Texas Proud
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- May 16, 2005
- Messages
- 17,383
Yes, I started looking at that. The preliminary work is in the latest version of the spreadsheet that I uploaded.
It gets very complicated very fast.
The biggest complexity was in the file-and-suspend scenario -- but that was just eliminated.
My current impression is that in most (not all, but most) cases, there is little interplay between the spouses, that changing the filing strategy for spouse A does not change the optimal filing strategy for spouse B. If that is indeed the case, then A should do whatever filing strategy is best for him, and B sould do whatever filing strategy is best for her.
All this is different than your family financial stuff up to now. We are still getting our heads around the fact that (on Medicare) we no longer have family health insurance -- we each have our own policy that incompletly independent from the other's. Even thought it's the same Medicare Supplement policy form from the same company.
In broad terms, the lower-earning spouse get the higher of their own SS benefit or half the higher-earning spouse's benefit. There are some minor tweaks you can make revolving around the cutoffs at FRA, but the monetary effect in actual dollars is small. Certainly nowhere near the "This little trick will get a married couple an extra $15,000/yr {click here}".
Most of the confusion about all this is that so many people ignore the time value of money.
They think that $750 today is less money than $1000 in 4 years which is less than $1320 in 8 years -- when actuarially and proper discounted, they have (approximately) the same NPV.
And as we just found out withe 2016 Medicare increase and the "hold harmless" rule, deferring can cost you actual cash money. That's something that I've never read about before.
Just a few disagreements with what you say....
If there is a very large benefit vs a very small (or non existing) benefit, then the large needs to take into account what is best for BOTH parties...
As an example, say husband was the only one who worked... and wife has family history of living a long life... then it is better to wait till 70 to get the max benefit for spouse... (I did not calculate if taking at 62 with spousal at the same age is better, but I doubt it... this is if both are the same age)...
Now, take the above and make wife 8 years or more younger... since both starting at 62 is out, then waiting till 70 is even a smarter decision for both... not neutral as you say...
I also take exception to saying $750 today is worth the same as $1000 in 4 years.. that is a 10% return.... you cannot get that today... in today's rate it is closer to $800... so waiting is better by $200 in real income....