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the smallest decision is about break even. why? because dead is dead. the only time you should be concerned about break even is perhaps if your single .
otherwise odds are if you are married one of you is going well past break even and the question becomes what if i live.
if you are so afraid of being cheated if you die go buy a life insurance policy. thats a product for what if i die.
social security is a product that should be planned around the question what if i or my spouse live?
there are a whole lot of other important decisions besides break even ,especially if you are married.
if your married there are a number of issues. you have to worry about survivorship benefits, what if one of you lives longer then expected, tax ramifications , the new wealth tax, manipulating the spousal benefits can add over 100k to your payments, how larger payments later on will interact with your rmd's.
the list goes on and on.
i can tell you anytime i see a bunch of people commenting they took it early and their only reason was what if i die i know odds are they have little knowledge of how the system works.
like i said singles dont have as much to be concerned about but those that are married have to fully understand the system and what it means to their spouse and the options open to them to increase income while letting their own grow..
then you can make an informed decision about whats best ..
Last edited by mathjak107; 12-03-2012 at 03:02 AM..
I have never heard of teachers being penalized when collecting SS because of teacher retirement checks. I do not understand how that can even be legal if you have paid into the system. Can you provide more details?
My wife was in the private sector for 20 years. She then did 20 years as an employee of a state government under their retirement plan. There are states that have a "deal" with the federal government (based on them not paying into SS or something along those lines) that if their employee retires under their pension plan, then the retired employee's SS will be at a "reduced" amount. This even applies to those like my wife that paid into SS prior to working for the state.
Some states refer to the program/reduced SS benefits as the "offset".
We love my wife's retirement pay and retirement benefits but she says it reduces her SS from about $1,200 per month to $400 per month.
Not complaining here...we love the monthly "state kiss".....LOL
EXCERPT:
WHAT IS THE WEP?
The WEP affects members who apply for their own (not spousal) SS benefits and fail to satisfy certain exceptions. A major exception is that members, who were eligible for their public pension before January 1, 1986 (i.e., 20/more years of service under age 55, or 10/more years over 55) or have at least 30 years of substantial coverage under Social Security, are exempt from the WEP. (There is some relief for those with 20-30 years of SS coverage.)
If a member doesn't satisfy the exceptions, then they are subject to the WEP, meaning that their SS benefits will be calculated using a different formula. Under that different formula, instead of receiving 90% of the first $606, which the member earned on the average each month (in this case, $545.40), the member would receive only 40% of their first $606 ($242.40) - more than 55% less in benefits.
WHEN DID WEP BECOME LAW?
The WEP was enacted as part of the 1983 Social Security Refinancing Act, designed to shore up the financing of the Social Security Trust Fund. That Act was signed into law by President Ronald Reagan, after being adopted by the Democratic-controlled House where Rep. Dan Rostenkowski (D-IL) chaired the House Ways and Means Committee and the Republican-controlled Senate, where Sen. Robert Dole (R-KS) chaired the Senate Finance Committee.
WHAT STATES HAVE RETIREES HURT BY THE GPO AND WEP?
In addition to Massachusetts, there are 26 states that have public retirees and employees who could be hurt by either the GPO/WEP. Like the Commonwealth, the first 6 states, listed below, have almost all or a large majority of their employees not contributing to Social Security, and, therefore, potentially affected by these laws as retirees. The remaining 20 states are ranked in terms of the percent of employees who may be impacted (66-16%). They are: California, Colorado, Illinois, Louisiana, Ohio, Texas, Florida, New York, Nevada, Connecticut, Kentucky, Minnesota, Georgia, Missouri, Michigan, Tennessee, Wisconsin, Washington, Indiana, Pennsylvania, Alaska, Maine, Hawaii, Montana, New Mexico and New Hampshire.
END
Hope this helps.
PS
Rarely are teachers part of the state employment retirement system as they are not state employees. They might be part of So and So State Teachers Retirement System but in most cases, this is not the same as a "true" state employee retirement system.
If her SS is being reduced by $800, there's something wrong. The maximum WEP reduction is $383.50:
For us the decision was based on my (younger) wife's survivor benefit. I would have delayed until 70 if it would have increased her survivor benefit, but it is based on what you draw at full retirement age (66 in my case), So I started drawing at 66.
It is a gamble every one has to decide for themselves in my opinion UR1972.
My dad took his social security at 62 years and received 12 checks before he died. He didn't get much of what he paid in. He was receiving $845 per month. Mom was a housewife and no social security was paid in for her. The good part was that she got 1/2 of his social security and received $442 per month for 21 years after dad died. She may have collected what he had paid in.
Because my dad died early, I also took mine at 62 years but was told by the social security people that I would be penalized because I had a teacher retirement income check. They were right as I started with $68 per month. That was 15 years ago and my ss check is now $180 per month. Part of my check pays for my Medicare premiums.
My wife took her ss at 65 and collected for 9 years before she died.
Wish you luck on your decision.
Just curious, why your mother did not get his full SS when he passed?
We love my wife's retirement pay and retirement benefits but she says it reduces her SS from about $1,200 per month to $400 per month.
If a member doesn't satisfy the exceptions, then they are subject to the WEP, meaning that their SS benefits will be calculated using a different formula. Under that different formula, instead of receiving 90% of the first $606, which the member earned on the average each month (in this case, $545.40), the member would receive only 40% of their first $606 ($242.40) - more than 55% less in benefits.
WHAT STATES HAVE RETIREES HURT BY THE GPO AND WEP?
In addition to Massachusetts, there are 26 states that have public retirees and employees who could be hurt by either the GPO/WEP. Like the Commonwealth, the first 6 states, listed below, have almost all or a large majority of their employees not contributing to Social Security, and, therefore, potentially affected by these laws as retirees.
Rarely are teachers part of the state employment retirement system as they are not state employees. They might be part of So and So State Teachers Retirement System but in most cases, this is not the same as a "true" state employee retirement system.
Your first paragraph above contradicts the second. According to your second paragraph, which is actually the correct one, your wife's monthly reduction in SS benefits comes to $303.00 ($545.50 minus $242.40). Therefore you wife cannot be losing out on $800 per month in benefits because the rest of the benefit formula (beyond the 90% rate for the first $606) remains unaffected by the WEP.
I have a quarrel with the word "hurt" in the third paragraph. No one is "hurt" because the WEP simply removes the advantage that low wage earners reap under the benefit formula. In other words, from your wife's SS wages alone, it would appear she is a low wage earner, but her other pension makes that not true. "Affected" would be a more accurate term, and in fact that term does appear later in the paragraph.
Finally, and this is really just a quibble, I don't get the significance of the distinction you are making in the final paragraph between teacher retirement systems and state employee retirement systems. If, in a given state, the teachers' retirement system is indeed state-wide, then the fact that teachers are not employed by the state is irrelevant, is it not? That is the case in California, where there are two completely separate state-wide systems, one for teachers and one for state employees per se.
For us the decision was based on my (younger) wife's survivor benefit. I would have delayed until 70 if it would have increased her survivor benefit, but it is based on what you draw at full retirement age (66 in my case), So I started drawing at 66.
Bideshi,
This is incorrect, as Mathjak and I have tried to explain in numerous posts. Although waiting until 70 would not have increased her SPOUSAL benefits, it most definitely would have increased her SURVIVOR benefits. Indeed, that is why Mathjak keeps stressing that married couples need to think carefully before deciding when to begin drawing their benefits.
It has been said that being single (never married) is itself a penalty with regards to SS. Although there are no survivor benefits, the single person still does not experience a boost in his/her monthly or lifetime payout. About 5% of women of retirement age have never married according to the SS website.
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Wep
