Social Security Question

[pagnotar]

Admittedly I know nothing about Social Security, but I need some help from the board on what is probably a fairly common scenario for 2 spouses retiring:


Spouse A: 66 years old, Retired with disability, and is considering filing for Social Security Disability
Source B: 62 years old, non-working


The latest statement from Social Security shows the current eligibility for SS
Spouse A: $1900/mo (without disability)
Spouse B: $890/mo


Is this course of action possible:
Spouse A: File & Suspend social security until age 70
Spouse B: File for Spousal Benefits @ $950/mo (50% of $1900 spousal benefit)


Then when spouse A reaches 70:
Spouse A begins drawing at $2600/mo (8% increase annually)
Spouse B begins drawing own benefit at age 66
Is that the way this works? Does social security disability put a kink in this plan?



Thank you in advance, I appreciate it!

 

[ronin]

Spouse B cannot file a restricted claim for spousal benefits before Full Retirement Age (66). Spouse B be is "deemed" to be filing for own benefit. Benefit is adjusted due to spousal benefit being higher than B's own and permanently reduced due to filing early, at age 62.

 

[pagnotar]

Thank you! The terminology is throwing me off though. I think what you are saying is that Spouse B has 2 options A) File early at 62 based on own benefit (891/mo), which is permanent or B) Wait until Spouse A draws and claim 50% of the benefit.

Is that correct? Spouse B cannot file for 50% because they are <66, even if Spouse A is currently drawing?

Thank you again for your help

 

[GrayHare]

Spouse A: 66 years old, Retired with disability, and is considering filing for Social Security Disability

I seem to recall reading once a person reaches full retirement age he/she is no longer be eligible for SS disability. I do not recall where I saw that and have not verified it.

 

[timo2]

I received some useful SS information from this t. rowe price calculator Social Security Benefits Evaluator - T. Rowe Price

 

[timo2]

The way I understand it, Spouse A has to be at full retirement age (66 for me) to perform the 'file and suspend' strategy. Spouse B only has to be older than 62, and will have a reduction for each year under their full retirement age.

AFAIK, file and suspend is not in the 'restricted claim' category.

It appears you are looking to do the 62/70 strategy. I am looking at that also. Here is an article about it. The 62/70 Solution - Forbes.com

this link might help.
Retirement Planner: Benefits For Your Spouse

 

[ronin]

Thank you! The terminology is throwing me off though. I think what you are saying is that Spouse B has 2 options A) File early at 62 based on own benefit (891/mo), which is permanent or B) Wait until Spouse A draws and claim 50% of the benefit.

Is that correct? Spouse B cannot file for 50% because they are <66, even if Spouse A is currently drawing?

Thank you again for your help

Spouse B can file for own early retirement benefit.

If Spouse A has filed, either claiming the benefit or suspending it until later, Spouse B is then also entitled to the portion of the spousal benefit to be added to B's own benefit to take it up to the spousal benefit amount, assuming that it is greater than B's own benefit by itself.

So if A has filed a claim for benefits, regardless of whether or not A has suspended payment, B is deemed to have filed for the larger of B's own or the spousal benefit. But the benefit is composed of B's own amount and any extra that would come from the spousal claim if it is larger.

Any benefit received, no matter its composition, is reduced for filing before FRA.

If B waits to file at FRA, B can file a restricted claim for spousal benefits only, and wait to file on own record until as long as 70. B cannot do this before FRA as B is deemed to be filing on own record even if qualified for a spousal benefit (as explained above).

Sorry if this seems convoluted. Maybe a consultation with Social Security would help.

 

[pagnotar]

I think I understand now. Thank you.

Here are 2 scenarios, am I relaying this correctly now?

Spouse A, file at age 66, collect 1900/mo.
Spouse B, file for Spousal Benefits at age 66 ($950/mo), and upon reaching age 70, file for personal benefits at $1210/mo (890*1.08^4).

I guess the other way to play it would be to defer Spouse A until age 70, when the payout would be $2,585. Spouse B would then be able to collect spousal benefits at age 66 (1,292/mo).

Under that last scenario, what would happen if Spouse B started to take spousal benefits at age 64? Obviously it would be reduced from the $1,292, but by how much? I think I understand that since spouse B filed before FRA, they would be permanently reduced and note eligible to claim their own benefits later.

Thank you. There are alot of nuances here, and you all are helping me to understand them. Thanks!

 

[ronin]

You are close in scenario 1. The only change is to use 890*1.32 = 1175. The 8%/yr. isn't compounded.

Scenario 2 is off because the spousal benefit doesn't include the delayed retirement credits due to spouse A. It is 50% of A's PIA or 950/mo. If B began benefits at 64, B would be deemed to be filing on own record. B would receive B's own benefit, reduced by 5/9ths of 1% for 24 months due to early retirement plus a portion of the spousal benefit, appropriately reduced, to bring the total up to the amount B qualifies for as spouse.

This may help: ssa.gov/retire2/yourspouse

 

[pagnotar]

Scenario 2 is off because the spousal benefit doesn't include the delayed retirement credits due to spouse A. It is 50% of A's PIA or 950/mo.

Thanks again. I'm getting there (slowly!). Would this be impacted at all if Spouse A starts collecting at 62? Is the spousal benefit still based on the FRA benefit of Spouse A, or does it get reverted to 50% of the actual payout of Spouse A?

If B began benefits at 64, B would be deemed to be filing on own record. B would receive B's own benefit, reduced by 5/9ths of 1% for 24 months due to early retirement plus a portion of the spousal benefit, appropriately reduced, to bring the total up to the amount B qualifies for as spouse.

Based on the link you provided, it appears you can file for spousal benefits before age 66. Is this correct? If so would the reduction at age 64 be a reduction based on the spousal benefit, or the reduction on the personal benefit? Or do you get to choose the higher of the 2?

Thanks again. Its amazing how complicated this is!

 

[ronin]

Is the spousal benefit still based on the FRA benefit of Spouse A, or does it get reverted to 50% of the actual payout of Spouse A?

It is based on Spouse A's PIA at FRA. Spouse A retiring early does not affect the spousal benefit for B.

Based on the link you provided, it appears you can file for spousal benefits before age 66. Is this correct? If so would the reduction at age 64 be a reduction based on the spousal benefit, or the reduction on the personal benefit? Or do you get to choose the higher of the 2?

If the spousal benefit is higher, then that is what is paid to B. The reduction on a spousal benefit is different than that on one's own benefit though (why should it be less complicated ). It is 25/36ths of 1% for each month early up to 36 months.

 

[pagnotar]

It is based on Spouse A's PIA at FRA. Spouse A retiring early does not affect the spousal benefit for B.



If the spousal benefit is higher, then that is what is paid to B. The reduction on a spousal benefit is different than that on one's own benefit though (why should it be less complicated ). It is 25/36ths of 1% for each month early up to 36 months.

Thanks again. Just as I think I am 100% squared away on this, more questions come to mind!

Under the scenario where B files for spousal benefits at age 66, but plans to revert to personal benefits later, can they wait until age 70 to do so, or does it revert to the personal benefit as soon as the personal benefit is greater than the spousal benefit?

 

[ronin]

Under the scenario where B files for spousal benefits at age 66, but plans to revert to personal benefits later, can they wait until age 70 to do so, or does it revert to the personal benefit as soon as the personal benefit is greater than the spousal benefit?

B can delay claiming their own benefit until 70. I'm glad if this all helps.

See: claim now claim more later

 

[pagnotar]

B can delay claiming their own benefit until 70. I'm glad if this all helps.

See: claim now claim more later

Thank you so much Ronin! I am getting a crash course in Social Security! Your article on claim now claim more later, got me thinking...Can both spouses file for spousal benefits at different times?

I have been reading a lot in the last 24 hours, and I am getting continuously closer to figuring out the right way ahead. After reading some more things on line, it seems that both spouses can take advantage of the spousal benefit . Is this true?


The scenario:
Spouse A, being 66, files and suspends, deferring their working benefit until Age 70. Spouse A immediately takes a spousal benefit of 50% of Spouse B’s PIA (Spouse B files at age 62). At age 70, Spouse A begins collecting their own (higher) worker benefit.

Spouse B, being 62, files and begins to take their own (reduced) worker benefit. At age 66, Spouse B files for spousal benefits, and receives their own (reduced) worker benefit, plus the spousal benefit (50% of the difference between Spouse A and Spouse B’s PIA)


Is this possible?

 

[ronin]

It is my understanding that a worker (B) collecting on their own benefits (early or not) is entitled to spousal benefits later if the spousal benefit is higher and the other spouse (A) has then filed on their own record. So if A files a restricted claim for spousal benefits only and delays filing on own record until 70, that is when B's is entitled to spousal benefits.

 

[gerntz]

Since A is FRA of 66, isn't FRA SS slightly higher than disability? If so, just filing for SS is higher/better, right?

If A can wait till up to 70 to file, the SS benefit to the ultimate surviving spouse is ~32% larger than it would be if A files at 66.

 

[BLS53]

I seem to recall reading once a person reaches full retirement age he/she is no longer be eligible for SS disability. I do not recall where I saw that and have not verified it.

Although it's not exactly written as such, I've always thought the government considers everyone over 65 as being disabled. Most of the benefits entitled to the disabled, are unilaterally applied to seniors. The SS benefit at 66 is a given, having paid into the system the required amount of time. So why would someone at 66, go through the hassle of filing for SSDI for the same benefit?

It's my understanding that someone on SSDI before full retirement age, automatically has their benefit shifted to regular SS retirement, upon reaching full retirement age.

 

[MRG]

It's my understanding that someone on SSDI before full retirement age, automatically has their benefit shifted to regular SS retirement, upon reaching full retirement age.

That's my understanding, we received that information from SSA, so I can't say it's accurate.
MRG