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yep, its that less 30% that keeps everyone from taking it early and then later on trying to step up to 1/2 the full rate with spousal benefits . that less 30% always tags along on who ever takes it early.
its actually a formula that determines the haircut but 30% is close enough for illustration.
So, if at 66 I file for my own benefit, my wife who would be 62 could file for 1/2 my benefit. Then, at 66 file for her own - full retirement age - benefits, which would be larger than the half of mine she previously took. Does that work?
NO. Once she takes early retirement, that's it. The reduction to retirement benefits is forever. Period.
When filing for early benefits, the claimant does not have the option of limiting the application to benefits based on her record versus her spouse's record. Both records will be used in calculating the early retiree's benefits.
I agree with the other posters - best to consult with SSA before adopting any particular strategy. (Although I know I'm right on this one. )
i may have confused everyone by my use of the word "locked in" or not being able to get spousal benefits if you filed already on your own.
ill try to simplify it. what i really meant is the early reductions are locked in and switching later on to spousal benefits wont cure that.
ill try to make a little flow chart to explain it as best as i can. im just learning this stuff myself so if you know for sure something is not correct please correct me. you can see why depending how you ask the question when calling the ss office you may get a different answer.
okay lets make it easy and assume marilyn and i are the same age. but in reality im really younger than her . sssshhhhh! dont tell her i told you.
lets assume both of us are still a pretend 62.
marilyn has 2 choices ,she can take early benefits about 30% less than full on her own record or she can take 1/2 my full benefits less about 30 %
at 62 i can take my own early reduced benefits or 1/2 marilyns full less 30%. that ends that scenerio.
now lets assume i was taking marilyns spousal benefit from age 62 thru 66 . when i hit 66 i have choices. NO, you don't have any choices. You took early retirement benefits. You're stuck with the reduced percentage of retirement benefits.
i can continue to take 1/2 of her full less the 30% or my own full benefit. that ends that scenerio. No, see above.
same scenerio both of us a pretend 62.
marilyn takes her reduced early benefit on her own record but i wait and dont take any benefit.
at 66 i can take my own full benefit or 1/2 of marilyns full and let my own run to 70. Correct. Because you waited until your full retirement age before claiming benefits, you now have this choice.
now this is where the op got confused.
he wanted to switch his wife from her own reduced benefit to 1/2 of his full at 66. problem is she is forever locked in to her own reduced benefit or 1/2 his full less the 30%.. that full less 30% is no different from the choice she had day 1 back at 62.
the exception is this and it involves the higher wage earner waiting until age 70.
"It is also possible for both spouses to receive spousal benefits on each other’s record. For example, take a couple in which the wife is the lower-earning spouse, and the husband is two years older; full retirement age for both is 65. The husband’s Social Security benefit will be considerably higher than hers if he delays receiving benefits on his own record until he reaches age 70; likewise, the wife’s spousal benefits on his record will be higher if he delays until age 70. The wife can elect to take Social Security benefits on her own work record at her full retirement age of 65, when her husband is age 67. At the same time, the husband can start taking Social Security benefits based on the wife’s work record. He will receive benefits valued at 50% of the wife’s benefit. He will delay receipt of benefits on his own work record, receiving delayed retirement credits, and will receive a higher benefit when he does start receiving benefits on his own work record. In our example, let’s say the wife’s benefit on her own record is $800 per month; then the husband would receive $400 per month in spousal benefits. In most cases, both husband and wife should sign up for Medicare at age 65. When the husband reaches age 70, he applies for Social Security based on his own work record and receives, for example, $2,000 per month. Because his own benefits are higher than his spousal benefit, he will receive his own higher benefit, and he will no longer receive the spousal benefit. The wife can then apply for additional benefits based on the husband’s work record. She will receive her own benefit of $800 per month first, then spousal benefits of $200 per month to bring her total benefit amount to the spousal benefit limit of $1,000 per month 50% of the husband’s benefit). If the husband dies first, then the wife’s survivor’s benefit will increase to $1,200 per month; combined with her own benefit"
hopefully now we all understand .
You cannot elect to receive reduced spousal benefits before FRA (full retirement age) and later receive unreduced benefits on your own record when you reach your FRA. It is not until you reach full retirement age that you are given the choice of taking spousal benefits or benefits on your own record.
correct as far as your own record goes. .. but at 62 my wife can file for her own benefits and at 62 i can file for 1/2 of her full benefit less about 30% once she files for hers. i can then file on my own record at 66 . so there is an example of me filing before 62 for a reduced benefit and later filing for my own at 66 but im not filling on my own record origonally.. thats my own plan. in fact if i can hold out until 70 i may just let it run.
heck even if i had the money in hand i couldnt get a guaranteed almost 8% oon it which is what its growing if i let it ride.
what my wife cant do before full retirement age is file and suspend so i get the spousal benefit and hers still grows soin the above example at 62 i do have a choice of hers now and my own later at full retirement age . marilyn wouldnt have a choice at 62 though of her own or mine unless i took mine too but then im the one locked in and she can let hers grow to full retirement age..
i think the key is at 62 you cannot file for spousal benefits unless the spouse who's record you are using has accepted reduced benefits forever unlike full retirement age when that spouse can file for their own benefit, let the other spouse collect half and then suspend theirs to grow.
for those with the resources to hold out taking ss early and who are married heres something to think about.
for the most part if we take benefits at 62 we get about 1/2 of what we get at 70.
of course not thinking out of the box old wisdom says take the money at 62 and run ,what if you die?
but heres a different spin. one that looks at quality of life and doing things you may not have been able to afford rather than worrying about dying before breaking even.
if you take reduced benefits at age 62 they are about 1/2 the age 70 benefit . you are limited to live your life on 1/2 the age 70 benefit plus whatever else your portfolio could spin off safely.
but what if right from day 1 at 62 you didnt take early social security but instead pulled from your own nest egg an amount equal to that age 70 benefit.
what if you lived on 2x the money at 62 you typically could because by waiting until 70 to take ss you have the whopping payments start and they would refill your nest egg which you spent down a little excessively in the early years.
for the amount of money you give up from 62 to 70 in social security you couldnt buy any annuity that would pay you anything close to what you get and inflation adjusted to boot. its the greatest value ever.
the reason i threw in the married part is you want 2 horses in the race not just 1 and you get that if your married. the odds are one of you may not live long enough to make it pay off but with 2 people its almost a lock you will win.
but the main reason you would do it is not to worry about breaking even, its to allow you to draw out of savings an amount each month to live on thats far bigger than you can ever take from early ss.
remember we are drawing an amount out of savings equal to that nice juicy age 70 payment right from day 1 at 62.
the whole concept here is to enjoy as much dough in your younger healthier years while you can still do all the things with your money you like. its to allow you to spend in the early years an amount each month you could never even think about if you filed early.
its just food for thought and yes you do need enough savings to keep you going for 8 years but if you do its an amazing deal. you do need to believe as well that for us 80 million voting baby boomers social security is the sacred cow and will remain pretty much as is which is exactly how i see it. for anyone under 55 or so all bets are off .
Last edited by mathjak107; 07-12-2011 at 03:54 AM..
OK, one more try at this..if wife waits (who is younger) to file at age 66 (FRA) husband will receive apx 50% benefit until he files for his full benefit at age 70. Wife will receive her FRA benefit until husband is 70, at which time she would file for 50% of his. Question is..does wife receive 50% of his benefit at age 66 or 50% of his benefit at age 70?
OK, one more try at this..if wife waits (who is younger) to file at age 66 (FRA) husband will receive apx 50% benefit until he files for his full benefit at age 70. Wife will receive her FRA benefit until husband is 70, at which time she would file for 50% of his. Question is..does wife receive 50% of his benefit at age 66 or 50% of his benefit at age 70?
At age 66, she can take her full benefits at FRA or elect to take spousal benefits up to 50% of your full amount. She is NOT entitled to 50% of amount awarded with delayed credits. Thus, the answer is NO, she will not receive the bump in benefits at age 70. (BUT if you die, she will receive survivor's benefits that equal your full amount, including the amount earned with the delayed credits.)
It does say if the wife files at 66 then at 70 the wife gets a bump up based on the husbands work record as long as the husband files at 70. unless im reading it wrong.
""It is also possible for both spouses to receive spousal benefits on each other’s record. For example, take a couple in which the wife is the lower-earning spouse, and the husband is two years older; full retirement age for both is 65. The husband’s Social Security benefit will be considerably higher than hers if he delays receiving benefits on his own record until he reaches age 70; likewise, the wife’s spousal benefits on his record will be higher if he delays until age 70. The wife can elect to take Social Security benefits on her own work record at her full retirement age of 65, when her husband is age 67. At the same time, the husband can start taking Social Security benefits based on the wife’s work record. He will receive benefits valued at 50% of the wife’s benefit. He will delay receipt of benefits on his own work record, receiving delayed retirement credits, and will receive a higher benefit when he does start receiving benefits on his own work record. In our example, let’s say the wife’s benefit on her own record is $800 per month; then the husband would receive $400 per month in spousal benefits. In most cases, both husband and wife should sign up for Medicare at age 65. When the husband reaches age 70, he applies for Social Security based on his own work record and receives, for example, $2,000 per month. Because his own benefits are higher than his spousal benefit, he will receive his own higher benefit, and he will no longer receive the spousal benefit. The wife can then apply for additional benefits based on the husband’s work record. She will receive her own benefit of $800 per month first, then spousal benefits of $200 per month to bring her total benefit amount to the spousal benefit limit of $1,000 per month 50% of the husband’s benefit). If the husband dies first, then the wife’s survivor’s benefit will increase to $1,200 per month; combined with her own benefit"
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