Another SS Staff Story

[CRLLS]

I may be mistaken, but I think the "Survivor Benefit" is capped at FRA for the surviving spouse? So waiting past FRA (67 for me) is about the additional payout for us while I am alive, not what she would get if I get hit by the beer truck....

Based on that, I was planning FRA for taking SS....

Someone correct me if I am wrong. I got this from the SS website. I think it means the widow or widower gets the higher amount.

4. Use of Delayed Retirement Credits in Computing Widows' and Widowers' Benefits

The worker's PIA, increased by any delayed retirement credits accrued prior to the death of the insured individual, is deemed to be the PIA on which the widow's or widower's benefit is based. Payments based on PIA's increased by these credits are effective for all widows' and widowers' benefits for months after May 1978.

Straight Spousal benefit is capped at FRA and does not increase by the primary delaying benefits.

 

[MissMolly]

I may be mistaken, but I think the "Survivor Benefit" is capped at FRA for the surviving spouse? So waiting past FRA (67 for me) is about the additional payout for us while I am alive, not what she would get if I get hit by the beer truck....

Based on that, I was planning FRA for taking SS....

This is not the way I understand that this works. The surviving spouse gets the higher of the two, but will be dependent upon the age of the surviving spouse. If the higher earning spouse waited until 70 to claim SS, then the surviving spouse would get the age 70 amount in place of their own lower amount, depending on their age.

If the higher earner dies before claiming SS, but after full retirement age, then the amount they would have been eligible for on their date of death is the amount the surviving spouse can draw. However, again, when the surviving spouse files can determine whether or not there is a reduction in the benefits.

If the surviving spouse is at full retirement age or beyond, they will receive 100% of the deceased eligible benefit. If they file for survivor benefits between 60 and full retirement age, they will receive a reduced benefit.

If the deceased was not yet at full retirement age, and the surviving spouse waits until their full retirement age, then they will receive 100% of the deceased full retirement benefits.

At least, this is how I understand it.

 

[Pilot2013]

I took a look, and found what you were referring to about the surviving spouse's age relative to FRA reducing their benefit, but I am 99% sure that the max they can collect on a Souses record is the SPOUSE FRA amount. I'll do more searching when I get home.

 

[athena53]

I'm a Surviving Spouse, not FRA, and I get 100% of late DS' amount. May have been reduced a little since I'm not FRA. Planning to collect on my own at age 70.

Given how many widows find it a shock that they collect the larger benefit their husband got, but no Spouse benefit (so household income reduced by 1/3), I can't imagine the disaster if it went from 150% of husband's benefit to only 50%.

 

[braumeister]

I took a look, and found what you were referring to about the surviving spouse's age relative to FRA reducing their benefit, but I am 99% sure that the max they can collect on a Souses record is the SPOUSE FRA amount. I'll do more searching when I get home.

I think the confusion stems from your conflating spousal benefit with survivor benefit.

You're right about the spousal benefit being limited to the spouse's FRA amount, but the survivor benefit is 100% of the deceased spouse's actual amount.

 

[gatored]

Consistent with the "it's not just about You" line of thinking, couldn't you also surmise that you should factor in the impact to your children's inheritance. With all of the Monte Carlo simulations of withdrawl rates less than 4% likely leading to having more in your retirement accounts than when you retired (minimal longevity risk), spending down your retirement accounts to increase an income stream (SS) that can't be bequeathed to your children (or charity) could be a concern. I'm probably going to hedge my bets and take SS at 62 and my 4 years younger wife take it at 70, since we likely won't need her SS.

 

[Blue Collar Guy]

Ok, since im not good in this area here is a question. My mother began collecting a widows benefit when she turned 60, it was from what i was told, it was half my fathers. She is 91 now and gets about 950 a month. Does collecting the husbands full not apply if the husband doesnt live to 62,65, or 70? She did make several calls about collecting her own but was told her husbands half was more. She doesnt get his whole thing. More info, my dad died at 57 so he never collected a dime. Never filed etc. I just googled this, but the rules are not clear to me. They wont talk to me over the phone either just tried.
***********************
I found this but dont know what is means in layman terms to my question.
"If your deceased spouse had not begun benefits...
and died prior to FRA, then as the widow(er) you are entitled to 100% of your deceased spouse’s PIA if you have reached your own FRA. The widow(er) benefit will be reduced if you begin benefits prior to your FRA. This means if your spouse passes at age 64 and had not started benefits yet, then as a widow/widower you can receive what they would have gotten at their age 66 (assuming 66 was their FRA, and assuming you have reached your own FRA). Most people born from 1943 to 1954 have an FRA of 66."

 

[braumeister]

That sounds about right, BCG, based on what I know and what my mom was receiving.

You can get a start at understanding it here:
Survivors Benefits For Your Widow Or Widower

 

[Blue Collar Guy]

That sounds about right, BCG, based on what I know and what my mom was receiving.

You can get a start at understanding it here:
Survivors Benefits For Your Widow Or Widower

So mom gets half of dads, reduced by the 60 year old reduction, and never gets his portion.

 

[Hermit]

So mom gets half of dads, reduced by the 60 year old reduction, and never gets his portion.

I think Mom gets 100% of Dad's at his FRA reduced to about 50% when filing at 60 rather than waiting for her FRA.

BYW, I did exactly this at 63 but when I reach 70 I will file on my own account which will be much larger than the late DW's.

 

[braumeister]

I think Mom gets 100% of Dad's at his FRA reduced to about 50% when filing at 60 rather than waiting for her FRA.

That's my understanding. She gets what he would have received (after considering the zero years after his death), reduced by her early claim. Someone at your local office could probably show you the calculations, but the amount sounds about right to me.

 

[Blue Collar Guy]

That's my understanding. She gets what he would have received (after considering the zero years after his death), reduced by her early claim. Someone at your local office could probably show you the calculations, but the amount sounds about right to me.

Thanks

 

[Pilot2013]

From EN-05-10084:

How much will I receive?

We base the benefit amount on the earnings of the person
who died. The more the worker paid into Social Security,
the greater your benefits will be.

Social Security uses the deceased worker’s basic benefit
amount to calculate the percentage survivors can get.

The percentage depends on the survivor’s age and
relationship to the worker. If the worker who died was
getting reduced benefits, we’ll base your survivor’s benefit
on that amount.
In most typical claims for benefits:
• A widow or widower, at full retirement age or older,
generally gets 100 percent of the worker’s basic
benefit amount;
• A widow or widower, age 60 or older, but under full
retirement age, gets about 71-99 percent of the
worker’s basic benefit amount

Now, what I am trying to understand is the bold/underlined statements. I think that is the deceased persons FRA amount.

 

[Independent]

Hind sight is 20/20. Seems to me it will take about 12 years to break out even. That money you didnt take and thus lost opportunity to invest, i think it will take long past your lifespan to break out even. why did you wait? Im a collect at 62 type person(if i live to 62). Im trying to understand the wait to 70 crowd. Im glad you got a good answer from the local office.

My post was intended to be about the possibility of getting different answers from different staffers. In this case, I'm betting the local person is correct. I'll know for sure when I get my first check.

The "when to start?" question is debated on many threads. In my case, it's significant that my wife will get my increased benefit if I die first, so the actual benefit years will be until the second death, not just until my death.

You mentioned "invest". It's correct that if you want to calculate a breakeven year, you need to make some assumption about investment returns.

Of course, if we did breakeven calculations for auto, home, life, or health insurance, we'd always find that companies pay fewer dollars in benefits then they get in investment-adjusted premiums. On that basis, we'd never buy private insurance. Deferring SS is a little like buying longevity insurance.

For me, deferring is a defensive strategy. As others have said, my heirs will come out with less if I die sooner. I don't care, my goal isn't to maximize my heirs upside potential, but protect me from the downside that could occur in the case the actual investment returns for my retirement years are lousy and I (or my wife) live a long time.

But, it's a very close call. I entirely understand why other people with other health, financial, and personality situations will make the other call. There are lots of valid pros and cons.

I will say there are two arguments I sometimes see that I believe are not valid:

Some say if you take SS early you can spend more in the earlier retirement years. For anyone who accepts something like the 4% guideline (or 3% these days), that is not true. You can actually spend a little more in the early years by delaying SS.

Some say that the roughly 8% annual increase in benefits is like an 8% investment return. It isn't. The 8% increase comes at the cost of losing a year's benefit. The actual IRR depends very much on how long you live, but it is well below 8%.

 

[Blue Collar Guy]

My post was intended to be about the possibility of getting different answers from different staffers. In this case, I'm betting the local person is correct. I'll know for sure when I get my first check.

The "when to start?" question is debated on many threads. In my case, it's significant that my wife will get my increased benefit if I die first, so the actual benefit years will be until the second death, not just until my death.

You mentioned "invest". It's correct that if you want to calculate a breakeven year, you need to make some assumption about investment returns.

Of course, if we did breakeven calculations for auto, home, life, or health insurance, we'd always find that companies pay fewer dollars in benefits then they get in investment-adjusted premiums. On that basis, we'd never buy private insurance. Deferring SS is a little like buying longevity insurance.

For me, deferring is a defensive strategy. As others have said, my heirs will come out with less if I die sooner. I don't care, my goal isn't to maximize my heirs upside potential, but protect me from the downside that could occur in the case the actual investment returns for my retirement years are lousy and I (or my wife) live a long time.

But, it's a very close call. I entirely understand why other people with other health, financial, and personality situations will make the other call. There are lots of valid pros and cons.

I will say there are two arguments I sometimes see that I believe are not valid:

Some say if you take SS early you can spend more in the earlier retirement years. For anyone who accepts something like the 4% guideline (or 3% these days), that is not true. You can actually spend a little more in the early years by delaying SS.

Some say that the roughly 8% annual increase in benefits is like an 8% investment return. It isn't. The 8% increase comes at the cost of losing a year's benefit. The actual IRR depends very much on how long you live, but it is well below 8%.

I want to thank you very much for this well thought out reasoning that i was able to understand. I need to research this more for whats best for our situation.

 

[Pilot2013]

My post was intended to be about the possibility of getting different answers from different staffers. In this case, I'm betting the local person is correct. I'll know for sure when I get my first check.

The "when to start?" question is debated on many threads. In my case, it's significant that my wife will get my increased benefit if I die first, so the actual benefit years will be until the second death, not just until my death.

You mentioned "invest". It's correct that if you want to calculate a breakeven year, you need to make some assumption about investment returns.

Of course, if we did breakeven calculations for auto, home, life, or health insurance, we'd always find that companies pay fewer dollars in benefits then they get in investment-adjusted premiums. On that basis, we'd never buy private insurance. Deferring SS is a little like buying longevity insurance.

For me, deferring is a defensive strategy. As others have said, my heirs will come out with less if I die sooner. I don't care, my goal isn't to maximize my heirs upside potential, but protect me from the downside that could occur in the case the actual investment returns for my retirement years are lousy and I (or my wife) live a long time.

But, it's a very close call. I entirely understand why other people with other health, financial, and personality situations will make the other call. There are lots of valid pros and cons.

I will say there are two arguments I sometimes see that I believe are not valid:

Some say if you take SS early you can spend more in the earlier retirement years. For anyone who accepts something like the 4% guideline (or 3% these days), that is not true. You can actually spend a little more in the early years by delaying SS.

Some say that the roughly 8% annual increase in benefits is like an 8% investment return. It isn't. The 8% increase comes at the cost of losing a year's benefit. The actual IRR depends very much on how long you live, but it is well below 8%.

Really good points. I agree on the "higher earning spouse waiting" theory for increased survivor benefit, but am just trying to determine if the benefit is capped at my FRA for the surviving spouse. If so, I won't wait until 70 to start SS (just 67), if not... I will have to re-evaluate my plan once again.

I also think about delaying SS, and taking more from 401k's earlier to lower the amount subject to RMD after 70. So much to think about and strategize, sometimes I'm ok that I have 3-5 more years!

 

[CRLLS]

From EN-05-10084:

How much will I receive?

We base the benefit amount on the earnings of the person
who died. The more the worker paid into Social Security,
the greater your benefits will be.

Social Security uses the deceased worker’s basic benefit
amount to calculate the percentage survivors can get.

The percentage depends on the survivor’s age and
relationship to the worker. If the worker who died was
getting reduced benefits, we’ll base your survivor’s benefit
on that amount.
In most typical claims for benefits:
• A widow or widower, at full retirement age or older,
generally gets 100 percent of the worker’s basic
benefit amount;
• A widow or widower, age 60 or older, but under full
retirement age, gets about 71-99 percent of the
worker’s basic benefit amount

Now, what I am trying to understand is the bold/underlined statements. I think that is the deceased persons FRA amount.

I thought I had answered that up above. The SSA uses the term PIA (Primary Insurance Amount) as the amount the earner gets at FRA, (Full Retirement Age). Within the SS, PIA and "Basic Benefit Amount" are synonymous. " We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount.”

The worker's PIA, increased by any delayed retirement credits accrued prior to the death of the insured individual, is deemed to be the PIA on which the widow's or widower's benefit is based.
​

To simplify for many couples, If both are living and both collecting SS and above their FRA, the widow or widower will receive what is essentially, the larger of the two benefits. If one worker dies before the other or either are under FRA, then other formulas apply. I hope this is clear.

 

[gerntz]

You must not be married...

Most women live longer than men... and most men marry a younger woman... so that means the woman will more than likely live past those 12 years you seem to be worried about...

I know the estimate is that my DW will get more money from my SS than I will....

While this is true and important, another factor is the tax torpedo that high SS benefits and high RMD's cause to assure high tax rate & higher Medicare premiums as well as not letting you fall under the "hold harmless" Mc provision. In some (many?) instances, taking earlier mitigate those costs. It's too late for me given I'm approaching 70, but wish I had studied these points early on.

 

[Keim]

And I'm still trying to understand why the primary PIA in a married couple would ever take before 70, barring some particular health/longevity risk to the female in the couple.

And I'm trying to understand what PIA stands for. Pain In the Ass? Cuz that alternates in my house. I'm the current title holder, but could change any moment now.

 

[2017ish]

Quote:
Originally Posted by 2017ish View Post
And I'm still trying to understand why the primary PIA in a married couple would ever take before 70, barring some particular health/longevity risk to the female in the couple.

That could be taken as somewhat of a sexist question. I assume that you are talking about major breadwinner and
minor breadwinner and a health issue with the minor breadwinner.

...

Umm. No, I don't believe so. Perhaps you could be so kind as to explain it to me.

Hypothesize a male and female couple of roughly equivalent age at retirement. (I hope this is not "sexist") I don't care who makes more, but one does. (again, I don't think it is sexist to assume divergent incomes over career). Assuming that the female has no unusual health/longevity risks, she has a notably longer life expectancy. (This is not sexist; it is fact, as you observe in a later post) No matter which has the larger PIA, why would that higher PIA be drawn before 70 if they could live fine without it?

FWIW, DW has the higher PIA in our household, since I stayed home with the kids for 15 years. Sexist or not, she won't be drawing until 70--particularly since she is likely to live beyond the average even for for her demographics.

 

[Pilot2013]

I thought I had answered that up above. The SSA uses the term PIA (Primary Insurance Amount) as the amount the earner gets at FRA, (Full Retirement Age). Within the SS, PIA and "Basic Benefit Amount" are synonymous. " We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount.”

The worker's PIA, increased by any delayed retirement credits accrued prior to the death of the insured individual, is deemed to be the PIA on which the widow's or widower's benefit is based.
​

To simplify for many couples, If both are living and both collecting SS and above their FRA, the widow or widower will receive what is essentially, the larger of the two benefits. If one worker dies before the other or either are under FRA, then other formulas apply. I hope this is clear.

I'm sorry I am being a PIA (as someone else had defined it ).

As you have defined it above (Basic benefit and PIA are the FRA benefit). Based on the quote from the SSA document I found, that to me would mean waiting to 70, and the associated increase ABOVE FRA benefit, would not go to the surviving spouse, just the Basic Amount, otherwise defined as the FRA amount....

That is why I had in my plan to start at FRA, not before as it would detract from Survivor benefit, and not after as it doesn't increase it.

 

[fosterscik]

You are missing the important phrase:

The worker's PIA, increased by any delayed retirement credits accrued prior to the death

Your spouse would get your age 70 benefits...

 

[Texas Proud]

While this is true and important, another factor is the tax torpedo that high SS benefits and high RMD's cause to assure high tax rate & higher Medicare premiums as well as not letting you fall under the "hold harmless" Mc provision. In some (many?) instances, taking earlier mitigate those costs. It's too late for me given I'm approaching 70, but wish I had studied these points early on.

I do not disagree with what you post... but it is a smaller subset than what I was talking about when most people have a knee jerk stmt saying 'take it at 62 in case you die young'....


BTW, what you mention is actually more likely to happen after one spouse dies... the surviving spouse is now considered single and the tax brackets are reduced and the higher Medicare premiums kick in at a lower income... this has hit my oldest sister.... she was surprised that after she lost her husband she lost a check from SS AND she is now paying more income tax AND her Medicare premiums have increased...

 

[CRLLS]

I read the original post as assuming that the woman earns less than the male. This may or not be the case. I did have a smiley face because there is no tongue in cheek emoji

barring some particular health/longevity risk to the female in the couple

If I read it wrong, or if my attempt at humor came across poorly, I apologize,

As to why the higher PIA would want to wait under your stated conditions, I guess they wouldn't need to. One might say that, if a couple were st\et-for-life with other income streams, neither would even have to claim SS at all. But maybe you could ask your DW why she is waiting? It would be interesting.

In my case, I / we are planning on one or both of us to live till 100. We are well-off compared to the surveys and reports that I read and the calculators, Our finances are far below some of the members here. I have to continuously plan, evaluate, adjust, plan....... But maybe it is just the engineer in me doing constantly re-evaluating options for the best result until it is time to "put it in production". I'd hate to think that if I go first, that my DW would run out of money and become a charity case. Or in the other case where DW goes first, it would be me running out. More SS $ in the later years will help to mitigate that situation. If we both go early, I will not worry for eternity "Why did I delay SS?"

 

[Pilot2013]

You are missing the important phrase:


Your spouse would get your age 70 benefits...

I don't see that statement anywhere in the SS Online document that I cut and pasted. In fact, it specifically says "workers basic amount"...

Is the statement you quote above in a document on the SS website? If so, could you tell me the document number? Thanks!