Contacting SS in January of "collecting" yr. could yield big bucks! (move, 2015)

[ilovemycat]

Originally Posted by arwenmark

Thank you again very much. I have almost never worked, earned a total of about 7000. in my life. I am one of those for whom the spousal benefit was originally intended, and I am very glad the benefit is still here, I have lived in fear for years that they would do away with it just before I would be eligible.

So sounds like we will be in the SS office on January 2, 2016!

You can both actually apply prior to January, 2016- 3 months in advance, so you can apply around October. Now, here is what I suggest: Have your husband bring a pay stub that shows he made the max in 2015, which I assume he did since 2016 was about $170000.00.

That way, his 2015 earnings will be included in your benefit payments. Also, call 1-800-772-1213 to make your appointment and any time from October on will be fine.

Tell your husband "congratulations" and hope you have a healthy, happy, fun time together!

[ilovemycat]

Originally Posted by tom1944

How about is you have a January birthday?

Well, if you have a January birthdate and your full retirement age is 66, then you reach FRA in January - you collect your SS and earn as much as your heart desires.

If your birthdate is 66.2, then applying in January is like the example I gave to the other poster.

[rdflk]

I don't need exact numbers worked out. My question was just generally about the comment about SS making benefit adjustments and how much you've made in the year/month before you file.....and what if you DIDN"T work at all in the year you file. (which quite frankly I found confusing, but I'm trying to get it....)

First, my FRA is 67......but If I retire in June of a given year at age 65.......and delay filing until the next February -- still age 65 -- but (the latest COLA will have been added to the benefit, right??). If I haven't work in that CALENDAR year -- it doesn't seem as if the whole scenario about how much I made and SS adjusting the benefit would be an issue, right?

I just don't like the idea -- and can't follow the calculations of if you work in a given year then start collecting, SS makes adjustments, recalculates the benefit, etc. I figure better to just wait a few months...when 1) that won't be an issue....and 2) the COLA will have been added.

I MIGHT collect at 65, I MIGHT NOT. Don't know yet. Even if I don't wait until 70. Maybe I'll wait until 67. What I need to know is IF I haven't worked from 65 to 67...is it WORTH it to wait until 67 not having worked and put in to for years.......is it still worth it to wait,...or just go ahead and take the age 65 reduced payment at 65. HOW much will the benefit go up, from 65-67 FRA, IF I'm not working anyway to put in more. Again not specific numbers -- but IN GENERAL is it worth it to wait to FRA if you're not working for the 2 years before.

Give me a little more info and I can work it out for you. Like how old you will be at retirement- sort of like what the original poster provided. Also, about how much you earn in a year- so I can get an estimate, or if you know a FRA estimate, I can work with that, if I have months and years of birth.

But obviously, you are under the limit- so you are in the category of "not working, not collecting and waiting for a later date for a higher amount".

I, personally, am not crazy about the "not working, not collecting" strategy, but for some folks, who really seem bent on having the higher SS amount, it appeals to them. They just have to realize they are letting the government keep thousands of their dollars, month after month - after they have worked a lifetime.

I've mentioned this before, but when we (meaning SSA workers) were allowed to actually advise people what to do, we would have to have them sign a paper indicating they understood it would take more than 7 years for them to make back the money they were giving up. More than 7 years was a point SSA felt was "disadvantageous". It really becomes disadvantageous if you have an "auxiliary", like a spouse or a child who receives a check whenever you receive a check. Not only are you giving up your own, but an auxiliary is due 50% of your own as well, so the losses really compound. And, many baby boomers have minor children.

[Mawoods]

I love thanks for posting this. I am trying to understand ! My husband is retiring in June 2015. He has filed and suspended and I get spousal on his. He is planning on taking social security next year in 2016 , thinking to start in January, His birthday to be 68 is in Feb. (1948). If he starts taking in January does it matter that he will not be 68 until Feb? Is the calculation based on calender year or the exact month and age he starts taking SS? We are very concerned about taxes. Between 2 of us our social security alone is high, We have debated whether to delay until 70 or go ahead and decided to go ahead. But at the same time we want to get as much as he is entitled to. We get conflicting answers from SS office. Thanks !

[ilovemycat]

Originally Posted by rdflk

I don't need exact numbers worked out. My question was just generally about the comment about SS making benefit adjustments and how much you've made in the year/month before you file.....and what if you DIDN"T work at all in the year you file. (which quite frankly I found confusing, but I'm trying to get it....)

First, my FRA is 67......but If I retire in June of a given year at age 65.......and delay filing until the next February -- still age 65 -- but (the latest COLA will have been added to the benefit, right??). If I haven't work in that CALENDAR year -- it doesn't seem as if the whole scenario about how much I made and SS adjusting the benefit would be an issue, right?

I just don't like the idea -- and can't follow the calculations of if you work in a given year then start collecting, SS makes adjustments, recalculates the benefit, etc. I figure better to just wait a few months...when 1) that won't be an issue....and 2) the COLA will have been added.

I MIGHT collect at 65, I MIGHT NOT. Don't know yet. Even if I don't wait until 70. Maybe I'll wait until 67. What I need to know is IF I haven't worked from 65 to 67...is it WORTH it to wait until 67 not having worked and put in to for years.......is it still worth it to wait,...or just go ahead and take the age 65 reduced payment at 65. HOW much will the benefit go up, from 65-67 FRA, IF I'm not working anyway to put in more. Again not specific numbers -- but IN GENERAL is it worth it to wait to FRA if you're not working for the 2 years before.

I will try to help you understand things as much as possible, but your tone is getting me stressed out. I am no longer at work- I do this as a service, so please - let's stay relaxed!

You, or others, might be unsettled because I presented a scenario that many people are not familiar with. The thrust of so many financial planners etc is to delay, delay, delay. In my opinion, half of them don't know much about SS benefits and they rarely seem to consider the thousands, tens of thousands of dollars people are giving up- especially if they "sit at home, don't work and don't collect", and especially if they have another person who could collect along with them, such as a spouse or child. I have said this before, but I don't like that option, unless you truly understand all the ramifications of your plan and have decided that is the way to go for you and your family. Your reasons- " I figure better to just wait a few months so you have the COLA and SSA won't be adjusting or not adjusting-- well, these are not good reasons, and I will explain it for you.

On other threads, I spoke about my best friend, who was sitting home, not working, not collecting, but also didn't ask me about her decision. When a man and his wife in my town were on vacation in Florida this winter, and a car jumped the curb and killed him, I began thinking about my friend. I called her up, and she is now collecting her benefits at age 63 +. It would have made me sick to think that she would not have gotten any of her SS checks, when we both started working right out of college (or before).

So, back to your questions. If you didn't work in the year, year and a half, 2 years, 4 years etc. before you file, there are no real adjustments to be made to your benefit due to work and earnings. Everyone, gets COLA's on their benefit, whether they are collecting them or not, beginning with the age you turn 62. So, by the time you are 65, your Primary Insurance Amount (PIA) would have 3 COLA's in them. I should say that is "under current law". Anything can change via Congress.

Now, my original thread was about people, such as yourself, who know when they will retire- well, instead of contacting SS 3 months before June, if you contacted SS in January of that year, you might be due benefits for all or some of those months. However, you seem to not want to file when you actually retire, let alone in January of that year. If you were interested in taking a reduced benefit payment- and if you closely read my answer to awrenmark, you will see the reduction her husband is going to have ($29.00) is far outweighed by getting the 2 extra checks for himself, and also for his wife.

So, with the little you told me, I can give you some figures about reduction factors using ssa.gov's quick calculator with a date of birth of June, 1960. 1960 is the first year the FRA becomes age 67. I will have to use fictitious benefit amounts, because you did not provide a ballpark of about how much you earn. That is OK. I will also give you percents, so you can apply them to any numbers you have from SSA regarding your benefit amount.

At age 65, you will get 86.7% of the monthly benefit because you will be getting benefits for an additional 24 months. So, if your fictitious PIA (FRA amount at 67) was $2000.00 per month, your age 65 amount would be $1734.00.

So, let's see your loss: Your loss is the difference between $2000.00 and $1734.00, which is $266.00 per month. But, what do you gain: You gain $1734.00 a month for 24 months. That is a total of $41,616.00. If you sit at home, don't work and don't collect, you will be losing money for 156 months, which is 13 years from age 66. That means that at age 79, you would have finally made up the $41616.00 you could have had, but from age 79 on each month you live you are ahead by $266.00.

You also asked about possibly waiting until February of 2026, instead of June, 2025. That is 1 year, 4 months (16 reduction months )before your FRA date of June, 2027. When SSA figures a benefit amount, they use the actual month you decide to apply and the reduction factors are according to the month. If you pick January, 2026 you will have 17 reduction months.

So, if you wait until February, 2026 you would receive 91.1% of your PIA (FRA amount). Again, by using the fictitious PIA of $2000.00 you would get $1822.00 per month. What is your gain from age 65? You gain $88.00 over your age 65 rate, but you lose $1734.00 x 8 =$13872.00. It takes you 157 months from February, 2026 to make up the $13,952.00 you could have had, which is 13.1 years.

If you started in January, 2026 you receive 90.6% of your PIA (FRA amount). That is $1812.00 per month.

At age 66 you get 93.3% of your full. And, you know that at age 67 you get 100% of your amount.

You also know that if you delay starting benefits past age 67 you gain an additional 8% on your $2000.00, but only if you wait the entire year. Delayed retirement credits are also month by month.

So, let's do that scenario: You retire in June 2025, when you are 65 but you don't work and don't collect until age 68, when you will be credited (eventually- not immediately) with an 8% DRC. That brings your $2000 to $2160.00. What do you gain? You gain the difference between $2160 and $1734 which is $426.00 per month. What do you lose? You lose $1734 for 36 months which is $62424.00. Divide the loss by the gain to see how long it takes you to make up the $62424.00 you could have had. It takes 146 months or 12.2 years from age 68 to finally break even. At age 80.2, you broke even and then each month you live thereafter you are ahead by $426.00.

So, I hope that helps you. And, if you are now possibly interested in applying in January of the year you might retire, I need a ballpark figure as to how much you will work and earn that year (or the half a year, actually).

[ilovemycat]

Originally Posted by Mawoods

I love thanks for posting this. I am trying to understand ! My husband is retiring in June 2015. He has filed and suspended and I get spousal on his. He is planning on taking social security next year in 2016 , thinking to start in January, His birthday to be 68 is in Feb. (1948). If he starts taking in January does it matter that he will not be 68 until Feb? Is the calculation based on calender year or the exact month and age he starts taking SS? We are very concerned about taxes. Between 2 of us our social security alone is high, We have debated whether to delay until 70 or go ahead and decided to go ahead. But at the same time we want to get as much as he is entitled to. We get conflicting answers from SS office. Thanks !

Ok, your husband is over his full retirement age, will be retiring this month, but thinking about either January or February of next year? Right?

To, me, he will now be in the category of "not working, not collecting". He is doing so, I gather, to get delayed retirement credits. He reached FRA in February 2014. In 2014 he received 11 DRC's. In 2015, he will receive 12.

So, to me, the calculation you should consider is what is the difference between 23 DRC's (his plan) and if he decided to begin collecting now (or July)- the month he retired, (my option). If he starts to collect his checks with July, 2015, he will get 6 DRC's for 2015 plus the 11 for 2014, for a total of 17 DRC's.

If his Primary Insurance Amount (FRA amount) was (fictitious) $2500.00, his amount with 17 DRC's is 111.33% of it.

If his Primary Insurance Amount (FRA amount) was (fictitious) $2500.00 his amount with 23 DRC's is 115.33% of it.

If his Primary Insurance Amount (FRA amount) was (fictitious) $2500.00 his amount with 24 DRC's is 116% of it.

17 DRC's = $2783.00

23 DRC's = $2883.00

24 DRC's = $2900.00

So, if he sits at home, doesn't work and doesn't collect until January, 2016 what is his gain? He gains $100.00 a month. What is his loss? His loss is $2783 x 6 = $16,698.00. It takes him 166 months from January to make up his $16,698.00, which is 13.9 years from January. He is almost 82 at that point. Each month he lives past 82, he is ahead by $100.00.

Now, the question is: will the $100.00 make a difference to you and him- when he is alive and when he is gone, or will having the $16698.00 now be better? You have to decide. But, your statement "But at the same time we want to get as much as he is entitled to." Well, that answer is with a trade off. He is entitled right now, but choosing not to get it.

Have him call 1-800-772-1213 and ask for his "PIA". Apply those percents above, and you both can discuss if it is worth waiting or beginning to collect when he leaves work. That's what I would do. Good luck, and if you have more questions, feel free to ask.

[rdflk]

Oh lovemycat, I certainly didn’t mean to stress you out. I’m grateful to have people like you educating the rest of us.
If you thought there was tone in my writing it certainly wasn’t intended.
Thanks so much for your analysis….

I don’t’ know why I’m so torn about the collect at 65 vs wait…decision. Other don’t even hesitate to take the money and run.
I’m single, no kids…..I do have longevity in my family…aunt lived until 94 mom until 89.
But that means nothing…… life can change on a dime…we only have today…and some may not make it to their beds tonight.

The ‘bird in the hand’ would be tempting…..I’ll just have to see.
IF I take it at 65…hopefully I’d just reinvest it. I have a pension coming so I’d try to just live off of that, or maybe use SOME of the Soc Sec and invest the rest.

I also have to decide how much I’m willing to tap MY money – 401K, Roth etc -- how low I’m willing to take those…to lower my 401K RMD if it helps me delay Soc Sec. (Roth doesn’t have an RMD, yet)

[ilovemycat]

Originally Posted by rdflk

Oh lovemycat, I certainly didn’t mean to stress you out. I’m grateful to have people like you educating the rest of us.
If you thought there was tone in my writing it certainly wasn’t intended.
Thanks so much for your analysis….

I don’t’ know why I’m so torn about the collect at 65 vs wait…decision. Other don’t even hesitate to take the money and run.
I’m single, no kids…..I do have longevity in my family…aunt lived until 94 mom until 89.
But that means nothing…… life can change on a dime…we only have today…and some may not make it to their beds tonight.

The ‘bird in the hand’ would be tempting…..I’ll just have to see.
IF I take it at 65…hopefully I’d just reinvest it. I have a pension coming so I’d try to just live off of that, or maybe use SOME of the Soc Sec and invest the rest.

I also have to decide how much I’m willing to tap MY money – 401K, Roth etc -- how low I’m willing to take those…to lower my 401K RMD if it helps me delay Soc Sec. (Roth doesn’t have an RMD, yet)

Ok, apology accepted and this post made me feel better. Thank you!

[seasick]

Originally Posted by ilovemycat

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. ......

(cut)

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!

WOW! Fantastic post! Thank you!

[Perryinva]

So I guess this strategy doesn't make sense if you are collecting an appreciable private company pension, instead of working? Any income you get that would count as income for MAGI? Really, that strategy is effective for people that have an income that goes away completely when they decide to collect SS, correct?

So if a person that retires at 62, with a pension of $5000/mo, that starts the month after a salary of say $12k/mo stops, and an expected PIA of $2700 at FRA of 66 2/3s, with an early Feb birthday, really gains nothing by applying in Jan of the year they turn 62 then. Then we're back to the discussion of early or late as related to taxes, converting IRAs to Roth (if still there), to draw down IRA's to reduce RMDs vs investing the early SSI, and coming out ahead.

In addition, it also depends on when bonuses, etc are paid out. Many companies pay out the bonus for the previous years results in Feb of the following year. So a $20k bonus arriving in Feb, also greatly reduces any chance this could work for people in that income range.