Social Security Max monthly benefit

[finnski1]

Age 62 = $1758
Age 67 = $2497
Age 70 = $3096

The Retirement Planning software (RightCapital) is predicting $27K at age 70 if she takes her SS benefit at age 62.

Got it. That makes more sense. they throw in a couple %/year inflation by the looks.

 

[latexman]

Well. She is 3 years older than I am. She plans to take her SS benefits at age 62 (in 2 years).

Since I am the higher earner, I play to delay SS benefits until age 70.

Sounds like you are trying to maximize the SS check and she is claiming early / minimizing the SS check. Aren’t y’all on the same page? Or, am I missing something?

My DW is taking SS at FRA and me at 70 to maximize the SS check.

 

[G-Man]

Got it. That makes more sense. they throw in a couple %/year inflation by the looks.

Yep. Either 2 or 2.5% Cola increase.

 

[G-Man]

Sounds like you are trying to maximize the SS check and she is claiming early / minimizing the SS check. Aren’t y’all on the same page? Or, am I missing something?

My DW is taking SS at FRA and me at 70 to maximize the SS check.

Right now, the plan is for my wife to take her SS benefits at age 62 and I will delay my SS benefits until age 70. I will revisit the plan again before my DW 62nd birthday which is 2 years away.

 

[gauss]

How is that "getting hosed"? Why would you get two checks for one person? It is bad enough that someone who had low earnings can get many years of high payments because they had a high earning spouse. You should only get what you earned or a flat minimum equal to the poverty line.

Have you heard of a corporate pension with a survivorship feature? A fraction of the original earner's income continues on to the spouse. The initial payments are less than with a single person.

We have both of our corporate pensions setup so that the surviving spouse will continue to get 100% of the deceased spouses payments. Of course we are getting less than we would be with the default 60% or with signed waivers 0%.

The problem is that Social Security was designed in a different era when typically one spouse worked outside the home and one did not. The sponsorship feature in today's SS is designed to address that case. Dual Earners were not likely part of the original SS design. There are some bills to partially address this, but I plan to keep my term life insurance in place until this actually appears and is on-par with corporate 100% survivor options.

Living expenses (other than maybe groceries) don't necessarily go down when one spouse dies. They could actually go up if the surviving spouse needs to purchase services that the original spouse did as part of the marriage.

-gauss

 

[SecondCor521]

Yes. I have an account on SSA.gov and can verify my SS benefits as of today. I assume that would be the minimum benefit I would receive. However, I have 13 years before I would start collecting.

I would look for tools which take your current benefit and apply COLA increases for you. FIREcalc does this, for one. I would expect most commercial tools to do so also.

Absent that, the average SS COLA is about 3.78% (https://www.ssa.gov/oact/cola/colaseries.html).

If you need to work in age 70 dollars, take your SS age 70 benefit today and calculate ($age70benefit * 1.0378 ^ 13) and you'll be close enough for planning purposes.

I'm a bit worried that you're trying to calculate your age 70 COLA adjusted benefit in age 70 dollars and plugging it into a tool which then COLA adjusts that number. That would be double-counting those COLAs and would overestimate your SS benefit by quite a bit.

 

[Koolau]

Have you heard of a corporate pension with a survivorship feature? A fraction of the original earner's income continues on to the spouse. The initial payments are less than with a single person.

We have both of our corporate pensions setup so that the surviving spouse will continue to get 100% of the deceased spouses payments. Of course we are getting less than we would be with the default 60% or with signed waivers 0%.

The problem is that Social Security was designed in a different era when typically one spouse worked outside the home and one did not. The sponsorship feature in today's SS is designed to address that case. Dual Earners were not likely part of the original SS design. There are some bills to partially address this, but I plan to keep my term life insurance in place until this actually appears and is on-par with corporate 100% survivor options.

Living expenses (other than maybe groceries) don't necessarily go down when one spouse dies. They could actually go up if the surviving spouse needs to purchase services that the original spouse did as part of the marriage.

-gauss

I would think term insurance at "advancing" age would be fairly expensive. I'm not saying it's a bad idea, but it must cost quite a bit.

DW and I wanted more money "up front" from my pension so we specified 25% survivor benefit rather than the maximum which was 50%. It helped us bridge the gap to SS so I think it was a good idea. (Heh, heh, DW may change her mind when I'm gone - but I actually think we're set up well for her survivorship.)

 

[gauss]

I would think term insurance at "advancing" age would be fairly expensive. I'm not saying it's a bad idea, but it must cost quite a bit.

DW and I wanted more money "up front" from my pension so we specified 25% survivor benefit rather than the maximum which was 50%. It helped us bridge the gap to SS so I think it was a good idea. (Heh, heh, DW may change her mind when I'm gone - but I actually think we're set up well for her survivorship.)

Gotta remember that in some cases it's not DW who is the survivor. What comes around goes around.....

 

[Koolau]

Gotta remember that in some cases it's not DW who is the survivor. What comes around goes around.....

I guess I'm more concerned about DW than I am about myself. I more or less understand our finical plan. DW has never been interested. As long as we have "enough" she could care less about it.

SO, I'd be okay if she left first. But I worry she'd be overwhelmed. She might worry that she no longer has "enough."

I do still have some insurance but nothing like a Mil.

 

[Exchme]

You had said you would get $70K and your wife $27K. If she went for spousal she would get half of yours at $35K. Something to look into

OP has kind of confused things by mixing in future inflated values with current values and age 70 benefits vs. PIA. But I think OP means his wife's current PIA as reported at SSA.gov is $2497 and his PIA is $4555/1.24 = $3673.

The spousal benefit is calculated as 1/2 of the higher earner PIA minus the lower earner PIA. The size of the check the lower earning spouse receives is the sum of their own benefit + spousal benefit. Each of the benefits can be claimed at different dates and are derated differently for early claiming.

In this case,
Higher Earner PIA/2 = 3673/2 = $1836.
Lower Earner PIA = $2497

Since the lower earner PIA is greater than 1/2 the higher earner, there will be no spousal benefit. OP's wife plans to claim at 62, so her benefit will be reduced by 30%, so will be $1748.

Of course, I might not have followed OP's numbers.

 

[G-Man]

I would look for tools which take your current benefit and apply COLA increases for you. FIREcalc does this, for one. I would expect most commercial tools to do so also.

Absent that, the average SS COLA is about 3.78% (https://www.ssa.gov/oact/cola/colaseries.html).

If you need to work in age 70 dollars, take your SS age 70 benefit today and calculate ($age70benefit * 1.0378 ^ 13) and you'll be close enough for planning purposes.

I'm a bit worried that you're trying to calculate your age 70 COLA adjusted benefit in age 70 dollars and plugging it into a tool which then COLA adjusts that number. That would be double-counting those COLAs and would overestimate your SS benefit by quite a bit.

Thanks for the manual calculation. The Retirement Planning software I'm using ask you to enter your PIA amount found on my SSA.gov statement and it does the rest. One of retirement planning tool I'm using actually allow you to enter your SS cola percentage. I'm using a conversative % of 2.1%.

 

[G-Man]

OP has kind of confused things by mixing in future inflated values with current values and age 70 benefits vs. PIA. But I think OP means his wife's current PIA as reported at SSA.gov is $2497 and his PIA is $4555/1.24 = $3673.

The spousal benefit is calculated as 1/2 of the higher earner PIA minus the lower earner PIA. The size of the check the lower earning spouse receives is the sum of their own benefit + spousal benefit. Each of the benefits can be claimed at different dates and are derated differently for early claiming.

In this case,
Higher Earner PIA/2 = 3673/2 = $1836.
Lower Earner PIA = $2497

Since the lower earner PIA is greater than 1/2 the higher earner, there will be no spousal benefit. OP's wife plans to claim at 62, so her benefit will be reduced by 30%, so will be $1748.

Of course, I might not have followed OP's numbers.

That is correct. Sorry for the confusion.

 

[zl55lz]

You had said you would get $70K and your wife $27K. If she went for spousal she would get half of yours at $35K. Something to look into

I don't believe this is correct. A person (currently) gets their max at age 70, but if the other spouse is drawing off them due to lower earnings, they would get half of the higher earning spouse's benefit at the higher earning spouse's Full Retirement Age (FRA), which is much lower than half of their age 70 benefit. In other words, if the age 70 spouse's FRA was age 66, the other spouse would get half of the age 66 amount, not half the age 70 amount. Big difference.

Of course, if the lower earning spouse's benefit is higher than that half, they could get the higher amount on their own record. And a surviving spouse would get a higher amount. Different calculations. This is assuming of course the lower earning spouse is also full retirement age.

Hope that makes sense. If anyone knows different, please post.

 

[jollystomper]

I don't believe this is correct. A person (currently) gets their max at age 70, but if the other spouse is drawing off them due to lower earnings, they would get half of the higher earning spouse's benefit at the higher earning spouse's Full Retirement Age (FRA), which is much lower than half of their age 70 benefit. In other words, if the age 70 spouse's FRA was age 66, the other spouse would get half of the age 66 amount, not half the age 70 amount. Big difference.

Of course, if the lower earning spouse's benefit is higher than that half, they could get the higher amount on their own record. And a surviving spouse would get a higher amount. Different calculations. This is assuming of course the lower earning spouse is also full retirement age.

Hope that makes sense. If anyone knows different, please post.

Your are correct. The spousal benefit is 1/2 of the primary up to the FRA value of the primary. The spousal benefit does not grow after the primary passes FRA.

I also will be getting the max and will be 70 in 15 years. According to monthly table I got from SS and my report, currently my non-cola adjusted 70 year SS payout is about $4,636/monthly, and DW's spousal benefit will be $1830/monthly.

 

[samcat]

The $70K is a nominal number and has to be adjusted down based the inflation guess that was input. I would use the $4550 as the real. That may turn out slightly conservative as you will get the National Wage Index adjustment (generally better than COLA) until you are 60, but then you skip a year with only partial COLA as only the bend points are adjusted and after that you get COLA adjustments for inflation. So the $4550 (real) will be pretty close to your benefit at age 70.

Don't forget to go to opensocialsecurity.com for a look at the combined claiming strategy.

I highly recommend opensocialsecurity.com. I am six years younger than my husband and the lower wager earner. I had figured out I should take SS at 62 and he at 70. opensocialsecurity said the same thing.