U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 04-22-2015, 05:32 AM
 
Location: Mount Airy, Maryland
10,467 posts, read 5,935,374 times
Reputation: 16170

Advertisements

Yeah I was afraid that was the answer, thanks
Reply With Quote Quick reply to this message

 
Old 04-22-2015, 09:59 AM
 
Location: Cape Elizabeth
425 posts, read 387,774 times
Reputation: 745
Alright, folks, let me try to just clarify terms. First, for Mathjak, on one hand, you said "you can't get spousal at 62", then you refer to it as "a kicker" and then you speak about something called "true or full spousal".

First, let's acknowledge we have two or three different types of spouses (LOL). (Well, for SSA purposes).

We have the caretaker spouse, usually a woman, lower earner, who stayed at home, maybe doesn't have her 40 quarters, maybe she does, but her own benefit is low. Low, meaning her full benefit (at her FRA) is less than 1/2 of her husband's full benefit at his FRA.

Then we have the newer type spouse, who worked outside the home, just as much as her spouse, for maybe just as much money, probably less, maybe more. But this spouse's own Full amount, is greater than 1/2 of her spouse's full amount. Like she is due $2500 at FRA and he is due $2800 at FRA.

Let's deal with the second type spouse first. These are the spouse's that the "spousal strategy schemes" come into play about. These are the couples who could never get anything on each other, before FRA, because their own full is greater than 1/2 of their spouse's full.

But, if they choose to wait until they are FRA to collect, or work past FRA, they can decide amongst themselves, if at FRAonly one of them should file on the other, and just collect a true 1/2 of the other spouse's benefits for the years between FRA and 70. The one who files just as a spouse is letting his or her own grow until 70 with DRC's.

There are more schemes these couples could concoct, but, as soon as one of them, meaning one of the couple, decides to take their own retirement before their FRA, they no longer have the option to get anything as "a spouse". Because all the spousal schemes, must begin at FRA, and when your own full amount is greater than 1/2 of your spouse's full amount then you are not due anything as a spouse before FRA.

That is different than the caretaker spouse. Well, let's divide the caretaker spouses into two categories: those who have their 40 quarters, and those who don't.

If your spouse does not have their 40 quarters, they must wait for you to file to get anything. So, they must wait from 62 until the point you file, which could be years (especially if you are younger than your spouse.) Then, depending on their own age at the time you file, they receive 1/2 of your full amount, and if you (the caretaker) are younger than your FRA, it is reduced for your age.

However, if your caretaker spouse does have their 40 quarters, well, they have options. And, this was how this thread started, because SSA always trained us that the way a spouse's benefit is computed is to take 1/2 of the worker's full amt, subtract 100% of the spouse's full amount from her work, reduce it for age,(if under FRA,) and add it to the amount the spouse was receiving or due on her own retirement. That is correct, and true.

Kotlikoff calls this the "excess spousal benefit" and Mathjak called it a "kicker", but I always just told people "this is what you are due as a worker, and this is what you are due as a spouse".

And, this computation formula applies whenever the worker has either already filed for their benefits, (such as ExnooYawker, whose husband has been receiving for years and she is not yet 62), or the caretaker spouse has filed already for their own, smaller, yet their own, benefits before their FRA, or even at their FRA.

And this is where I had the epiphany- what Kotlikoff was trying to say about SSA's spousal computation. I finally understood that he was upset that even if you are FRA, and you file for your own retirement, you will get the equivalent of 1/2 of your spouse's full amount, but it is not "from your spouse".

It is a combo, your own, plus, as Mathjak called it, a "kicker" from your spouse.

Why does that matter? If the money amount is equivalent to 1/2 of your spouse's?

Let's do an example: Dave's full amount is $2264.00. He would like his spouse, who does have her 40 quarters, to get 1/2 of his full amount or $1132.00.

Now, if his wife waits until she is her FRA to file on her own record and on Dave's, she will get $1132.00.

But, if she files for her own retirement, SSA will take her full amount, which was $1003.00, (which is less than 1/2 of Dave's) and then subtract that from 1/2 of Dave's full amount (the $1132), and difference, $129.00 is added to her $1003.00. She gets the combo of $1132.00.

Ok, so what is the issue? Well, if Dave's wife does not file for her own retirement at FRA, and instead just files as Dave's spouse, (this has to assume Dave has filed) she will get $1132.00, all from Dave.

So, again what is the issue? Well, this allows her own to grow, with DRC's to age 70, and her $1003.00 gets an extra $280.00.

Now, when SSA does the computation this time, they still take 1/2 of Dave's full, the $1132.00, subtract his wife's full (the $1003.00, NOT the $1003.00 plus the $280.00), and it leaves $129.00. That $129.00 gets added to her $1003.00, and her $280.00 gets added to her $1003.00, so all together, by not filing for her own retirement at FRA, she is now due $1412.00 per month. Of course, the $1132.00 she has been receiving all the years since FRA is now $129.00, but her total check is now $1412.00.

Tah Dah! Again, I hope this helps. I have had enough of this for now. Time to enjoy the outdoors!

Last edited by ilovemycat; 04-22-2015 at 10:11 AM..
Reply With Quote Quick reply to this message
 
Old 04-22-2015, 01:26 PM
 
Location: Mount Airy, Maryland
10,467 posts, read 5,935,374 times
Reputation: 16170
If there is any sort of poster of the month award around here I'm voting for ilovemycat.
Reply With Quote Quick reply to this message
 
Old 04-22-2015, 04:19 PM
 
Location: Cape Elizabeth
425 posts, read 387,774 times
Reputation: 745
Now, the reason I am so happy I figured out what Kotlikoff was explaining, is because I really like this option! I really like it for a number of reasons.

First, I like it because the lower earner, all they have to do (or I guess sacrifice) is to be willing to wait until their FRA to file, and then must file only as a spouse. And, because, their own is low, a reduced low amount is even lower, so the "sacrifice" is not so great.

Going back to our example: Dave's wife, if she begins at 62 + 1, her benefit is $731.00. And her full amount was $1003.00. Many people who just have their 40 quarters, have full amounts way lower than that.

That is a big difference from the "newer spouse"- the one whose FRA amount was $2500.00. If she waits at home and doesn't collect, she is giving up $1823.00 per month! If the other spouse, the one with the $2800.00 is the one not collecting, they are giving up $2041.00 month (for 53 months).

When Dave begins to collect his, all his wife will ever get is an extra $129.00, and possibly less, either added on to her $731.00 for a combo of $860.00, or if she files for her own retirement first at FRA, the $129.00 is added to her $1003.00.

And, then, the best part, at 70, which is only 4 years, and even less in our case because FRA is past 66, she is able to go up to $1412.00, whereas if she did file that retirement claim before or at FRA, she would only be at $860.00 or the $1132.00 forever. (well except for COLA's).

I like it because there is is no "penalty" for getting the DRC's. Meaning, when they finally compute the retirement/spousal at 70, they don't subtract her amount with the DRC's- they still only subtract her full amount from 1/2 of his full amount. So, that full spousal difference gets added to her now enhanced own retirement amount.

And another reason I like it- you are making the sacrifice when you are "younger"- in your early to mid 60's, as opposed to late 60's to 70. The "main wage earner" is probably still working and they probably have been managing to get by with only one income or one income and not as much from the other. To me, this is more of a "real world" scenario- tailored to regular folk.

And, women, usually the lower earner, tend to live longer than the men, so that extra money at 70 should continue on for a long time.
Reply With Quote Quick reply to this message
 
Old 04-22-2015, 05:13 PM
 
71,700 posts, read 71,801,099 times
Reputation: 49273
but as i pointed out everyone needs to look at their total situation not just ss and the bigger check.

you need to see the entire big picture .

retiring at 62 and delaying until 70 carry's a big cost in what you don't get .

not getting 8 years of checks , spending down investments and losing the compounding on them or selling in to losses while you wait .

see what your spouse may be giving up by delaying , in our case for every year i delay until i can file and suspend my wife loses another 3k plus colas on her spousal kicker.


medicare costs are uncapped while you wait and can increase much more than if you were collecting.

what effect will delaying and getting almost 2x the check have on tax rates when combined with rmd's.


do you want to bet on longevity or markets ?

all of the above can push break even past 23-24 years and that can be a long time to wait to just break even , we are talking 83-84 years old..

whilr yes the benefit of waiting can shine after that point the longevity risk is huge trying to make the gamble worth it.

all food for thought..

Last edited by mathjak107; 04-22-2015 at 05:26 PM..
Reply With Quote Quick reply to this message
 
Old 04-22-2015, 05:47 PM
 
1,227 posts, read 1,261,178 times
Reputation: 4310
Please explain how the cost of Medicare isn't capped if you wait until age 70 to collect Social Security. In the event you wait, aren't you purchasing Medicare starting at 65? What is the difference if you pay for Medicare directly or the cost is deducted from your benefit check?
Reply With Quote Quick reply to this message
 
Old 04-22-2015, 06:13 PM
 
Location: Cape Elizabeth
425 posts, read 387,774 times
Reputation: 745
Quote:
Originally Posted by mathjak107 View Post
but as i pointed out everyone needs to look at their total situation not just ss and the bigger check.

you need to see the entire big picture .

retiring at 62 and delaying until 70 carry's a big cost in what you don't get .

not getting 8 years of checks , spending down investments and losing the compounding on them or selling in to losses while you wait .

see what your spouse may be giving up by delaying , in our case for every year i delay until i can file and suspend my wife loses another 3k plus colas on her spousal kicker.


medicare costs are uncapped while you wait and can increase much more than if you were collecting.

what effect will delaying and getting almost 2x the check have on tax rates when combined with rmd's.


do you want to bet on longevity or markets ?

all of the above can push break even past 23-24 years and that can be a long time to wait to just break even , we are talking 83-84 years old..

whilr yes the benefit of waiting can shine after that point the longevity risk is huge trying to make the gamble worth it.

all food for thought..
Mathjak, I am not advocating waiting until 70. In my example, Dave and his spouse, Dave is collecting, probably pre-FRA, since his wife is older by 2 years, and his wife is collecting at 66+6 months. Just getting an additional $280.00 at 70.
Reply With Quote Quick reply to this message
 
Old 04-23-2015, 02:22 AM
 
71,700 posts, read 71,801,099 times
Reputation: 49273
i do advocate waiting until 70 when a retirement is underfunded or survivor benefits need to be max but that goes along with being able to work until fra or 70..

however the equation can shift big time generally when someone retires at 62 and has enough assets to lay out to delay and actually has a choice of filing early or not..


then it becomes another story because you are spending down assets ,losing checks ,losing compounding and a whole host of other issues that crop up.

it is usually those that need the bigger checks the most that either don't have the assets to delay or they would spend their own resources down dangerously low trying to delay.

most of the time those who advocate those with enough assets to delay never take all the factors into consideration.

they either spew about the 6-8% increases in ss but never take in to consideration all the other factors that push break even out 23-24 years.

then it becomes a gamble on your own longevity with the odds stacked against you and all the risk free return you hear about by delaying becomes riskier than just going with long term market risk.

Last edited by mathjak107; 04-23-2015 at 03:43 AM..
Reply With Quote Quick reply to this message
 
Old 04-23-2015, 03:17 AM
 
71,700 posts, read 71,801,099 times
Reputation: 49273
Quote:
Originally Posted by LookingatFL View Post
Please explain how the cost of Medicare isn't capped if you wait until age 70 to collect Social Security. In the event you wait, aren't you purchasing Medicare starting at 65? What is the difference if you pay for Medicare directly or the cost is deducted from your benefit check?
when you collect social security there is a hold harmless law that says the increase you get from medicare can never be more than your cola adjustment regardless how much the actual increase is.

if you are not collecting ss yet and pay on your own you are not covered under the hold harmless law.

increases at times have been way higher than the cola adjustments on ss.
Reply With Quote Quick reply to this message
 
Old 04-23-2015, 03:46 AM
 
Location: Mount Airy, Maryland
10,467 posts, read 5,935,374 times
Reputation: 16170
I really liked the option ilove spelled out for us where I file at 64 1/2, my wife files with me to get 1/2 of my benefit, then files on her own at 70. Mathematically it makes the most sense. But there are 2 concerns: I may not be retiring at 64 1/2, just keeping all options open. If I continue to work I'll no doubt go over the SS limit so will my benefits be reduced right? Will hers be as well? Secondly my wife's family does not show a long life expectancy. We never know, obviously, but it's not like we should assume she lives to 90. So as mathjack points out the break even point may be too far in the future.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top