What If You Run Out of Money?

[Huston55]

I've done a 180 in my thinking on this.

My spousal benefit will be significantly greater than what I'd get on my own record. Since file & suspend went away for us, my extremely-tentative plan is to start collecting on my record at 62, then switch to my spousal benefit later. Otherwise, I'm just leaving money on the table. It has nothing to do with needing it or break-even points.

I say extremely-tentative, because who knows how the rules might change before then. Again.

Under the new ‘deemed claiming’ rules, won’t claiming @ 62 permanently reduce all of your SS payments, both your own & spousal when claimed? If so, then your calculus would change.

 

[aja8888]

If I am in my late 80's and I run out of money, I will do the following:


1) I will sell a kidney.


2) I will sell my blood to a blood bank.


3) I will sell my sperm to a sperm bank.




Why are you laughing?

You will still have sperm in your late 80's??

 

[Alan]

Under the new ‘deemed claiming’ rules, won’t claiming @ 62 permanently reduce all of your SS payments, both your own & spousal when claimed? If so, then your calculus would change.

Yes, I believe this is the case. Originally we planned on DW taking it at 62 while I delayed until age 70 but now she is waiting until her FRA. She is 21 months younger than me and her SS will be about half what I expect for myself.

 

[Cut-Throat]

Yes, I believe this is the case. Originally we planned on DW taking it at 62 while I delayed until age 70 but now she is waiting until her FRA. She is 21 months younger than me and her SS will be about half what I expect for myself.

Not so sure about this ..... I just ran this Calculator written by Mike Piper and for a Married couple. He will suggest the higher earner/older spouse to delay their SS to age 70 and the younger spouse to take theirs at age 62.


https://opensocialsecurity.com/


The resultant table lists the Spousal benefit if you were to die first. You can run your own scenario at the bottom of the table and delay your Wife's SS to FRA... I get the same Total amount for my wife whether she claims at 62 or 67 ......

 

[gauss]

^^
I never wanted to try to be too clever with SS, even before the file and suspend rules were repealed. Both of us were dual-career earners and we both plan to defer until age 70.

Deferring is an even better deal than purchasing the worlds cheapest private annuity.

But then again, deferring comes naturally for me. As a child I would not have "eaten the marshmallow".

-gauss

 

[NW-Bound]

When one gets down and out, it's important to keep a positive attitude. Like this woman living under a bridge in Seattle, whose story I happened to see recently.

After this video was posted, donations poured in and she is now happily living in an apartment.

 

[MissMolly]

Yes, I believe this is the case. Originally we planned on DW taking it at 62 while I delayed until age 70 but now she is waiting until her FRA. She is 21 months younger than me and her SS will be about half what I expect for myself.

I think, but am not positive, this may fall into the area of "depends". The deeming rule means that you are deemed to be applying for whatever benefits you are eligible for at the time of filing. If the spouse has not yet filed for his/her benefits, then you aren't eligible to file for spousal. Once the spouse files for his/her own benefits you then become eligible to file for spousal, so if they are higher, do you think one would then be moved to the new higher benefit?

 

[Carpediem]

I hope this thread doesn't turn into another SS discussion/debate. I find the original topic very interesting.

 

[gwraigty]

I think, but am not positive, this may fall into the area of "depends". The deeming rule means that you are deemed to be applying for whatever benefits you are eligible for at the time of filing. If the spouse has not yet filed for his/her benefits, then you aren't eligible to file for spousal. Once the spouse files for his/her own benefits you then become eligible to file for spousal, so if they are higher, do you think one would then be moved to the new higher benefit?

Yes, that is correct. Here is some information about the new deemed filing rules directly from the Social Security website at this link (bolding mine):

https://www.ssa.gov/planners/retire/claiming.html

"...deemed filing may occur in any month after becoming entitled to retirement benefits. For example, if you begin receiving your retirement benefit and only later become eligible for a spousal benefit (or vice versa), you will be “deemed” to have applied for the second benefit as soon as you are eligible for it. Your monthly payment will be the higher of the two benefit amounts."

You're not eligible for a spousal benefit until your spouse is actually collecting their retirement benefit, as explained at this link (bolding mine):

https://www.ssa.gov/planners/retire/applying6.html

"...you may be able to get spouse’s retirement benefits if you are at least 62 years of age and your spouse is receiving retirement or disability benefits."

It's relevant that my spousal benefit will be significantly higher than what I would collect on my work record. That will not change. My husband and I are the same age, with my FRA coming a few months before his. Based on that, I could file for my retirement benefit and collect on my work record anytime from 62 until my husband files for his retirement benefit, at which time I'm then deemed eligible for a spousal benefit and the higher amount will apply.

Filing for retirement benefits on my work record won't reduce my spousal benefit. That's only reduced or capped based on when he files.

I have to give credit to the fine folks on this forum for discussing when to take Social Security so often. Even though it's still several years away for us, I hadn't considered anything other than filing for the spousal benefit when eligible. But I recently realized that I would be leaving money on the table by not considering my own retirement benefits while waiting for my husband to file.

 

[GravitySucks]

The reason I planned SS at 70 was in case I run out of money.
I can live ok on my SS at that age. I can survive on the SS with a 25% cut. Dad and his wife live on less than that with a paid off house but close to zero savings. Not a lot of extras for them, but they get by and even go out to lunch a couple times a month.
Full SS at 70, a paid off house, and $200k of todays dollars and you're better off than more than half of my fellow Americans.
It would take a severe medical issue or an economic collapse for most of us to be completely broke.. Money won't be worth much in either situation.

 

[Crabby Mike]

It's relevant that my spousal benefit will be significantly higher than what I would collect on my work record. That will not change. My husband and I are the same age, with my FRA coming a few months before his. Based on that, I could file for my retirement benefit and collect on my work record anytime from 62 until my husband files for his retirement benefit, at which time I'm then deemed eligible for a spousal benefit and the higher amount will apply.

Filing for retirement benefits on my work record won't reduce my spousal benefit. That's only reduced or capped based on when he files.

I'm pretty sure you've got that wrong, and maybe backwards.


According to https://faq.ssa.gov/en-us/Topic/article/KA-02011,



"Your full spouse’s benefit could be up to one-half the amount your spouse is entitled to receive at their full retirement age. If you choose to begin receiving spouse’s benefits before you reach full retirement age, your benefit amount will be permanently reduced.

You will receive your full spouse’s benefit amount if you wait until you reach full retirement age to begin receiving benefits."


On the other hand, I don't think when he files affects your spousal benefit at all; it is up to 1/2 his PIA, reduced only by your early filing, not his.


If I'm mistaken, I'm sure someone will point it out.

 

[cyber888]

Well, if you have zero social security, you’re deadmeat. But if you have $1,000/mo social security, you can survive in countries like Thailand, Philippines and many Latin American countries and you will be more than middle class in these countries

 

[jollystomper]

If we run out of money to due reasons other than our stupidity, I think a lot more people will be in trouble besides us. We are fortunate to have multiple income sources (pension, investment returns, eventually SS). We can survive losing one and probably survive losing 2 with lifestyle changes and downsizing our living space.

The biggest potential I see for losing money is

- Some expensive medical issue not covered by or limited by insurance. The best we can do is take care of ourselves and hope for the best.
- Some stupid financial move we make. We have watched enough episodes of "American Greed" to see folks who had plenty fall victim to this. Best we can do is to be content with the income and returns we are receiving, and ignore those who insist the can get better returns for us.

Finally... it is not something we would consider, but I wonder how much legal euthanasia/assisted suicide will become a factor in the future for those running out of money and not seeing any hope for themselves. Might it become a legally encouraged option for those who have exhausted all of their funds and social nets, and do not want o be put out into the street? Just a curious thought. Time will tell...

 

[Crabby Mike]

Amending my post above (#136), it looks like it's more complicated than either you or I implied. If you're eligible for both your own benefit and (larger) spousal, when you switch over they don't exactly give you the spousal amount, but rather your own plus the "excess" of the spousal amount over yours, which if you waited until your FRA to claim, would equal the spousal amount. But since you claimed your own benefit early, it's permanently reduced, but the spousal "excess" is not, so you'll get the equivalent of the spousal amount, reduced by the same dollar amount (not percentage) as your own benefit was.


Or at least that's how I read it. This example from AARP might help:


"Spousal benefits are calculated by subtracting your monthly benefit at full retirement age(FRA) from 1/2 of the full retirement benefit of your spouse. If you claim only your benefit early the benefit on your record will be permanently reduced. If you then claim a spousal benefit at 66 the spousal benefit will not be reduced and it will be added to your reduced benefit. As a result, the amount you receive will be higher than if you had claimed both at the same time but below 50% of the benefit. For example, lets say your monthly benefit at FRA is $1000 and your spouses FRA benefit is $2400. Your spousal benefit would be $200(2400/2=1200-1000=200). If you claim your benefit at 62 it would be reduced by 25% to $750. When you claim the spousal benefit at FRA you will receive the extra $200 for a total of $950."

 

[jim584672]

Millions live on Social Security and manage to get by somehow. Not a fun existence.

 

[gwraigty]

I'm pretty sure you've got that wrong, and maybe backwards.


According to https://faq.ssa.gov/en-us/Topic/article/KA-02011,



"Your full spouse’s benefit could be up to one-half the amount your spouse is entitled to receive at their full retirement age. If you choose to begin receiving spouse’s benefits before you reach full retirement age, your benefit amount will be permanently reduced.

You will receive your full spouse’s benefit amount if you wait until you reach full retirement age to begin receiving benefits."


On the other hand, I don't think when he files affects your spousal benefit at all; it is up to 1/2 his PIA, reduced only by your early filing, not his.


If I'm mistaken, I'm sure someone will point it out.

Apologies for my mistake. You are correct.

 

[Katsmeow]

Millions live on Social Security and manage to get by somehow. Not a fun existence.

I disagree about the last part. My mother recently died at 94. She mostly received SS but about $2500 to $3000 a year from other stuff. Her SS as I recall was about $1500 a month. She had plenty of fun. In fact, I found out that over the last 10 years, she saved an average of about $5000 year. In other words, she lived on less than her SS.

And, she bought pretty much anything she had the urge to buy. But, she had a small house paid for many years ago. She didn't have to pay income taxes. She didn't travel much. She had low expenses and never got into some of the more modern things (she had no internet, no cable TV, no dishwasher). She also didn't need to buy a lot of "stuff." In fact, after she died I found clothes that she hadn't even taken tags off of yet (not a lot, not expensive). Just by that time in her life she just didn't have a lot of hobbies that cost money and didn't go out much, etc. (I am talking about from when she was in her mid-80s to when she died). But -- she wasn't unhappy.

It might not sound fun to you (or to me for that matter) but it was fun to her. She could have easily spent more money each year but just didn't.

 

[Cut-Throat]

I hope this thread doesn't turn into another SS discussion/debate. I find the original topic very interesting.

The S.S. discussion/debate is EXACTLY about the Original Topic. That is the Point.

 

[gwraigty]

Under the new ‘deemed claiming’ rules, won’t claiming @ 62 permanently reduce all of your SS payments, both your own & spousal when claimed? If so, then your calculus would change.

I stand corrected in that it will reduce spousal. Not because of the deemed filing rules though, as explained in prior posts.

Yes, I'll have to revisit the issue.

In the context of the discussion, one's own spending habits, COL, etc. might play a significant part in determining whether the better option is to go for the higher monthly amounts, or total dollars one hopes to pull out of the system.

 

[youbet]

I hope this thread doesn't turn into another SS discussion/debate. I find the original topic very interesting.

Agree. Dozens of other SS threads to rehash breakeven points in......”

 

[imoldernu]

What if you run out of money?

Estimates put the number of persons on some form of government assistance at 80 million.

While we go off in many directions to understand how a person could survive without a steady income, It might be well to learn a little bit about what our national and state governments provide for persons in need.

A few minutes here might help to understand our national safety net.

https://www.wikiwand.com/en/Social_programs_in_the_United_States

The idea that running out of money means that one must grovel or die is not a part of our America.

 

[Cut-Throat]

Agree. Dozens of other SS threads to rehash breakeven points in......”

Sure let's take Social Security 'Off the Table' when talking about "what if you run out of Money"..................


Let's keep the discussion to Pan Handling, Food Banks and Homeless Shelters and Such.

 

[Teacher Terry]

Kats: after my dad died at 73 the pension was smaller as was the SS. My mom used her savings to travel while she could. She died at 90. Once savings was gone her life was still good. She continued to go to bingo, senior centers, making and selling crafts, out to eat, etc. She quit clothes shopping because she had a lot of nice clothes. She loved living. She was not in a high cost of living. She paid 600 rent and owned her car. She prepaid her funeral. She had cable and internet.

 

[Crabby Mike]

Apologies for my mistake. You are correct.

Good grief, don't apologize -- your post caused me to look up that particular situation and learn something! DW and I have been immersed in SS options for the past several years as we decide when to pull that trigger. Every time we think we have a plan set in stone, we discover another wrinkle, or revisit previous thinking. Fortunately for us, she is among the last "grandmothered" into the file-and-restrict strategy (by about 32 days), so I plan to file at or near FRA (next year), and she will file at her FRA later in the year and take only spousal 'til 70, before switching to her own.


Because our "break-even" point is around the time benefits could be cut (2034-ish), we felt it made sense to wait at least this long. It's unlikely we would ever run out of money, but it remains a scary prospect, to be avoided as vigorously as possible.

 

[daylatedollarshort]

Estimates put the number of persons on some form of government assistance at 80 million.

While we go off in many directions to understand how a person could survive without a steady income, It might be well to learn a little bit about what our national and state governments provide for persons in need.

A few minutes here might help to understand our national safety net.

https://www.wikiwand.com/en/Social_programs_in_the_United_States

The idea that running out of money means that one must grovel or die is not a part of our America.

America is a diverse place. Unfortunately groveling or dying due to being broke is a part of the America I live in. There are 35,000 homeless in the Bay Area and many of those people do die every year.