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Old 01-14-2016, 09:24 PM
 
Location: Cape Elizabeth
425 posts, read 387,365 times
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Quote:
Originally Posted by jontwin4 View Post
I'm still confused. Before the most recent budget passed, our plan was to have my husband file at his FRA, then immediately suspend so our daughter and I would receive benefits while he continued to accrue credits until age 70. Of course, that was not an option after the SS loophole was closed. Essentially, I cannot collect spousal without him also receiving checks. I think as well, though, that I cannot collect without activating *my* own SS. There's a name for it ("deeming," I think), but you cannot collect on someone else's SS while suspending yours.... So, that means that as soon as mine could be activated, it would be locked in at the age 62 rate, right? I would rather collect mine at the FRA rate, but maybe I cannot do that and still collect on my husband's.

Or am I misunderstanding?

I'm five years younger than my husband.

Thanks again! Whew!
No, you can go ahead with your plan and just stay on your husband's record, along with your daughter, and collect as caring for a disabled dependent. Filing as the spouse caring for the dependent adult disabled child does not trigger the "deeming" of your own retirement.

Once you do file for your retirement, and you can wait until you are FRA, you are no longer due benefits on his record, until he dies.

I was just pointing out that as long as you are also on your husband's record as the spouse with child in care, you and your daughter are subject to the family maximum.

So, I was just having you figure out the monthly income from SS, with you off his record and on your own.

Yours at 62 +1 is $925.00.

So, if you collect your own, your daughter goes to $976.00, hubby stays at $1952, and you go to $925.00. That is total ss of $3853.00.

Compare that to $3259.00, the family maximum monthly amount. By staying on his record, you lose $594.00 a month for 59 months. That is $35046.00.

But, if you don't take reduced retirement but take your own at your FRA, your family SS is $4242.00. ($1314 for you, $1952 for husband and $976 for your daughter. You begin to make back your loss at the rate of $389.00 a month. It takes you 90 months to make up the $35046.00 and at age 74.5 months, you have made it back. Then each month after that you are ahead (as a family) by $389.00.

So, as long as you remain in good health, that is a good option. Meaning, stay on your husband's record with your daughter, and at age 67 apply for your own retirement.
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Old 01-14-2016, 10:29 PM
 
81 posts, read 67,605 times
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Thank you so much.... I have spent many hours struggling to get information about our situation.


Quote:
Originally Posted by ilovemycat View Post
No, you can go ahead with your plan and just stay on your husband's record, along with your daughter, and collect as caring for a disabled dependent. Filing as the spouse caring for the dependent adult disabled child does not trigger the "deeming" of your own retirement.

Once you do file for your retirement, and you can wait until you are FRA, you are no longer due benefits on his record, until he dies.

I was just pointing out that as long as you are also on your husband's record as the spouse with child in care, you and your daughter are subject to the family maximum.

So, I was just having you figure out the monthly income from SS, with you off his record and on your own.

Yours at 62 +1 is $925.00.

So, if you collect your own, your daughter goes to $976.00, hubby stays at $1952, and you go to $925.00. That is total ss of $3853.00.

Compare that to $3259.00, the family maximum monthly amount. By staying on his record, you lose $594.00 a month for 59 months. That is $35046.00.

But, if you don't take reduced retirement but take your own at your FRA, your family SS is $4242.00. ($1314 for you, $1952 for husband and $976 for your daughter. You begin to make back your loss at the rate of $389.00 a month. It takes you 90 months to make up the $35046.00 and at age 74.5 months, you have made it back. Then each month after that you are ahead (as a family) by $389.00.

So, as long as you remain in good health, that is a good option. Meaning, stay on your husband's record with your daughter, and at age 67 apply for your own retirement.
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Old 01-15-2016, 08:29 AM
 
Location: Eastern UP of Michigan
1,202 posts, read 682,631 times
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Ilovemycat---------- thank you for all the great info. Really enjoyed this thread. It has convinced me to apply in January 2018 rather than waiting until May 2018, when I will be 64.


Deciding whether to go at 62 or 63 and 6 months is sort of the last hurdle.


It seems that much of the logic is similar to whether a person should collect early at all and that is my question. I will be 62 in May, but will still be working 25-28 hours per week @14.50per hour.


When I do the math it seems that this would put me over the limit for rest of the year and longer depending on how long I keep working. I really don't mind going over the limit, as I will still be ahead. We want to postpone withdrawls from retirement accounts for as long as possible so working p/t and collecting on SS seems to be the best way.


I gather that at FRA things would be recalculated but no clue on how to guestimate the extra.


Thanks.
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Old 01-15-2016, 08:48 AM
 
Location: Midwest transplant
2,013 posts, read 4,995,569 times
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Such great information, my head is spinning~sent you a PM. Thanks for providing this as a resource to CD readers.
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Old 01-15-2016, 11:32 AM
 
Location: Eastern UP of Michigan
1,202 posts, read 682,631 times
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Just saw another thread that helped me figure out the math for how many months might be withheld, so if I recall previous readings the months withheld get thrown back into your kitty. So if over 3 year period(collecting at62) I had 9 months withheld at FRA it would be recomputed as if I collected at the age of 62 and 9 months.


Have I got it mostly right?


Tried to edit my post above, but must have been too late.
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Old 01-15-2016, 05:48 PM
 
Location: Cape Elizabeth
425 posts, read 387,365 times
Reputation: 745
Quote:
Originally Posted by JIMANDTHOM View Post
Ilovemycat---------- thank you for all the great info. Really enjoyed this thread. It has convinced me to apply in January 2018 rather than waiting until May 2018, when I will be 64.


Deciding whether to go at 62 or 63 and 6 months is sort of the last hurdle.


It seems that much of the logic is similar to whether a person should collect early at all and that is my question. I will be 62 in May, but will still be working 25-28 hours per week @14.50per hour.


When I do the math it seems that this would put me over the limit for rest of the year and longer depending on how long I keep working. I really don't mind going over the limit, as I will still be ahead. We want to postpone withdrawls from retirement accounts for as long as possible so working p/t and collecting on SS seems to be the best way.


I gather that at FRA things would be recalculated but no clue on how to guestimate the extra.


Thanks.
Glad to be of help. Now let me explain, and maybe you already know this, but in the year you reach 62 (or 62 + 1), if not born on the first of a month, they still count your earnings for the entire year.


So, if you want to work, I did 28 hrs x 14.50 x 52 weeks and got a yearly estimate of $21112.00 for 2016.

So, let's take 2016. SSA doesn't care about the first $15720.00, so we subtract it. That leaves $5392.00. Then, they don't care about $1 of every $2 over the $15720.00, so we divide it in half. That leaves $2696.00 that they do care about. Those are called "excess earnings".

So, now you need to see how much is your SS check. I don't know your benefit amount at 62 + 1, but if you do, divide the amount into the $2696.00 to see how many checks need to be held back.

Eg: If your check at 62 +1 was $1000.00 a month, it would take 2 checks and part of a third (they would hold back the 3) checks, beginning at 62+1, June. They hold back June, July, August and then you would be due Sept, Oct, Nov, Dec. in 2016.

Say, 2017, you work and got a raise: $22720. Subtract $15720 and it leaves $7000.00. Divide in half and $3500 needs to be held back. That, at still $1000 a month, would get you 8 full checks for 2017.

2018- same- 8 full checks.

2019- same- 8 full checks.

2020 - you reach FRA in May, 2020. So in 2020 you are due all the checks in 2020.

After FRA, they do an ARF- Adjustment of the Reduction Factor, and ask "how many full checks did Jimandthom get before he was FRA"?

Well, he got 4 in 2016, 8 in 2017, 8 in 2018, 8 in 2019 and 4 in 2020. That is 32.

Your initial reduction factor, at 62 +1 was 75.42% of your full.

But you only got 32 checks, not 47. So your permanent reduction factor would be 82.22% of your full, representing the 32 months of full checks. They don't count partial checks.

If you want to supply the actual numbers (at least your FRA amount) and I can determine the difference, or I think you seem able to do it yourself.

Please let me know if you have more questions.

Last edited by ilovemycat; 01-15-2016 at 07:15 PM..
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Old 01-15-2016, 08:30 PM
 
Location: Eastern UP of Michigan
1,202 posts, read 682,631 times
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Ilmc----thank you very much for the info.


Yep I can plug in the more accurate numbers for earning etc. Guess I had misunderstand on the first years total earning counting, thought it was just the earning after eligibility. Thanks for clearing that up.


For along time, I thought this whole retirement/collecting process would be a slam dunk, no- brainer type decision. Was a bit wrong about that. Jim and I are truly soul-mates and we will be comfortable. Its going to be a magical time.
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Old 01-15-2016, 10:49 PM
 
Location: At the Lake (in Texas)
2,070 posts, read 2,035,505 times
Reputation: 5032
Quote:
Originally Posted by ilovemycat View Post
Many people, when pondering when to begin to collect their Social Security benefits, usually think about the month they turn Full Retirement Age, or the month they turn 62, or possibly their birthday month, or their work anniversary month (35 years on a job), etc. as the month they are going to apply for their checks.

They contact SS 3 months before that month or apply on the internet a few months before their chosen date.

I want to explain how, if you know in advance when you would like to retire, how picking January of that year might yield you thousands or even tens of thousands of dollars in extra benefits.

Certain milestones, like the year you hit 62 or 62 +1, are cut and dry. Because you are not eligible before that age, you must wait for the birth date month.

Or, those who work and make hundreds of thousands a year, well, they have to wait for their FRA month, when the amount they earn no longer counts against receiving a SS benefits, because they make too much before that month.

But, for the vast majority of folks- even those who earn $100,000 in their FRA year, they have more possibilities.

Let's go through it with Sherry, a working, now single (previously divorced) woman.

Sherry is turning 66 in August, 2016, meaning she is born in 1950. She works and earns $85000.00 a year but hates her new boss and wants to retire at the end of 2016. She is worried about her debts. She knew that beginning in August, she can work and make as much as she likes and was planning to apply 3 months before her birthday and her FRA month, May, 2016.

But, in the year you reach Full Retirement Age (FRA), SS has a very liberal work test, meaning people can work and earn quite a bit of money and still receive benefits.

In that year, SS only cares about the earnings you made before the month you reach FRA. So, for Sherry, that means January through July. Let's see how much she made in those months: $85000 divided by 12 = $7083.00 per month. Times 7 months = $49,583.00.

Also, in 2015, a person reaching FRA can earn $41880. and still receive all their benefits. We don't know how much it will be in 2016, so let's use the 2015 limits, knowing 2016 will be even higher.

From Sherry's $49583.00 SS doesn't care about the first $41,880.00, so we subtract it. That leaves $7703.00. Then SS does not care about $1.00 for every $3.00 you earn over $41880.00 so we divide the $7703.00 by 3 to see how much SS does care about. That leaves $2567.00 that Sherry is over the SS work limit for 2016. So, from her original $85000.00, SS only cares about $2567.00!

Note that the $1 for $3 is only in the FRA year. If you want to do this pre-FRA, it is $1 for $2, and a much lower limit ($15720).

Ok, now, how much is Sherry's check? Well, (I used fictitious, but plausible amounts from Quick Calculator) in August, FRA month, her benefit is $1973.00. But, we are looking at January, 2016, when she is 7 months younger. Her check that month is reduced (initially, but not permanently) to $1896.00.

Remember, SS has to withhold $2567.00 from Sherry's checks for the year. The way they do that is withholding your check, month by month, starting with your filing month. In Sherry's case, that is January's check, $1896 and then February's check, $1896.00. In her case, they are done withholding by February and they actually withheld more than they had to. SS initially withheld $3792.00. They will even it up later. SS can now pay Sherry every check beginning with March, 2016.

That is March, April, May, June, July, @ $1896.00 which totals $9480.00. Of course Sherry will also get August to December, but she already knew that. (because she reached FRA in August and was allowed to work and earn as much as she wants and still get those months).

What happens next? When 2016 is over, SS evens up the record. When they know exactly what Sherry made pre-FRA, they either pay her the difference between the $3792 and the $2567 = $1225.00, if her estimate was spot on, or if she underestimated, they might have to withhold more. If she overestimated, they owe her more.

The next thing that happens is to her reduction month calculation. Remember, to get Sherry her $9480.00 (plus possibly another $1225 -totaling $10705.00) SS reduced her benefit by 7 reduction months, the 7 months she was under FRA in January.

But, Sherry didn't get 7 checks pre-FRA, she got March, April, May, June, July, = 5 months. So, they recalculate the reduction factor to only permanently reduce her benefits by the 5 full months she got checks. SS does not care about the partial month check Sherry received in February.

So, going back to Sherry's FRA amount of $1973.00, 5 retirement reduction months is $54.75, leaving a permanent SS benefit of $1918.00.

For a reduction of $54.75, Sherry gained $10705.00. We divide the loss into the gain to see how long it would take Sherry to make up that $10705.00. It takes Sherry 195 months or 16.2 years to make up that $10705.00 if she chose not to take it, or called SS in May, 2016 (3 months before her birthday) instead of January of that FRA year.

Sherry was thrilled and is going to use her "new found money" to pay off some (or all) of her debts and be well on her way to a more secure retirement. (or whatever-I am just presenting information).

I hope you find this helpful and informative. I know everyone and every circumstance is different, but knowledge is power!




Thank you! This information has been so helpful...I will reach FRA in August of 2017...I had wanted to work an extra year to be able to amass some additional cash, and I knew that one could do that while still getting SS after one reached FRA...I had no idea that it could work this way...That would give me, if I understand you correctly, 7 months of SS payments while I am still working at my full salary...I make just a little less than your example, so I would have no overage at all I don't think for those 7 months. If that is the case, then I would still get the full monthly amount that I should get after FRA, is that correct? That's not a huge amount of money, but it's definitely worth doing.
So, I should sign up then in January of the year I reach FRA in August, correct? I'm very excited about this. Again, I hope I understood you correctly and thank you SO much for this information.
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Old 01-15-2016, 10:51 PM
 
Location: At the Lake (in Texas)
2,070 posts, read 2,035,505 times
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Oh and in re-reading your original post, I guess I should contact SS in May of that year, right?
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Old 01-16-2016, 07:40 AM
 
Location: Cape Elizabeth
425 posts, read 387,365 times
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Quote:
Originally Posted by MagnoliaThunder View Post
Thank you! This information has been so helpful...I will reach FRA in August of 2017...I had wanted to work an extra year to be able to amass some additional cash, and I knew that one could do that while still getting SS after one reached FRA...I had no idea that it could work this way...That would give me, if I understand you correctly, 7 months of SS payments while I am still working at my full salary...I make just a little less than your example, so I would have no overage at all I don't think for those 7 months. If that is the case, then I would still get the full monthly amount that I should get after FRA, is that correct? That's not a huge amount of money, but it's definitely worth doing.
So, I should sign up then in January of the year I reach FRA in August, correct? I'm very excited about this. Again, I hope I understood you correctly and thank you SO much for this information.
Your first instinct was correct. You need to sign up in January of the year you reach FRA, which is 2017.

You say you earn a little less than Sherry. So, let's use $80000.00. First we divide $80000.00 by 12 to see your monthly income. It is $6666.00. $6666 x 7 =$46662.00.

That is what you will earn pre-FRA.

Using 2016 figures (and hopefully in 2016 there will be a COLA so this amount might go up for 2017) a person in their FRA year can work and earn $41880.00 before their FRA month and get all their checks.

But, you earned $46662.00 so we need to see how much you are over.

$46662.00 minus $41880.00 leaves $4782.00.

Of the $4782.00, SSA only cares about $1 for every $3, so we divide it by $3.00.

That leaves $1594.00 that SSA needs to hold back from your checks in 2017. These are "excess earnings."

Now in Sherry's case, my fictitious example, her FRA amount was $1973.00, but we are starting pre-FRA, so her reduced amount (January - 7 months early) was $1896.00.

If those were your amounts, they would hold back January's check of $1896.00 to recover the $1594.00.

When the year was over, they would see what your pre-fra earnings were, and make any adjustments and if they owe you the difference, they send it to you.

Ok, so now that your check for January dealt with your excess earnings, you are due your benefits for Feb through the rest of the year. Of course, you would be getting Aug thru Dec anyway, because you reached FRA in August, but they would send you Feb thru July as well.

Now, remember, it is not your FRA rate they are sending you- you started early, so your rate, at first is $1896.00.

When the year is over, they look at your record and ask "how many checks did Magnolia receive before her FRA?"

Well, she got six. Feb, Mar, Apr, May, June, July.

So then they take your FRA amount and reduce it by the 6 months, not 7 as they originally did.

A six month reduction gives a person 96.67% of their FRA amount.

Using the $1973.00 from my original example, 96.67% is $1907.00.

So what do you gain? You gain 6 months of $1896.00 = $11376.00 and if $80000.00 was spot on, they also owe you $302.00 from January. That is $11678.00.

What do you lose? You lose the $66.00 which is the difference between $1973.00 and $1907.00 (your permanent SSA rate).

Divide $11376 by $66 to see how long it takes you to make back that money (if you decide not to do this).

It takes 172 months, which is 14.2 years to make up those funds!


So, if you want to do this, you need to apply in January of the year you reach FRA. Your next post where you reverted to May was incorrect!

The whole point of my post was to highlight how NOT APPLYING 3 months before your FRA date, but instead APPLYING JANUARY of the FRA YEAR, could yield big money!
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