefits along with using some of your retirement assets?


No. It's too late to pay back the money (you only have 12 months after starting benefits to do that).

But he could suspend now and earn some delayed retirement credits to increase his benefit for the rest of his life (at the rate of 8% for each year he suspends). And that might increase your eventual survivor benefits as well.

Yes, I am sorry, you are correct it did say 70. Since we don't have a ton of money saved up, we would have to draw close to 8% annually to make up for the lost income. Does it still make that much difference to do that?

 

[mountainsoft]

Filing early will reduce your SS benefits. You probably know that.

If you're the lower earner, filing early will also reduce your spousal benefits if the higher earner dies first. If I remember correctly, if you file at 62 you would only receive around 35% of the benefit the higher earner would have received at full retirement age (regardless of whether they filed early or late).

https://www.ssa.gov/OACT/quickcalc/spouse.html#calculator

 

[Animorph]

We're probably close to 6% WR as we delay SS and a pension. No income other than our portfolio. But I can't say that's what you should do, just that it should be an option.

DW is 5 years younger than me, so I kind of flip the OP case. I have a marginally higher basic SS benefit, plus an extra year of delay possible from FRA to age 70. I'll delay until I'm 70, giving us the highest SS possible as long as either of us lives. As a widow DW would drop her SS and get 100% of mine.

Theoretically DW should then take hers as early as possible. Her SS will be the one that only lasts as long as we're both living. Given my extra age and maleness, and the fact that we must both survive, on average we likely won't cover the break even period to make waiting pay off.

Still, I'm very healthy so far at 64 and would like to Roth convert and pick up some 0% capital gains taxes before adding any income streams. I'd have to live to 85+ or so to make delaying DW's SS pay off, but I'm thinking about it. We can decide any time after she turns 62, so we might let it ride and see how we're doing.

Good luck!

 

[pb4uski]

It actually suggests that he suspend his until FRA and I start mine in 1.5 years. If we did that, he would have to go back to work for us to pay the bills between now and then. How does that work anyway? I thought I read that if you suspend, you have to pay back all the money you have collected so far.

No... suspend means that you just stop receiving benefits for a period.

Try this... at the very bottom of opensocialsecurity.com there is a section for alternative claiming strategies... put in what you would prefer to do and compare that present value to the present value of the optimal strategy... the difference is what that alternative "costs" you.

Another way to think of delaying SS is as buying a cost of living adjusted annuity. By suspending his benefits for 2.5 years his benefit (and yours if he predeceses you) will increase by 20% (2.5 years * 8%). So if his current benefit is $2,000/month then his age 70 benefit will be $2,400/month or an increase of $400/month or $4,800/year. In the meantime, he will forgo $60,000 of benefits ($2,000/month * 2.5 years). So it is the same as taking $60,000 of your savings to buy a COLA adjusted annuity that pays $4,800 a year for as long as either one of you is alive.... if you're not familiar with annuity pricing, that is a very good deal.

Now if you don't have the $60,000 in retriement savings to "buy" that COLAed annuity then it doesn't matter because you have no choice.

 

[MarieIG]

DH has the by far longer/better earning history. He is planning to delay until age 70 to optimize survivor benefits.

 

[Camas Lilly]

Filing early will reduce your SS benefits. You probably know that.

If you're the lower earner, filing early will also reduce your spousal benefits if the higher earner dies first. If I remember correctly, if you file at 62 you would only receive around 35% of the benefit the higher earner would have received at full retirement age (regardless of whether they filed early or late).

https://www.ssa.gov/OACT/quickcalc/spouse.html#calculator

Let me see if I understand correctly. I if I figure up spousal benefits I get much less than survivor benefits. According to the calculators, when he passes away, for survivors benefits, my benefit would be supplemented to match the total amount DH was receiving.

 

[Camas Lilly]

No... suspend means that you just stop receiving benefits for a period.

Try this... at the very bottom of opensocialsecurity.com there is a section for alternative claiming strategies... put in what you would prefer to do and compare that present value to the present value of the optimal strategy... the difference is what that alternative "costs" you.

Another way to think of delaying SS is as buying a cost of living adjusted annuity. By suspending his benefits for 2.5 years his benefit (and yours if he predeceses you) will increase by 20% (2.5 years * 8%). So if his current benefit is $2,000/month then his age 70 benefit will be $2,400/month or an increase of $400/month or $4,800/year. In the meantime, he will forgo $60,000 of benefits ($2,000/month * 2.5 years). So it is the same as taking $60,000 of your savings to buy a COLA adjusted annuity that pays $4,800 a year for as long as either one of you is alive.... if you're not familiar with annuity pricing, that is a very good deal.

Now if you don't have the $60,000 in retriement savings to "buy" that COLAed annuity then it doesn't matter because you have no choice.

That makes very good sense. Anyway, at first look let night I figured delaying for 2.5 years would add roughly $400 gross per month to his SS check. He is currently getting about $1875. We consulted a FP right before he retired to double check everything and give us the go ahead. He told us we were fine, which we may very will be, but if he mentioned this, I don't recall or he didn't emphasize it much.

 

[Camas Lilly]

When did your husband begin collecting his Social Security benefits? It's probably unfortunate that he already started to collect. Depending on the numbers, it may be advantageous for him to suspend his benefits now and wait until he is 70, in order to accrue some delayed retirement credits and increase eventual survivor benefits.

You haven't actually provided enough information to suggest a good plan. Your benefits, his benefits - both matter regarding your choice.

Check out https://opensocialsecurity.com/. It's a good tool for playing with possible collection strategies and their outcomes.


If you are going to sell the house in a few years anyway, don't pay down the mortgage now.

I ran the numbers and don't believe my eyes. I will have to go back and double check when I get more time over the weekend.

Continue as planned, I claim early (5-2021): Annual Income: $36,135, Survivor: $18,885.
DH suspends now and unsuspends 8-2021, I claim early (5-2021): Annual Income $39,786, Survivor: $22,536.
Recommended Plan: DH suspends now and unsuspends 5-2019, I wait until age 70 (5-2028--an additional 8 years): Annual Income: 2021-2028: $19,389, then 2029: $48,489; Survivor: 48,489.

So it looks like if we can squeeze by on his Pension, SS, RMD and Dividends, we/I will be much, much better off if I wait until 70, but he will be pushing 77 by then. That's a long time, but I could w**k.... The only thing that may be appealing to him is that his 2 kids will probably get a larger inheritance, not that we are planning on that, but we'll see. Lots more cash for long term health care....

 

[Camas Lilly]

Since DH will be 77, maybe we can find a good middle ground, maybe a year or so earlier. I don't know....have some more checking to do I guess.

 

[ivinsfan]

I ran the numbers and don't believe my eyes. I will have to go back and double check when I get more time over the weekend.

Continue as planned, I claim early (5-2021): Annual Income: $36,135, Survivor: $18,885.
DH suspends now and unsuspends 8-2021, I claim early (5-2021): Annual Income $39,786, Survivor: $22,536.
Recommended Plan: DH suspends now and unsuspends 5-2019, I wait until age 70 (5-2028--an additional 8 years): Annual Income: 2021-2028: $19,389, then 2029: $48,489; Survivor: 48,489.

So it looks like if we can squeeze by on his Pension, SS, RMD and Dividends, we/I will be much, much better off if I wait until 70, but he will be pushing 77 by then. That's a long time, but I could w**k.... The only thing that may be appealing to him is that his 2 kids will probably get a larger inheritance, not that we are planning on that, but we'll see. Lots more cash for long term health care....

Your numbers don't make sense ..try them again...your survivor number is off

 

[Camas Lilly]

Your numbers don't make sense ..try them again...your survivor number is off

Will do. I have to w**k right now.

 

[Camas Lilly]

I ran the numbers and don't believe my eyes. I will have to go back and double check when I get more time over the weekend.

Continue as planned, I claim early (5-2021): Annual Income: $36,135, Survivor: $18,885.
DH suspends now and unsuspends 8-2021, I claim early (5-2021): Annual Income $39,786, Survivor: $22,536.
Recommended Plan: DH suspends now and unsuspends 5-2019, I wait until age 70 (5-2028--an additional 8 years): Annual Income: 2021-2028: $19,389, then 2029: $48,489; Survivor: $28,500.

So it looks like if we can squeeze by on his Pension, SS, RMD and Dividends, we/I will be much, much better off if I wait until 70, but he will be pushing 77 by then. That's a long time, but I could w**k.... The only thing that may be appealing to him is that his 2 kids will probably get a larger inheritance, not that we are planning on that, but we'll see. Lots more cash for long term health care....

Absolutely right. #3 Survivor benefits was off.