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Old 04-09-2015, 08:12 AM
 
Location: Cape Elizabeth
424 posts, read 387,043 times
Reputation: 745

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Some of the regulars on this site might know that I have begun posting in the past month or so trying to weigh in with my experience and knowledge of Social Security. I began to work right out of college- age 22, for the Social Security Administration. After 13 weeks of full time classroom training, I was assigned to the Downtown office in lower Manhattan and worked there 14 years, first as a claims representative, then a field representative (giving pre-retirement seminars to major corporations and businesses in lower Manhattan) Later I transferred to the suburbs of NJ when I had my children. I worked the last 21 years in Elizabeth, NJ. I became a "technical expert"- really a glorified claims representative, but actually a senior employee, mentor, trainer etc. My 35 years were all dealing with the public, not in management. After I retired in 2008, they called me back two times as a "re-employed annuitant" to help them during the recession when the baby boomers were applying in overwhelming numbers for disability. I last did that in 2010. I say all this to give you my background before I explain what was happening that was very puzzling about spousal benefits. A number of you have referenced Lawrence Kotlikoff, I think he might be a Harvard professor, who wrote a book about SS, and an article in Forbes called "44 Social Security Secrets All Baby Boomers and Millions of Others Must Know." He speaks on NPR regularly and also has a business where you can buy tailored advice.

Here is the link to his article: 44 Social Security 'Secrets' All Baby Boomers and Millions of Current Recipients Need to Know - Revised! - Forbes

Now, I keep this article on my bookmark tab and have read it many times. It is not easy reading, and I obviously am familiar with all the terminology, the computations, the policies etc. He was really harping about spouse's, and that the way SS determines how much a spouse receives is dependent on whether or not they have taken reduced retirement and if you did, you did not ever get 1/2 of your spouse's FRA. All true. Now, a number of folks on here wrote about having an older spouse, the lower earner, and if that spouse starts to get benefits at 62, can they still get 1/2 of their FRA when they are 66. Kotlikoff had an example (#6) with Sally and Joe, but the ages and sexes were reversed from the questions posed on here. Sally was younger- 4 years younger, and Sally also was the high earner. Joe was 66 and the low earner. Last night, while looking over posts from this site, I was reading an older, long thread started by DaveinMtAiry. Dave is the higher earner, his wife the lower, his wife is older (by 2 years) and their FRA's are past 66. Dave's is 66 and 10 months and his wife's is 66 and 6 months- meaning he was born in 1959 and she in 1957. Dave was wanting to know if his wife began collecting at 62, could she get half his benefit at her FRA. At the same time, another person wrote me privately about their situation- and gave me some figures to use. That was good, because now, I had concrete numbers to plug into the scenario. But, I needed to rewrite Kotlikoff's situation to match DaveinMtAiry, so I replaced the word "Sally with Dave" and replaced "Joe with Joann". I then replaced the pronouns and applied Kotlikoff's scenario to Dave and his wife using the figures the other poster gave me. When I did that, I finally was able to have the spouse get 1/2 of her husband's FRA at her FRA! But here is the catch- the wife (Joann) cannot take the reduced retirement- the husband (Dave) is the one who takes the reduced retirement. If the higher earner husband takes his benefit reduced when his older wife is FRA, she can receive 1/2 of his FRA. Then, Kotlikoff says, when the hubby is his FRA, he suspends until he is 70. Meanwhile, Joann is receiving spousal only until she turns 70. Then, she applies for retirement for the first time. Now, when I did this, her retirement, plus delayed retirement credits, was still less than 1/2 of Dave's. I said "what's the point of that- but, I went back to Kotlikoff and he said, and it is correct, that the excess spousal (1/2 of husband's FRA, minus wife's full FRA = spousal) gets added to whatever the wife is receiving at the time she files for her retirement. In this scenario, Joann doesn't apply until she is 70 so it gets added to the FRA/DRC amount. In all the questions previously, we were adding it to her reduced retirement amount. But, now, that we add it to her FRA/DRC amount, it exceeded 1/2 of Dave's FRA. When Dave turns 70, his delayed retirement credits get added to his MBA (monthly benefit amount- not his FRA- because he took benefits reduced). But, it finally made sense!

Here are the figures I used for Dave and Joann:

Dave's FRA is $2450.00. Joann's FRA is $890.00.
Dave's reduced retirement- 2 years early(24 reduction months) = $2123.00
Joann's reduced retirement (if she was taking it-but in this example, she is not) $648.00 (age 62+1)
Joann at FRA -gets 1/2 of Dave's $2450 =$1225.00
Dave at FRA = suspends and gets 0.00 for 38 months. (because his FRA is 66/10 there are only 38 months until he turns 70)
Dave at 70 - gets his 38 DRC's which is an extra 25.33% added to his reduced retirement of $2123, for a total of $2660.00.
Joann at 70 -gets her $890.00 own retirement, plus DRC's of extra 28% ($249.00) plus her excess spousal of $335.00 for a total of $1474.00.
Joann's excess spousal amount $335.00 (take 1/2 of Dave's $2450= $1225. Subtract her FRA of $890.00. It leaves $335.00.

If Dave dies first, Joann goes to $2660.00.

I hope this has helped folks. I know I feel better.
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Old 04-09-2015, 09:12 AM
 
Location: SW Corner of CT
1,948 posts, read 1,534,865 times
Reputation: 2438
I am years away from collecting SS (currently 55), and trying so hard to understand, but just can't get it......I think I need pictures
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Old 04-09-2015, 09:50 AM
 
Location: Cape Elizabeth
424 posts, read 387,043 times
Reputation: 745
Quote:
Originally Posted by beer belly View Post
I am years away from collecting SS (currently 55), and trying so hard to understand, but just can't get it......I think I need pictures
I know, I know- I just re-read it and it is tough! I share your pain!

Find my post to DaveinMtAiry. It is under this thread: Social Security "Spousal Benefits" often overlooked, you could get more then you think. (pension, divorce). On page 5, I explain what I was also doing here. Maybe that will help a little.
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Old 04-09-2015, 09:58 AM
 
Location: Prescott AZ
6,123 posts, read 9,073,863 times
Reputation: 11545
This is a very good post but also very confusing. I am sending you a DM. Thanks. Barb
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Old 04-09-2015, 10:24 AM
 
1,168 posts, read 2,401,166 times
Reputation: 3485
I think I get it- and thank you for all you do here.
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Old 04-09-2015, 11:20 AM
 
Location: Central Massachusetts
4,800 posts, read 4,844,519 times
Reputation: 6377
ilovemycat can you put that in a flow chart?
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Old 04-09-2015, 11:27 AM
mlb
 
Location: North Monterey County
3,179 posts, read 2,853,807 times
Reputation: 4876
I need someone to explain SS benefits for those of us with the 40 credits - who after I had those went to work for an employer who opted out of SS in the 1980's.

Windfall Elimination Provision.

NO ONE has been able to explain it to me.... An SS benefit person said I basically would only get 40% of my benefit.
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Old 04-09-2015, 11:39 AM
 
6,306 posts, read 5,049,308 times
Reputation: 12815
It is crazy that someone has to write a book about social security. Makes it sound like it was something that was designed and handed down by space aliens.

But we, the people, wrote those rules. Why can't it be simple?

If it was made by man, it can be "unmade" by man.

A friend and her sister are/were in the same situation as far as receiving benefits from their spouse. The women both retired from same university and did not pay into SS. Well one sister had no problem getting SS through her hubby, the other could not. She said it all depended on the person doing the information processing.

Same thing happened to me with my VA paperwork. I had a great representative. I found a couple of errors. He made one call to his buddy in Houston regional office - bam - fixed! None of this dragging on you hear on the news.
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Old 04-09-2015, 12:07 PM
 
Location: Cape Elizabeth
424 posts, read 387,043 times
Reputation: 745
Quote:
Originally Posted by golfingduo View Post
ilovemycat can you put that in a flow chart?
I don't think so. Have no idea how to do that on this site. But again, find the post I wrote to DaveinMtAiry - last night, it might help.
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Old 04-09-2015, 12:40 PM
 
Location: Orange County
1,667 posts, read 1,868,226 times
Reputation: 1394
Quote:
Originally Posted by ilovemycat View Post
Some of the regulars on this site might know that I have begun posting in the past month or so trying to weigh in with my experience and knowledge of Social Security. I began to work right out of college- age 22, for the Social Security Administration. After 13 weeks of full time classroom training, I was assigned to the Downtown office in lower Manhattan and worked there 14 years, first as a claims representative, then a field representative (giving pre-retirement seminars to major corporations and businesses in lower Manhattan) Later I transferred to the suburbs of NJ when I had my children. I worked the last 21 years in Elizabeth, NJ. I became a "technical expert"- really a glorified claims representative, but actually a senior employee, mentor, trainer etc. My 35 years were all dealing with the public, not in management. After I retired in 2008, they called me back two times as a "re-employed annuitant" to help them during the recession when the baby boomers were applying in overwhelming numbers for disability. I last did that in 2010. I say all this to give you my background before I explain what was happening that was very puzzling about spousal benefits. A number of you have referenced Lawrence Kotlikoff, I think he might be a Harvard professor, who wrote a book about SS, and an article in Forbes called "44 Social Security Secrets All Baby Boomers and Millions of Others Must Know." He speaks on NPR regularly and also has a business where you can buy tailored advice.

Here is the link to his article: 44 Social Security 'Secrets' All Baby Boomers and Millions of Current Recipients Need to Know - Revised! - Forbes

Now, I keep this article on my bookmark tab and have read it many times. It is not easy reading, and I obviously am familiar with all the terminology, the computations, the policies etc. He was really harping about spouse's, and that the way SS determines how much a spouse receives is dependent on whether or not they have taken reduced retirement and if you did, you did not ever get 1/2 of your spouse's FRA. All true. Now, a number of folks on here wrote about having an older spouse, the lower earner, and if that spouse starts to get benefits at 62, can they still get 1/2 of their FRA when they are 66. Kotlikoff had an example (#6) with Sally and Joe, but the ages and sexes were reversed from the questions posed on here. Sally was younger- 4 years younger, and Sally also was the high earner. Joe was 66 and the low earner. Last night, while looking over posts from this site, I was reading an older, long thread started by DaveinMtAiry. Dave is the higher earner, his wife the lower, his wife is older (by 2 years) and their FRA's are past 66. Dave's is 66 and 10 months and his wife's is 66 and 6 months- meaning he was born in 1959 and she in 1957. Dave was wanting to know if his wife began collecting at 62, could she get half his benefit at her FRA. At the same time, another person wrote me privately about their situation- and gave me some figures to use. That was good, because now, I had concrete numbers to plug into the scenario. But, I needed to rewrite Kotlikoff's situation to match DaveinMtAiry, so I replaced the word "Sally with Dave" and replaced "Joe with Joann". I then replaced the pronouns and applied Kotlikoff's scenario to Dave and his wife using the figures the other poster gave me. When I did that, I finally was able to have the spouse get 1/2 of her husband's FRA at her FRA! But here is the catch- the wife (Joann) cannot take the reduced retirement- the husband (Dave) is the one who takes the reduced retirement. If the higher earner husband takes his benefit reduced when his older wife is FRA, she can receive 1/2 of his FRA. Then, Kotlikoff says, when the hubby is his FRA, he suspends until he is 70. Meanwhile, Joann is receiving spousal only until she turns 70. Then, she applies for retirement for the first time. Now, when I did this, her retirement, plus delayed retirement credits, was still less than 1/2 of Dave's. I said "what's the point of that- but, I went back to Kotlikoff and he said, and it is correct, that the excess spousal (1/2 of husband's FRA, minus wife's full FRA = spousal) gets added to whatever the wife is receiving at the time she files for her retirement. In this scenario, Joann doesn't apply until she is 70 so it gets added to the FRA/DRC amount. In all the questions previously, we were adding it to her reduced retirement amount. But, now, that we add it to her FRA/DRC amount, it exceeded 1/2 of Dave's FRA. When Dave turns 70, his delayed retirement credits get added to his MBA (monthly benefit amount- not his FRA- because he took benefits reduced). But, it finally made sense!

Here are the figures I used for Dave and Joann:

Dave's FRA is $2450.00. Joann's FRA is $890.00.
Dave's reduced retirement- 2 years early(24 reduction months) = $2123.00
Joann's reduced retirement (if she was taking it-but in this example, she is not) $648.00 (age 62+1)
Joann at FRA -gets 1/2 of Dave's $2450 =$1225.00
Dave at FRA = suspends and gets 0.00 for 38 months. (because his FRA is 66/10 there are only 38 months until he turns 70)
Dave at 70 - gets his 38 DRC's which is an extra 25.33% added to his reduced retirement of $2123, for a total of $2660.00.
Joann at 70 -gets her $890.00 own retirement, plus DRC's of extra 28% ($249.00) plus her excess spousal of $335.00 for a total of $1474.00.
Joann's excess spousal amount $335.00 (take 1/2 of Dave's $2450= $1225. Subtract her FRA of $890.00. It leaves $335.00.

If Dave dies first, Joann goes to $2660.00.

I hope this has helped folks. I know I feel better.


I was reading the article you referenced in Forbes Something that I read does not sound right:

" For example, if you started collecting at 62 and are now at your full retirement age, i.e., 66, you can suspend benefits until 70 and then start collecting 32 percent higher benefits for the rest of your life.'

I was under the impression that the only way you could use the "Suspend Benefits" option was if you waited until FRA and then did the "Suspend Benefits?" If this is true what would be the disadvantage of taking benefits at 62 instead of FRA?
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