View Full Version : Social Security Questions for you smart people
Question #1
My husband started claiming his benefits at age 64.
His benefits are about half of mine.
Can he claim a portion of MY benefits to increase his SS?
Question #2
I have two years before I'm 70, max SS benefit.
The difference if I wait instead of claiming now is a couple of hundred dollars a month
I've been thinking about claiming now because
It would provide a buffer in case my work lags as I get older
I could accellerate paying off the little bit of debt I have now
I could stash it in the bank and increase my savings
Do those "pros" exceed the "con" of getting a reduced benefit for the rest of my life? I am in good health. Females in the family tend to live to 80-90. Males tend toward heart disease and earlier death.
What would you do?
#1 yes, but only once you start to collect. He can't collect on your benefits until you collect on your benefits. But spousal benefit is only 50% of the higher earners benefits, so in this case it likely won't make a difference if he's already at 1/2 of yours.
My opinion on #2 is to wait, if this will be your primary income in retirement. A couple of hundred dollars can make a difference. If you have a pension/401k/other investments that will provide a good chunk of your retirement income, then it doesn't matter so much.
It is my understanding that once you turn 70 he must claim his own. Is that worth the hassle of switching twice? I also don't know if he can switch. It's my understanding from a friend, that if you stop taking your SS you have to pay back all benefits received. (She investigated this heavily about 8y ago so I don't know if that has changed.
I would wait to collect yours. Why? 8% annual increase up to age 70. Do you think you can get that return in the market and are your interest rates higher than that on your debt?
A lot of questions, not a lot of answers.
Question #1
My husband started claiming his benefits at age 64.
His benefits are about half of mine.
Can he claim a portion of MY benefits to increase his SS?
Question #2
I have two years before I'm 70, max SS benefit.
The difference if I wait instead of claiming now is a couple of hundred dollars a month
I've been thinking about claiming now because
It would provide a buffer in case my work lags as I get older
I could accellerate paying off the little bit of debt I have now
I could stash it in the bank and increase my savings
Do those "pros" exceed the "con" of getting a reduced benefit for the rest of my life? I am in good health. Females in the family tend to live to 80-90. Males tend toward heart disease and earlier death.
What would you do?
First question is about him receiving spousal benefits, and here is what I think, based on talking to ss last year with my husband: he will not receive bigger spousal benefits if you wait until 70, as they are calculated on what you would receive at full retirement age.
From an Aarp article on this question,
https://www.aarp.org/retirement/social-security/questions-answers/maximizing-spousal-social-security-benefit/
"If I wait until 70 to claim Social Security, will my spouse get a bigger benefit as well?
AARP (https://www.aarp.org/) | Comments: 0
En español (https://www.aarp.org/espanol/jubilacion/seguro-social/preguntas-respuestas/solicitar-a-los-70-para-beneficio-maximo-del-conyuge/?intcmp=AE-RET-TOSPA-TOGL-ES) | No. The most your spouse can receive on your work record is 50 percent of your primary insurance amount, which is the monthly benefit you are entitled to at full retirement age (https://www.aarp.org/retirement/social-security/questions-answers/social-security-full-retirement-age/)."
So if he receives half of what you receive at 68, there would be no increase in him getting yours, as that is calculated on what you would get at full retirement age. Obviously, check this out yourself with social security to see if this is correct.
Second is about whether you should take benefits now. Personally, I would, as for me, it would take until I was 82 to break even, and you have debt to pay off. I would also want to save it as emergency savings.
However, the advice of the others is correct; how much more can you make if you wait until 80, and it's like longevity insurance. But usually, that is based on folks who have already saved a bundle, are out of debt, and can self fund for those 2 years. If I were in debt and did not have much saved, I would take it early. But that's just me, and it goes against the common wisdom you'll read in things like Kiplinger retirement, who would agree with the advice you've gotten.
But for me, debt and lack of a big pile of savings would mean I would probably go taking it now and continuing to work and trying to pile it up between now and when I retired.
iris lilies
5-20-20, 11:56am
We have been through this sort of. My SS payout is more than DH’s, but his is about 3/4 of mine so no real advantage to him. When I die tho, I think he can opt to take mine (?)
since we are talking about Social Security, today I turn 66 years old, in the eyes of the Social Security administration “full retirement age. “
I started drawing Social Security a couple months ago because it was a new tax year and I want to get all the bureaucratic crap completed before gardening season started. So now I am fully on the government dole: Medicare, Social Security income, the whole array of social service entitlements. Yay for socialism!
DH turns 66 next October and is evaluating his option for SS draw.
Happy FRA Birthday, that's neat!
iris lilies
5-20-20, 12:01pm
Happy FRA Birthday, that's neat!
Thank you. Sometimes I wonder how many of you out there think “ that Iris Lily, have you noticed how she turns every thread into a thread about herself? “
It’s kind of embarrassing, please know that I am at least aware of it although it doesn't stop my poor behavior. Haha.
iris lilies
5-20-20, 12:17pm
Since this my Full Retirement Age Day, a Social Security administration celebratory event, I will take this opportunity to bitch and moan about the Feds removing a benefit that they had out there for years and then took away. We were mere weeks from qualifying for it age-wise. It would’ve allowed him to “file and suspend “ Which would, in a nutshell, give us several thousand more dollars per year in income.
I only mention this as a cautionary tale for those of you who are quite confident that all of your SS income will be there. It’s a good example of Social Security administration changing the rules, pulling the rug out from under you, beware.
catherine
5-20-20, 12:22pm
Yes, Happy birthday! Taurus the Bull, eh? Earth sign, eh? It all fits! :)
Since this my Full Retirement Age Day, a Social Security administration celebratory event, I will take this opportunity to bitch and moan about the Feds removing a benefit that they had out there for years and then took away. We were mere weeks from qualifying for it age-wise. It would’ve allowed him to “file and suspend “ Which would, in a nutshell, give us several thousand more dollars per year in income.
I only mention this as a cautionary tale for those of you who are quite confident that all of your SS income will be there. It’s a good example of Social Security administration changing the rules, pulling the rug out from under you, beware.
Which supports the idea of taking the benefit at 68 and not waiting, as that money could all be saved.
If someone earned 2000 a month (I am a low earner, so that's not me) then 2 years of that benefit is $48,000. Which could all be put in savings for retirement life.
If someone waits until they are 70, yes, they will earn 2320 instead, but will not have the $48,000 plus interest in the bank.
Yes, I was sorry to see file and suspend go.
Teacher Terry
5-20-20, 12:28pm
I would definitely wait until 70. Also once you sell the jersey house you can pay off any debt.
I can sure see why it's smart to wait. But maybe it depends on how much debt, and what's paid for? So if selling the big house eliminates the debt, then she would still have to know what she would have in the bank for savings and big ticket items down the road, right?
I still say the decision is impacted by how much there is in savings, and how much she could amass with an extra 2000 a month now, versus 2360 at 70. I guess it depends on how much she wants to earn now, and whether she wants to work til 70, doesn't it? And amount of debt and whether a paid off house is something that is preferred--lots of people like keeping a mortgage in retirement. Then the bigger ss at 70 makes more sense to me, if there is a mortgage.
Teacher Terry
5-20-20, 12:48pm
The only money they have if I remember correctly is SS and the house money and she wants to work until 70.
iris lilies
5-20-20, 4:21pm
Wait— catherine.
Since you work and earn good money, will you get ANYTHING at this time? SS money isnt automatically given to you, there is a formula for them withholding money when you exceed a ceiling of earnings.From what you said, you would exceed that ceiling very much.
At age 70 you get the full amount regardless how much you earn in a job.
Wait— catherine.
Since you work and earn good money, will you get ANYTHING at this time? SS mo ey isnt automatically given to you, there is a formula for them withholding money when you exceed a ceiling of earnings.From what you said, you would ex eed that ceiling very much.
No, not when you reach full retirement age, which I have. I can earn as much as I want.
All along I've assumed I would wait until 70 to collect, and I would retire at 70 as well. I'm trying to cut back on work a little (it's not working so far). I'm probably just going through that resentful season of the year when my friends (and some members of my family) are out boating and gardening-at-will, and doing whatever they want and I'm still working, so I'm trying to get creative with different possibilities.
But it all comes down to:
a) I should never have co-signed that mortgage for my MIL in 2007
b) I should never have co-signed at least 2-3 other loans in the 2000s
c) Taking a bite out of the reality apple, I definitely have to work until 70, and probably part time for a couple of years after that.
d) So, basically I agree with you all in that I'm better off waiting to collect.
Thanks for the reality check.
One good thing is, my son wants me to put the house on the market soon.. they are almost certain they are moving from the area before school starts.
Since this my Full Retirement Age Day, ....
Congratulations, and many happy returns!
rosarugosa
5-20-20, 5:23pm
Happy Birthday & FRA IL from a fellow Taurus!
Catherine, I agree with waiting. I like the longevity insurance aspect of SS, especially if this will be your sole source of income. I also wonder, relative to the collect early and save/invest the money strategy, how many people actually save the money. I'm sure some have the self-discipline to do so, but I'll bet more just increase their standard of living. So I think each of us has to ask honestly whether we are more likely to save or spend. I hit 62 last month, and despite my intention to wait until FRA, I can certainly feel the temptation to go for that one marshmallow now instead of two later! I could end up claiming earlier due to DH's change in work status, but I don't see any reason why I can't hold out for at least another year or two.
iris lilies
5-20-20, 8:45pm
Yes, Happy birthday! Taurus the Bull, eh? Earth sign, eh? It all fits! :)
hah, yep.
As far as your past financial transgressions, well – you’re in a not bad entirely situation right now. And that news about your New Jersey house selling is just really really good, I’d like to see you get out from under that.
I remember how, not too long ago, you kind of wondered aloud about retiring because you really enjoyed all of your work all the time. I knew at the time that someday you will want to get out from under those obligations. That doesn’t mean that you can’t keep a contract or so for part time work, you’re in a nice position where maybe you will want to. I don’t know how that works.
Does YNAB have a function where you can model two different futures, one with taking it at 68 and saving all of it, and one taking it at 70?
You can model in the debt repayment, how much and when that occurs, and whether you can do it solely with money from sale of NJ house.
As far as Rosa's great point about absorbing the extra into a higher standard of living now, the way to avoid that is to open an account at an online bank like Ally that is designated only for the Social Security money, and have it auto deposited there each month, and leave it alone. You would just pretend to yourself you weren't getting it yet.
That way, you could have saved something like 50,000 in the two years, and you can factor that into your models, one where you have that saved and one where you don't, but you are getting a higher monthly draw.
Then see when you breakeven, how many years.
Does YNAB have a function where you can model two different futures, one with taking it at 68 and saving all of it, and one taking it at 70?
You can model in the debt repayment, how much and when that occurs, and whether you can do it solely with money from sale of NJ house.
As far as Rosa's great point about absorbing the extra into a higher standard of living now, the way to avoid that is to open an account at an online bank like Ally that is designated only for the Social Security money, and have it auto deposited there each month, and leave it alone. You would just pretend to yourself you weren't getting it yet.
That way, you could have saved something like 50,000 in the two years, and you can factor that into your models, one where you have that saved and one where you don't, but you are getting a higher monthly draw.
Then see when you breakeven, how many years.
I actually did that a couple of months ago! I can't find it now, but I believe that the breakeven would be at age 78 (I would have accumulated more money by taking early and saving vs taking the full amount at 70), which is not great given I might have several more years after that.
IL, yes, I go through waves where I know I am so lucky to be able to pick and choose projects, work load, work from home, and make good money. But then sometimes I get whiney. Overall, I'm grateful, but mad at myself for not being in a better position. As you said, though, I'm not in a bad position, really.
So, here I am again.
I just called Social Security to find out what my benefits would be if I started collecting SS benefits now vs at age 70, in about 6 months.
It's a difference of about $100/mo. That's 1200/yr.
So is that a big deal? I am so tempted to cash in at this point, for the reasons in the OP. I could use it to ready my finances for a cheap retirement. I could alleviate some of the stress of a variable freelance income. I've given up on the idea of retiring fully at 70, so I'll probably bring in extra income anyway, for at least a couple of years.
Do I just pull the plug, or wait it out for 6 months?
Do I just pull the plug, or wait it out for 6 months?
1) Are you unhappy with your current situation? 2) do you have alternate activities in mind you'd rather be doing for the next 6 monsh? 3) are you under any contractual obligations with clients?
1) Are you unhappy with your current situation? Not unhappy--just antsy. 2) do you have alternate activities in mind you'd rather be doing for the next 6 monsh? Alternate activities would not be the goal of taking SS now--it would be to pay off as much total debt as possible. I'm handcuffed to the work for a while, no matter what. Full time babysitting or gardening--I'm looking at 2023/2024. 3) are you under any contractual obligations with clients? I have no plans to jettison any particular client at this point. I'll get more selective in 2022. I have no contractual obligations
So to be clear, I don't plan on retiring--just collecting SS.
frugal-one
8-25-21, 3:04pm
I read somewhere that if you took SS at age 62 you would be ahead of the game until age 80... the breakeven point. Guess it depends on how long you think you will live. I took SS at 62. I would rather invest my own money than let Uncle Sam use it. Also, there is always talk of SS be discontinued or ???
Here is the other confounding factor. I have earned about 20% less in 2020 and anticipate to be about the same in 2021 as in 2020. A lot of it has to do with COVID. And frankly, I don't want to work 20% harder at this point. So, my estimated benefits are not going up, they are actually depreciating a little.
Whether to take SS early is both a gamble and a tax decision. What is your gamble on how long you will live? Do you need it or just want it and nothing wrong with that? How will the additional SS affect your tax consequences and increased Medicare premiums (if your income is high enough)?
All this gives me a big headache so we just started ours at 62. We did not need it but it is done.
All this gives me a big headache so we just started ours at 62. We did not need it but it is done.
Hmm.. and you're the tax guru. I suspect that $100/mo isn't going to make a huge difference, especially if I'm diverting the money into debt service, which is several hundred dollars a month.
The extra income is an interesting twist though. Something to consider.
FWIW, what will $100/mth buy? It pays for my dog's annual expenses OR my monthly internet and haircut OR my annual car maintenance expenses including oil changes, seasonal tire exchange and storage OR annual eye exam and new glasses OR dental exam and two scaling appointments OR my entire theatre and operaHD tickets for the year.
I don''t understand the US SS system but $100/mth less income is a lot of money less to me.
FWIW, what will $100/mth buy? It pays for my dog's annual expenses OR my monthly internet and haircut OR my annual car maintenance expenses including oil changes, seasonal tire exchange and storage OR annual eye exam and new glasses OR dental exam and two scaling appointments OR my entire theatre and operaHD tickets for the year.
I don''t understand the US SS system but $100/mth less income is a lot of money less to me.
That's true, but I still have debt I want to get rid of. So if the debt has carrying charges of certain percentage, by throwing the SS at the debt, I reduce the amount of interest I ultimately pay. That's money in my pocket, too.
That's true, but I still have debt I want to get rid of. So if the debt has carrying charges of certain percentage, by throwing the SS at the debt, I reduce the amount of interest I ultimately pay. That's money in my pocket, too.
That should be easy to calculate. Calculate the reduction in interest of you put all of your $100 less but six months sooner social aecurity income now into debt reduction. Will that reduction of interest offset the loss of $1200 per year of SS for, say, the next ten years? If not then you are probably better off waiting six months to get the bigger benefit. (You should be able to ignore the effects of inflation on that ten year reduction of income since SS theoretically keeps pace with inflation.)
GeorgeParker
8-25-21, 8:54pm
Here is the other confounding factor. I have earned about 20% less in 2020 and anticipate to be about the same in 2021 as in 2020. A lot of it has to do with COVID. And frankly, I don't want to work 20% harder at this point. So, my estimated benefits are not going up, they are actually depreciating a little.The monthly SS benefit you will actually receive is based on your 35 highest earning years. And IIRC some kind of inflation adjustment is applied to your earnings so your early years and late years will have equal weight.
The question you need to be asking yourself is, "Do you feel lucky?" If your 2020 or 2021 income is among your 35 highest, your lowest earning year will fall off the list and your actual SS benefit will go up. If neither year is among your 35 highest, neither will be added to the list and they will have no effect on your actual benefit. IMO if you think the current year will be among your 35 highest, you should keep working because every dollar you make will count. If the current year won't be among your 35 highest, go ahead and quit if you want to.
The SS estimates you're looking at are like weather forecasts; a best guess based on you earning the same amount this year that you earned last year.
True story: I applied for SS in January of 20xx. During the 90 days I had to wait for my SS benefits to start, I earned a bit more than $7000, and one of my 35 highest earning years was less than $7000. So, my tiny $7000 20xx income pushed a worse year off my record and increased the SS benefit I'm receiving.
GeorgeParker
8-25-21, 9:06pm
$100/month less income is a lot of money less to me.Everything is relative in it's own way.
The average Social Security retirement benefit in 2021 is $1,543 a month. $100 is about 6.5% of that.
But for Bill Gates, a $100 bill is what he uses to scrapes dog crap off his shoe.
Personally, I wouldn't concern myself too much about waiting 6 months for the additional $100. I'm not sure what your SS benefit will be but for the purposes of comparison I'll use an example of $3000 per month. By applying 6 months early you'll receive $18,000 during the time you'll otherwise be waiting. If you do decide to wait the additional 6 months it will take you 180 months at an additional $100 per month to break even.
I'd go ahead and apply now.
I knew about the 35 highest years calculation. Is it from at the time of filing for benefits or from the time of full retirement age?
mschrisgo2
8-25-21, 9:38pm
I spent some time on ssa.gov poking around and working up scenarios. In the end, I realized I had really already made up my mind and I was looking for justification.
it came in nearly the same format that Alan detailed. Listen to Alan, lol
GeorgeParker
8-26-21, 12:57am
I knew about the 35 highest years calculation. Is it from at the time of filing for benefits or from the time of full retirement age? The earnings record SS shows for me goes all the way back to a summer job I had in the mid-1960s, and my 35 highest years are widely scattered across that whole range. I applied for SS when I was barely 69. The $7000 I earned in 20xx was earned after I applied for SS, it bumped a year when I earned less than $4000 off of my highest 35 years list. So it's not based on retirement age or filing date, it's the 35 highest earning years from your entire work history.
The calculation made when you apply includes only the years that you've already filed income tax forms for, but if you earn money after you file, that income will be noted by SS when your income tax form for that year is processed, and if that new income increases your monthly benefit, SS will automatically adjust your future benefit and send you a check for the additional money you would have received if SS had known about that income at the time you applied.
I would agree with Alan here, but I understand, the hundred dollars a month is a lot of money for anyone.
Still, if you could get into paying the debt off faster, there is a lot to that. On the other hand, there is a lag of about two months when you apply; you won't get it for a bit so it might be more like four months for the purposes of calculation.
Happystuff's post on another thread made me think to update you guys on my decision... which defaulted to no decision. I'm going to turn 70 in March. I just submitted my application, so by the time they get around to calling me and approving the amount, I'll have used the time I was thinking of jumping on early. So I'll be jumping on full boat, and continuing to work. On one hand, I'm glad I waited, but OTOH, wow, time goes fast. I didn't realize how quickly 70 was going to creep up on me.
Good for you! Sounds like your decision kind of evolved naturally, and glad you will get more money!
happystuff
1-8-22, 11:40am
Good for you, catherine! I don't think I can hang on until I'm 70 - at least not in this job. Dh, on the other hand, has finally found a job that he is good at and - more importantly - really likes. Not sure how long he will stay with it though.
rosarugosa
1-8-22, 12:08pm
Thanks for the update, Catherine. I think it's probably the best way to go anyway. I believe you are in good health, and if I recall correctly, you don't have pensions or other sources of income coming in, so getting the max from SS is great.
Teacher Terry
1-8-22, 2:47pm
I think you made a good decision waiting.
San Onofre Guy
1-19-22, 1:06pm
For those doing the same calculations, if you continue to earn FICA wages, it generally is beneficial to delay SS benefits due to the tax implications.
but with any financial scheme, your mileage may vary
For those doing the same calculations, if you continue to earn FICA wages, it generally is beneficial to delay SS benefits due to the tax implications.
but with any financial scheme, your mileage may vary
True, but I'll be 70 in March, so there is no sense in delaying beyond that. I realize there are tax implications when I still have a decent self-employed income, but it's more important to me that I take the money and increase my solvency for retirement.
I would think another reason to delay benefits if one is still working would be the fact that the benefit amount t is calculated on your highest 35 years of earnings. If one is currently earning enough that’s that year would be included, bumping out a lower earning year, it would be better to wait and have the current year as part of the benefit calculation. In Catherine’s case that probably wouldn’t make sense but someone younger would want to consider that.
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