City-Data Forum How the \$\$ shakes out- spousal strategy (my epiphany) (spouse, retired, years)
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04-10-2015, 01:16 PM
 Location: Cape Elizabeth 425 posts, read 387,956 times Reputation: 745

Ok, I did the math for our couple Dave and Joann. I will try to present this in the easiest way to follow.

There are 2 scenarios.

The first scenario is that Joann, when reaching 62 + 1 month, applies for her own retirement benefits. When her husband Dave, reaches his Full Retirement Age, he applies for his own retirement and she begins to get some more SS as his spouse. They just continue on in this mode. (nothing fancy- no real strategy involved)
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First, let's recap facts: (all facts-whether they apply to a scenario or not)

Joann is born: 6/15/1957

Joann reaches 62+1 = July, 2019

Joann reaches Full Retirement Age (FRA): 66 +6 = December, 2023

Joann reaches Age 70 = June, 2027

Joann's Full (Primary Insurance Amount) Amount: \$890.00

Joann's Reduced Retirement Amount: \$648.00

Joann's Extra as Dave's Spouse: \$335.00

Joann's Age 70 amount: \$890.00 (PIA)+ \$249.00 (DRC's) + \$335.00 (spouse)= \$1474.00
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The 2nd scenario is that Joann does not collect any of her own retirement benefit until she is 70. Dave begins to collect his retirement 24 months before he is 66 + 10 (He retires at 64 + 10 - nice!) . Dave suspends his retirement benefits at age 66+10 months. (boo!) Joann begins to collect 1/2 of Dave's FRA amount at her FRA, December, 2023. Dave begins to collect his SS again 38 months later, age 70.
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Dave is Born: 06/15/1959

Dave reaches Full Retirement Age: 66 + 10 = April, 2026

Dave reaches Age 70 = June, 2029

Dave's Full Retirement Amount = \$2450.00

Dave's Reduced Retirement Amount = \$2123.00 (24 reduction months)

1/2 of Dave's FRA = \$1225.00 (relates to his wife's benefits, not his)

Dave's Age 70 Amount: \$2123.00 (Reduced Retirement) + \$537.00 (DRC's) = \$2660.00
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Year by Year Strategy- Strategy 1

2019 6x 648 = \$3888 (Joanne)

2020 12 x 648 = \$7776 (Joanne)

2021 12x 648 = \$7776 (Joanne)

2022 12 x 648 = \$7776 (Joanne)

2023 12 x 648 = \$7776 (Joanne)

2024 12 x 648 = \$7776 (Joanne)

2025 12 x 648 = \$7776 (Joanne)

2026 3 x 648 = \$1944 9 x 983 = \$8847(Joanne) 9 x 2450 = \$22050(Dave)

2027 12 x 983 = \$11796 (Joanne) 12x 2450 = \$29400 (Dave)

2028 12 x 983 = \$11796 (Joanne) 12 x 2450 = \$29400 (Dave)

2029 12 x 983 = \$11796 (Joanne) 12 x 2450 = \$29400 Dave)

Total Joanne \$96723.00 Total Dave \$\$110,250.00 -- Scenario 1 Grand Total =\$206,973.00

__________________________________________________ ___________________________________

Year by Year Scenario 2

2019 - \$0.00

2020 - \$0.00

2021 - \$0.00

2022 - \$0.00

2023 - 1 x 1225= \$1225 (Joanne) 1 x \$2123 = \$2123 (Dave)

2024 - 12 x 1225 = \$14700 (Joanne) 12 x 2123 = \$25476 (Dave)

2025 - 12 x 1225 = \$14700 (Joanne) 12 x 2123 = 25476 (Dave)

2026 - 12 x 1225 = 14700 (Joanne) 5 x 2123 = \$10615 (Dave)

2027 - 5 x 1225 = \$6125 7 x 1474 = \$10318 ((Joanne) \$0.00 (Dave)

2028 - 12 x 1474 = \$17688(Joanne) \$0.00 (Dave)

2029 - 12 x 1474 = \$17688 (Joanne) 7 x 2660 = \$18620 (Dave)

Total Joanne = \$97144, Total Dave = \$82310 -Scenario 2 - Grand Total - \$179,454

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Ok, the initial loss by going with scenario # 2 is \$27,519.00. But let's look at 2030 in each scenario:

With Scenario #1, Joanne and Dave receive \$41,196.00 a year.

With Scenario # 2, Joanne and Dave receive \$49,608.00 a year.

They begin to make up their loss by \$8412.00 a year. In 3 years, 2 months, they have made up their \$27519.00 loss and then are ahead by \$8412.00 each year they live past age 73.2.

Last edited by ilovemycat; 04-10-2015 at 01:31 PM..

04-10-2015, 03:32 PM
 Location: Cape Elizabeth 425 posts, read 387,956 times Reputation: 745
The more I think about it, the more I like scenario 2, but maybe with a change.

First, I like that Dave gets to retire at a reasonable age, 64 +10 instead of 66 +10. Just because SS raised the retirement age, if people can manage, it is great to be retired. It is really good in his case because Joanne is FRA and gets his a full 1/2 of Dave's \$2450.00.

I also like that by age 73, they have made up the loss and then are ahead \$8412 every year thereafter.

I also think that Joanne getting the \$7776 in the years before Dave retires is not such a big deal. They have been managing without her working already, and her spousal beginning at her FRA, and then her own at 70 is so much higher.

The change I would consider is Dave NOT suspending at his FRA for the 38 months. If they were managing fine with his \$25476 and Joanne first at \$14700 and then \$17688, the extra \$537.00 he gets by going to zero for 38 months might not be worth it.

In any case, I hope you can find this format helpful for your own situations. Just think about your own age differences, plug in your amounts, and think about how long you really want to work.

Last edited by ilovemycat; 04-10-2015 at 03:33 PM.. Reason: left something out

04-10-2015, 09:45 PM
 2,429 posts, read 3,226,304 times Reputation: 3330
All that's great -- IF you live to past your break even age.
The bottom line is whatever a person's options...you're taking a chance, making a bet either way.
As "Dirty Harry" once asked "do you feel lucky? do ya?"

04-11-2015, 01:42 AM
 71,700 posts, read 71,829,507 times Reputation: 49273
but if married the bet is a one sided one.

odds are very very great one of you is going on to quite a much older age ..

being a couple is like having 2 horses in a raxe with one bet.

out of all the reasons as to whether file at 62 or wait what if i die is likely to be the least important.

the biggest chioces are always based on what if i live.

i am filing early after extensive numbers running as that works out best because of our own rmd situation and taxes . everyone's situation will be just different enough to work out better doing something different.

what flipped us around was the fact i am working part time and contributing the max to my 401k in just 6 months. i will be done working in july . that will wipe away almost all my income.

my wife is too so we will have very little taxable income and since 50% of our assets are in equities in our taxable account we can raise lots of cash at zero capital gains rates.

that cash will carry us through year two with zero tax allowing all the fund dividends and distributions to have zero tax.

so with that being our last year of almost tax free income i will take ss. by taking ss we can leave equities to grow and grow far more hopefully than the increases in ss by delaying after you figure in the checks you gave up too.

delaying until 70 would have blown our rmd's out of the water. just looking at the chart down the road had us in the highest tax brackets.

spreading that check out longer brought those taxes down so having almost 2x the ss check later on burned us by waiting.

fidelity investments has an awesome retirement planner (RIP) that lets you compare scenario's and see the effects of waiting on your own assets.

Last edited by mathjak107; 04-11-2015 at 01:55 AM..

04-11-2015, 02:00 AM
 71,700 posts, read 71,829,507 times Reputation: 49273
once you figure in just the checks you gave up waiting the difference is not that great , in fact if you filed early and spent the ss checks instead of money you had invested odds are you will do much better than delaying.

but for those with no investments and an underfunded retirement waiting and working can be the silver bullet .

as you see below once lost checks are figured in that 6% difference until 66 and 8% difference from 66-70 is diminished by a lot

lot.
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