Kotlikoff's 25 Social Security Secrets

[walkinwood]

For those getting close to making this decision...

He plugs his company's software, but also lists a number of points that may not be common knowledge - thought I think many on this board will be aware of most of them. In any case, here goes.

Laurence J. Kotlikoff: 25 Social Security "Secrets" All Baby Boomers and Millions of Current Recipients Need to Know

 

[Huston55]

This is a good link. These are especially informative for DW and I. However, I thought for #8 below that waiting until age 70 resulted in the spousal benefit increasing just like the primary beneficiary's benefit. Is this not correct?

4. Now, if you're married, you or your spouse, but not both, can receive spousal benefits after reaching full retirement age while deferring taking your retirement benefits and, thereby, letting them grow. This may require having one spouse file for retirement benefits, but suspend their collection.

8. There is no advantage to waiting to start collecting spousal benefits after you reach your full retirement age.

14. When it comes to possibly paying federal income taxes on your Social Security benefits, withdrawals from Roth IRAs aren't counted, but withdrawals from 401(k), 403(b), regular IRAs, and other tax-deferred accounts are. So there may be a significant advantage in a) withdrawing from your tax-deferred accounts after you retire, but before you start collecting Social Security, b) using up your tax-deferred accounts before you withdraw from you Roth accounts, and c) converting your tax-deferred accounts to Roth IRA holdings after or even before you retire, but before you start collecting Social Security.

 

[Texas Proud]

This is a good link. These are especially informative for DW and I. However, I thought for #8 below that waiting until age 70 resulted in the spousal benefit increasing just like the primary beneficiary's benefit. Is this not correct?

4. Now, if you're married, you or your spouse, but not both, can receive spousal benefits after reaching full retirement age while deferring taking your retirement benefits and, thereby, letting them grow. This may require having one spouse file for retirement benefits, but suspend their collection.

8. There is no advantage to waiting to start collecting spousal benefits after you reach your full retirement age.

14. When it comes to possibly paying federal income taxes on your Social Security benefits, withdrawals from Roth IRAs aren't counted, but withdrawals from 401(k), 403(b), regular IRAs, and other tax-deferred accounts are. So there may be a significant advantage in a) withdrawing from your tax-deferred accounts after you retire, but before you start collecting Social Security, b) using up your tax-deferred accounts before you withdraw from you Roth accounts, and c) converting your tax-deferred accounts to Roth IRA holdings after or even before you retire, but before you start collecting Social Security.

Someone with REAL knowledge will probably come along and answer your question.... but I will tell you what I think it is....

For spousal benefits, the amount is based on the other spouse's regular benefit, I do not know the term for this, but say 66 years.... they will not get any more spousal benefits if the other waits until 70...

Now, if the other spouse waits until 70 to get their benefit... and then dies... the spouse stops getting spousal benefits and starts to get survivor benefits as the higher amount...

If this is true, then waiting to get spousal benefits does not pay off....

 

[ziggy29]

I've mentioned this elsewhere but seems to bear repeating here: Given the new health care law and assuming attempts to roll portions of it back are not successful (not looking to debate the politics of that, please), I'd add #26: SS benefits count against the MAGI for the purposes of determining your health insurance subsidies (if you buy your own) until you reach Medicare age (currently 65 but may change for me and folks younger than me), so if you are likely to lose a considerable amount of health insurance subsidy because of collecting SS income before reaching Medicare age, you may want to consider waiting to take SS until you reach Medicare age.

 

[Texas Proud]

I've mentioned this elsewhere but seems to bear repeating here: Given the new health care law and assuming attempts to roll portions of it back are not successful (not looking to debate the politics of that, please), I'd add #26: SS benefits count against the MAGI for the purposes of determining your health insurance subsidies (if you buy your own) until you reach Medicare age (currently 65 but may change for me and folks younger than me), so if you are likely to lose a considerable amount of health insurance subsidy because of collecting SS income before reaching Medicare age, you may want to consider waiting to take SS until you reach Medicare age.

It is something to think about.... but I am over 10 years away and my DW a lot longer.... I am sure EVERYTHING will change before I get to the point of having to decide what to do...

But, if you are making the decision now... I would look at my situation and see what would happen either way the politics go... much better to be ready to make a move either way than be sitting without any knowledge...

 

[ziggy29]

It is something to think about.... but I am over 10 years away and my DW a lot longer.... I am sure EVERYTHING will change before I get to the point of having to decide what to do...

But, if you are making the decision now... I would look at my situation and see what would happen either way the politics go... much better to be ready to make a move either way than be sitting without any knowledge...

Agreed. For the most part this would currently be relevant to someone who is at least 60 but not yet 65. Above 65 it's a moot point since you are Medicare-eligible, and younger than 60 it's less relevant because a fair amount of details can and probably will change before reaching 62.

 

[mickeyd]

For those getting close to making this decision...

He plugs his company's software, but also lists a number of points that may not be common knowledge - thought I think many on this board will be aware of most of them. In any case, here goes.

Laurence J. Kotlikoff: 25 Social Security "Secrets" All Baby Boomers and Millions of Current Recipients Need to Know

Interesting article walkinwood, thanks for posting. Can you imagine how complex all of this could get if current marriage laws were to be liberalized and same-sex partners were to be factored in?

 

[Independent]

This is a good link. These are especially informative for DW and I. However, I thought for #8 below that waiting until age 70 resulted in the spousal benefit increasing just like the primary beneficiary's benefit. Is this not correct?

4. Now, if you're married, you or your spouse, but not both, can receive spousal benefits after reaching full retirement age while deferring taking your retirement benefits and, thereby, letting them grow. This may require having one spouse file for retirement benefits, but suspend their collection.

8. There is no advantage to waiting to start collecting spousal benefits after you reach your full retirement age.

14. When it comes to possibly paying federal income taxes on your Social Security benefits, withdrawals from Roth IRAs aren't counted, but withdrawals from 401(k), 403(b), regular IRAs, and other tax-deferred accounts are. So there may be a significant advantage in a) withdrawing from your tax-deferred accounts after you retire, but before you start collecting Social Security, b) using up your tax-deferred accounts before you withdraw from you Roth accounts, and c) converting your tax-deferred accounts to Roth IRA holdings after or even before you retire, but before you start collecting Social Security.

The most a spouse can get is 50% of the other spouse's PIA.

The spousal benefit can be as much as half of the worker's "primary insurance amount," depending on the spouse's age at retirement.

Benefits for Spouses

 

[Independent]

I think a lot of people are not aware of

13. If you take retirement, spousal, or widow/widower benefits early and lose some or all of them because of Social Security's earnings test, Social Security will actuarially increase your benefits starting at your full retirement age based on the number of months of benefits you forfeited. Consequently, you should not be too concerned about working too much and losing your benefits if you elected to take them early.

 

[Huston55]

The most a spouse can get is 50% of the other spouse's PIA.

Benefits for Spouses

Thanks, that helps.

So, worker must be full retirement age (FRA), and spouse must be at least 62 to draw a spousal benefit.

Spousal benefit is reduced based on whether spouse is at FRA or not.

Max spousal benefit is 50% of worker's FRA benefit.

Worker can apply and suspend at FRA to enable spouse to draw spousal benefit.

Did I get this right?