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ilovemycat, thank you SO much for your response. It was very informative.
So, if my spouse dies when I am 66, what we had both been receiving (1800) would be reduced to half? If I die, nothing changes for him. He still collects his full benefit, correct?
I would not be eligible to collect my benefits at that point (age 66) in addition to survivors benefits to make up for the loss of half our income?
He is thirteen years older than I am and not in great health, which is why I am asking these difficult questions. It sounds as though I should just go ahead and collect my own reduced benefits at age 62 and then switch to survivor's benefits at age 67, assuming he is no longer alive.
Confusing stuff!
Well, as I explained originally, if you go ahead and apply at 62, you will be receiving your own plus spouse's benefits. Because your own full amount is less than 1/2 of his full amount, you are due some more money when he is alive, besides your retirement. So, you and your husband would have a combined income of $1800.00 + $749.00 =$2549.00.
So, if you die first, he loses the $749.00. If he passes first, and you are past 66 (or whatever your full age is as a widow), your $749.00 becomes $1800 (or $1905.00)- his full amount. You do not lose half your income. Your own share goes up.
what really makes it confusing is the way delaying is explained.
they talk about delaying like it increases you by 6% a year from 62 to fra and 8 % from fra to 70 but it really isn't any where near that for most folks who retire early but hold off filing.
what they don't include is what you are not getting if you delay
they do not include 8 years of giving up checks and colas .
they do not include the fact if you delay ss you may have to spend down money that could or should have stayed invested . only those still working or who have pensions or other income that act like they are still working are exempt from this .
you give up any adder in a spouses benefit who filed early since if 1/2 yours is higher than their own they do not get the kicker added unitl you file or file and suspend . if i delay at 62 marilyn gives up 4 years of 3k additional spousal payments added on to her check . she cannot get that until i file so the longer i delay the more checks she gets without the adder..
you are not immune to the full cost of medicare increases when you delay. under the hold harmless law if you are collecting the increase in premium can not be more than the cola adjustment.
micahel kitces took all of the above in to consideration and just figuring a 50/50 balanced portfolio break even was 23-24 years , 84-85 years old just to get back what you gave up delaying using a 50/50 balanced portfolio. using TIPS instead gave a lower return and reduced break even to 21-22 years .
after 85 the benefit of waiting grows quickly . by age 90 you can see a 5% real return , that is after inflation ..
that is huge for what is basically a gov't bond and zero risk ..
but most of us will never see break even at age 84-85.
on the other hand delaying and working to improve an under funded retirement can be the biggest bang for the buck adding the equal of hundreds of thousands in savings to an underfunded retirement.
in that case you will get that bigger check , as much as almost double 62
you will not spend down savings for 8 years
you can still contribute to savings
your investments can compound 8 more years
you have 8 years of life less to support.
two very different results when working vs not working.
Last edited by mathjak107; 04-18-2015 at 04:47 AM..
Wow not sure how I missed this thread until this morning but a belated thank you is in order. It's still confusing, and I'm off to the beach soon, so I'll have to look at it when I get back. One thing I do know is I don't see me waiting until 70 to file for a number of reasons. So when I get the time I'll revisit this topic and read all the posts and if needed send the opening poster a private message.
My husband who is 63 started to receive social security disability last year. He was an engineer and always had a good job from the time he graduated from college until he got sick in 2012. He was always the high earner in our family. I was a stay at home mom.
If things continue as they are his social security disability should seamlessly go into regular SS when he turns 66 from what I understand. I am about to turn 61. My question is will I receive half of his SS when I turn 66 even though he's been collecting SS disability?
The example of filing at 62, then suspending at a later age to increase the SSI at 70 is an interesting concept. But I thought you could not File and Suspend until FRA?
If you can, then if you filed at 62, then at 64 years later came in to a windfall inheritance, that could easily replace the SSI, it might make sense, especially if the spouse was waiting to collect until their FRA. So start with the higher income spouse, early, for a lower amount, then suspend at FRA, when that persons spouse starts collecting, so there is little change in overall income, then pick up again, for a bigger SSI at 70, while also providing for a larger death benefit. Interesting scenario.
Normally though, it is going to be the pretty RARE scenario in reality, where a couple will get used to that $2k/mo income, then drop it for years, instead of taking the new increase in income with the added spousal SSI, to pick it up again. It would really depend on your income overall. If your earned income is high enough, there's no reason to not delay until you stop working. If you retire early, but have a very large savings and or pension to live off on, then again, just delay the whole time, unless the spousal benefit from early filing is large enough, say a housewife that never worked, but her husband earned enough to max out SS for 35 years. Then she gets 1/2 of his FRA at 62, if he files at 62, reduced as discussed. (similar to what mathjak said above). Now if her spousal benefit continues, and he can Suspend, it would be worth considering. I was pretty sure you can only File & Suspend (or file Restricted) at FRA. Am I wrong?
So the question is, would the spousal benefit go away during the suspend period until FRA?
Also, on a side note, a lot of people seem to be under the impression that all you need to collect a healthy SS check is 40 credits. That is not the case. 40 credits qualifies you to receive a check, but the amount is actually a time & inflation adjusted calculation based on the 35 years with the highest calculated income (not actual income). The calculation is published every year, on the SSA website, for the retirement for that current year. You actually can have made less money, earlier, that met the SS maximum, and have it be worth more in the calculation than more money made later, but fell below the maximum. So if you only worked 10 years contributing to SS, then you hve 25 years of zeros added to the calculation. A lot of people don't realize that, and to them the SS amount seems like some random number the goverment comes up with.
To get the maximum that SS will pay out, which is published each year, you have to have maxed out your SS contribution due to earned income for the past 35 years right up until your FRA. Conversely, if you worked 40 or 45 years, and always earned enough that you contributed the maximum, you get absolutely nothing, not one red cent more for the extra 5 or 10 years you paid in to the system! Something that is never talked about, and inherently unfair in my eyes. It was relatively easy for a graduating engineer,(like myself, those these aren't my dates), to pay the maximum to SS each year (mostly barely for many years) starting in 1975, and then retire at 65 in 2018, with 43 years. Sure wouldn't be considered rich, but not poor either, but those first 8 years are for nothing. Work until FRA and the first 10 years are for nothing, and that money, had it been available for investing, would be a HUGE kicker added to retirement. Kinda sucks, IMHO!
you can't file and suspend until fra. but if you file under fra and your spouses full is less than 1/2 your full your spouse gets the kicker immediately , you just can't suspend.. that is why in the other thread i mentioned to you that you have to re-rerun the numbers with you filing earlier and your spouse getting the adder if she qualifies.
if i delay until fra my wife does not get 3k a year added to her check which she qualifies for . if i file at 63 she gets it added right away but i can't suspend .
Actually you can suspend at fra until 70 i believe but in any case you have to see what the adder your wife will get will be if you file earlier than fra.
Last edited by mathjak107; 04-18-2015 at 07:04 AM..
So, when we are adding in the years it will take to to reach a break even point: how is the break even point affected when the wife lives longer than the husband and has a bigger widows benefit because the late spouse waited until age 70 to collect?
not as much as you think. while the survivor benefit is based on what the husband actually got there is a 2nd part to that . there is a minimum amount based on the husbands full even if he filed at 62.
if the wife is 60-61 she gets the husbands amount or the husbands full rate even if he filed at 62 x.71 which ever is higher .
. if the wife is 62 or older but under fra she gets the husbands amount or his full x.81 ,which ever is higher.
even if she waits until 65 she gets nothing more than x.81 off full as a floor .
she does get delayed credits though if husband waited until 70 and she is at least fra.
it all depends how bad the wife will need the additional benefit to get by.
The example of filing at 62, then suspending at a later age to increase the SSI at 70 is an interesting concept. But I thought you could not File and Suspend until FRA?
If you can, then if you filed at 62, then at 64 years later came in to a windfall inheritance, that could easily replace the SSI, it might make sense, especially if the spouse was waiting to collect until their FRA. So start with the higher income spouse, early, for a lower amount, then suspend at FRA, when that persons spouse starts collecting, so there is little change in overall income, then pick up again, for a bigger SSI at 70, while also providing for a larger death benefit. Interesting scenario.
Normally though, it is going to be the pretty RARE scenario in reality, where a couple will get used to that $2k/mo income, then drop it for years, instead of taking the new increase in income with the added spousal SSI, to pick it up again. It would really depend on your income overall. If your earned income is high enough, there's no reason to not delay until you stop working. If you retire early, but have a very large savings and or pension to live off on, then again, just delay the whole time, unless the spousal benefit from early filing is large enough, say a housewife that never worked, but her husband earned enough to max out SS for 35 years. Then she gets 1/2 of his FRA at 62, if he files at 62, reduced as discussed. (similar to what mathjak said above). Now if her spousal benefit continues, and he can Suspend, it would be worth considering. I was pretty sure you can only File & Suspend (or file Restricted) at FRA. Am I wrong?
So the question is, would the spousal benefit go away during the suspend period until FRA?
Also, on a side note, a lot of people seem to be under the impression that all you need to collect a healthy SS check is 40 credits. That is not the case. 40 credits qualifies you to receive a check, but the amount is actually a time & inflation adjusted calculation based on the 35 years with the highest calculated income (not actual income). The calculation is published every year, on the SSA website, for the retirement for that current year. You actually can have made less money, earlier, that met the SS maximum, and have it be worth more in the calculation than more money made later, but fell below the maximum. So if you only worked 10 years contributing to SS, then you hve 25 years of zeros added to the calculation. A lot of people don't realize that, and to them the SS amount seems like some random number the goverment comes up with.
To get the maximum that SS will pay out, which is published each year, you have to have maxed out your SS contribution due to earned income for the past 35 years right up until your FRA. Conversely, if you worked 40 or 45 years, and always earned enough that you contributed the maximum, you get absolutely nothing, not one red cent more for the extra 5 or 10 years you paid in to the system! Something that is never talked about, and inherently unfair in my eyes. It was relatively easy for a graduating engineer,(like myself, those these aren't my dates), to pay the maximum to SS each year (mostly barely for many years) starting in 1975, and then retire at 65 in 2018, with 43 years. Sure wouldn't be considered rich, but not poor either, but those first 8 years are for nothing. Work until FRA and the first 10 years are for nothing, and that money, had it been available for investing, would be a HUGE kicker added to retirement. Kinda sucks, IMHO!
i replied in the other thread we had going about this. based on the numbers you posted your wife's benefit is already more than 1/2 your full benefit so restricted application is your only choice since she filed already at 62. but will that be worth spending down assets until 70 and giving up 8 years of checks at your amount vs getting just 4 years at 1/2 your wife's benefit , as well as leaving your medicare increases open ended since you are not collecting ?
Last edited by mathjak107; 04-18-2015 at 07:09 AM..
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