SS for surviving spouse

[Fermion]

Given the amount of use it has received, I'm guessing it is a garbage in/garbage out situation rather than a problem with the site.

Care to elaborate?

Scenario 1:

Married couple, primary female, born 3/15/1969, PIA 2700, spouse male, born 8/4/1970 PIA 0 (to say it will be half of primary)

"The strategy that maximizes the total dollars you can be expected to receive over your lifetimes is as follows:

You file for your retirement benefit to begin 8/2037, at age 68 and 5 months.
Your spouse files for his/her spousal benefit to begin 8/2037, at age 67 and 0 months.
The present value of this proposed solution would be $574,669."

2038 primary $36,072 spouse $16,200 total $52,272
2039 $36,072 $16,200 $52,272
2040 $36,072 $16,200 $52,272
2041 and beyond $36,072 $16,200 $52,272


Now weird why the spouse number is not half of the primary. But here is the really weird part. If you make them the same age, both born 3/15/1969:

"The strategy that maximizes the total dollars you can be expected to receive over your lifetimes is as follows:

You file for your retirement benefit to begin 4/2037, at age 68 and 1 months.
Your spouse files for his/her spousal benefit to begin 4/2037, at age 68 and 1 months.
The present value of this proposed solution would be $561,448"

2038 primary $35,208 spouse $16,200 $51,408
2039 $35,208 $16,200 $51,408
2040 and beyond $35,208 $16,200 $51,408

 

[pb4uski]

You are misunderstanding it.

Scenario 1:

The $16,200 for the non-working spouse is correct... it is 50% of the working spouse's PIA since the non-working spouse claims at their FRA of 67... $2,700*50%*12 = $16,200.

The working spouse is higher than the PIA because by waiting until 68 and 5 months they are getting 1.42 years of delayed retirement credit. So the $36,072 is $2,700*12*(1+8%*(68.42-67)).
​

Scenario 2:

The second part where the ages are the same... while it normally wouldn't make sense for the non-working spouse to wait any longer than their FRA in this case since the non-working spouse's own benefit is $0, the non-working spouse can't claim until the working spouse starts their benefits.

In that scenario, the working spouse is higher than the PIA because by waiting until 68 and 1 months they are getting 1.0833 years of delayed retirement credit. So the $35,208 is $2,700*12*(1+8%*(68.0833-67)).​

 

[Fermion]

You are misunderstanding it.

The $16,200 for the non-working spouse is correct... it is 50% of the working spouse's PIA since the non-working spouse claims at their FRA of 67... $2,700*50%*12 = $16,200.

The working spouse is higher than the PIA because by waiting until 68 and 5 months they are getting 1.42 years of delayed retirement credit. So the $36,072 is $2,700*12*(1+8%*(68.42-67)).

Oh I see how it works, thanks. Garbage in garbage out, as predicted

 

[frances]

From everything I've read, and all the numbers I've been able to twist around the best scenario I can figure out, for me anyway, is to take SS as soon as DH decides to shut his company down and stop paying me money and putting money into my SEP.
And his 3 month contract is now in its 5 year....

 

[joedila]

I'd wait until 70 but that's me

I'm with most of the posters here and would wait until they turned 70, especially if they don't need the money.

I just turned 70 in January and started collecting my own SS after claiming the spousal benefit for 4 years on my wife's SS, which was half of her benefit. (Sadly, they did away with the spousal benefit - I think I was the second to the last cohort that was eligible)

In terms of my own SS at age 70, if I took it (FRA) at age 66, my benefit would have been about $2300 per month....but thanks to me waiting until 70 (plus the whopping 9 percent COLA this year) my benefit has been $3604 per month....not a bad deal....

But this is not for everyone -- I did not need the money (I still have $700,000 in Regular and Roth IRA's that I am not tapping into yet) I have been moving $20K annually from the regular IRA to the Roth for several years, to cut down on my RMD's at 73) My goal is to try to stay in the 22% tax bracket when RMD's kick in, and my preliminary calculations are that I will make it

But I just do not understand why people claim at age 62 -- they are shorting themselves - permanently.

 

[latexman]

All you can do is try. I liked the Mike Piper book Social Security Made Simple. About 100 pages. Corrected my misconceptions

I thought “Get What's Yours: The Secrets to Maxing Out Your Social Security” by Laurence Kotlikoff, Paul Solman, and Philip Moeller was outstanding.

 

[buckskinbowman]

I don't understand this general consensus that the spouse with the higher benefit wait until FRA to collect SS benefits. IMHO, why spend your own money first in retirement when you can spend SS money instead? Also, by taking SS as soon as possible, you are guaranteed to get at least some of your benefit if you should happen to die young. We're not all going to live until FRA, much less break-even age which is typically around 82. Finally, when I'm in my 60's I'm going to want to do a lot of travel and spending. Having those SS dollars will help me do that. Once I'm in my 70's I suspect things are going to slow down and I won't need nearly as much to live. Read Ty Bernicke's Reality Retirement Planning: A New Paradigm for an Old Science (Firecalc). A bird in hand is worth more than 2 in the bush! My DW and I will both start collecting at 62.

 

[tbis]

I don't understand this general consensus that the spouse with the higher benefit wait until FRA to collect SS benefits. IMHO, why spend your own money first in retirement when you can spend SS money instead? Also, by taking SS as soon as possible, you are guaranteed to get at least some of your benefit if you should happen to die young. We're not all going to live until FRA, much less break-even age which is typically around 82. Finally, when I'm in my 60's I'm going to want to do a lot of travel and spending. Having those SS dollars will help me do that. Once I'm in my 70's I suspect things are going to slow down and I won't need nearly as much to live. Read Ty Bernicke's Reality Retirement Planning: A New Paradigm for an Old Science (Firecalc). A bird in hand is worth more than 2 in the bush! My DW and I will both start collecting at 62.

A lot of it comes down to your individual comfort levels, delta in SS between husband/wife, life expectancy (for each of you independently) and the delta between your ages. Having at least one large SS payment for a spouse that may live considerably longer can be a nice plus (maybe even a necessary one).

 

[badatmath]

But I just do not understand why people claim at age 62 -- they are shorting themselves - permanently.

Because they need the money to live on? Some of us do not have a spouse to consider either.

Really, sometimes even the spouse who is presumed to be last to die doesn't want to wait. My friend's wife was like that - all about the money now now now and no matter what he said on needing it later she just would not hear it. He passed at 57 so SS was not a factor in the end anyway.

 

[RetMD21]

I thought “Get What's Yours: The Secrets to Maxing Out Your Social Security” by Laurence Kotlikoff, Paul Solman, and Philip Moeller was outstanding.

I should read that one too. Social Security for Dummies was ok too.

 

[Out-to-Lunch]

I don't understand this general consensus that the spouse with the higher benefit wait until FRA to collect SS benefits. .

I think this comes about from two features of the SS system. (1) It is meant to be actuarially neutral for individuals regardles of the age at which they claim. (2) Surviving spouses can "inherit" or step up to their deceased spouse's benefit.

The rest is just math.

As individuals, we expect that each person can choose between (lower payments)*(longer time) or (higher payments)*(shorter time) and these will (on average) come out the same.

However, in a spousal situation, the lower earning spouse can anticipate (lower payments)*(time until partner dies)+(higher payments)*(rest of lower earner's life).

It is clear that this is higher (mathematically, on average) than both partners claiming early.

 

[1242Vintage]

Have to figure out our SS strategy in the next few years. Both of us turning 60 soon so have time.

Wife has her 40 quarters in when she was young and worked in private sector, but then switched careers mid-life to school teacher and falls under the Windfall Elimination provision (WEP). Some of her retired teacher cohorts are widows and struggling financially because of poor planning and WEP. Seems every time my wife comes home from her periodic retired teacher lunch, one of her teacher pals is sadly a new widow and Social security and WEP is the topic of discussion.

 

[CincyDave]

Some couples have the higher earner postpone taking SS until age 70 to maximize the benefit for the surviving spouse. That is our current plan.

This is our plan as well.

 

[qwerty3656]

I have a "qwerty's dead" document for my wife. This is what I wrote under social security - did I get it right?

4. Social Security
 Our plan is for you to start at 62 and me to wait until 70
 If I die before 67, take yours at 62 and claim Survivor Benefits at 67 (you don't get to wait til 70)
 If I die after 67, claim Survivor Benefits when I die

 

[MissMolly]

I have a "qwerty's dead" document for my wife. This is what I wrote under social security - did I get it right?

4. Social Security
 Our plan is for you to start at 62 and me to wait until 70
 If I die before 67, take yours at 62 and claim Survivor Benefits at 67 (you don't get to wait til 70)
 If I die after 67, claim Survivor Benefits when I die

Looks good to me assuming the Survivor Benefits for her are substantially higher than her own at 70. Also, if she is not yet 67 when you die after 67 (option 3) she may still want to wait until she is 67 to get 100% of Survivor Benefits and not a reduced amount.

 

[FiveDriver]

I have a simple question about Survivor Benefits, that I believe belongs here --

Only one scenario needs confirmation.
Both DW and I are above our respective Full Retirement Ages. If I should kick the bucket......Does DW's Survivor Benefit revert to my FRA Amount ??
Or is it my highest monthly amount, usually my last check ??

 

[MissMolly]

Just to be clear, it doesn't automatically "revert". She would have to apply for Survivor Benefits. Since she is already FRA it would be 100% of the benefit you are currently receiving.

 

[FiveDriver]

Thank you once again, Miss Molly. Yeah, 'revert' was my poor choice of wording.

The key question has been answered -- if both have reached FRA, her Survivor Benefit would be equal to what I am currently receiving (much higher than her Spousal Benefit).

 

[imnontrad]

The spousal benefits have been confused -

Spousal - while the spouse is alive and equal to 50% of their spouse's SS benefit at FRA. Their spouse must have already filed for SS and this amount must be larger than their own SS benefit.

Surviving Spouse - after the spouse has dies and equal to whatever the spouse was receiving for SS. The ONE exception (to help out widows) is there is a minimum of 82.5% of the FRA amount for this benefit, not the amount they would get by filing at 62. But that is reduced if the living spouse files for this before their FRA.

The rule of thumb is for the spouse with the lower SS benefit to apply early and the higher benefit spouse wait as long as possible (hopefully until 70). This will provide some SS income and ensure that when one spouse dies, the surviving spouse will have the highest possible SS benefit.

So your sister's logic is right - IF your BIL does not die before she reaches her FRA. If he does, she would need to have the financial assets to continue on her own benefit until then to avoid that amount from being permanently reduced.

Have them read https://am.jpmorgan.com/us/en/asset-management/adv/insights/retirement-insights/guide-to-retirement 2023 Guide to Retirement

Also, if she has a Facebook account, you could suggest she join the group "Social Security Intelligence" to help both of them learn their options and pros/cons.

 

[athena53]

The key question has been answered -- if both have reached FRA, her Survivor Benefit would be equal to what I am currently receiving (much higher than her Spousal Benefit).

But she no longer receives the Spousal benefit. I think this is an unhappy surprise for some uninformed widows/widowers.