One More Social Security Question --- Please

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
Texas Green
Posts: 10
Joined: Sun May 23, 2010 2:47 pm

One More Social Security Question --- Please

Post by Texas Green »

SScritic and others: I have read through many of the prior threads and a few outside sources, but for whatever reason I find this to be a very confusing topic. So forgive me if I am asking a question substantially similar to one that may have been recently asked (i.e., a similar combination of factors), but I just want to be clear on this.

Husband (H) is 60 and may retire in 2013. Wife (W) is a few months younger (but let’s say 60, also). W works occasionally, but has essentially retired (very limited income).

Husband’s PIA: $2,508/month (at age 66)
Wife’s PIA: $2,277/month (at age 66)

Age at which both become eligible for FRA is 66.

SS benefits are not expected to be critical to retirement income because of other assets. Seeking a strategy to maximize benefits.

Key: H has had health issues and a family history of early death. W is in very good health with longevity in her family. Because of the health factors, husband would propose filing to begin taking social security benefits at age 62.

Could W later, at age 66 (FRA), file for benefits based upon H’s earnings record (spousal benefits), and then switch to filing for benefits based upon her own earnings record at age 70? I believe I understand that in such a case W would thus be making a “restricted application for spousal benefits” at FRA.

Is there any obvious downside to such a course of action, assuming that this can be done and given the facts (and concerns) as stated? Is there a strategy that better fits the circumstances and the objective of early filing for H while maximizing benefits to W? Given the relative parity of the two PIA numbers, how much should “survivor’s benefits” weigh in the decision?

Thanks much for any insights. I have learned a great deal from this Board.
User avatar
ObliviousInvestor
Posts: 4212
Joined: Tue Mar 17, 2009 9:32 am
Contact:

Re: One More Social Security Question --- Please

Post by ObliviousInvestor »

Texas Green wrote:Could W later, at age 66 (FRA), file for benefits based upon H’s earnings record (spousal benefits), and then switch to filing for benefits based upon her own earnings record at age 70? I believe I understand that in such a case W would thus be making a “restricted application for spousal benefits” at FRA.
Yes. And, correct.

However, because H has the higher PIA, I would consider flipping the strategy around so that it is W who is filing early.

Note that having the higher earning spouse delay benefits increases the amount the couple receives as long as either spouse is alive. So it isn't terribly relevant that H is the one with the shorter life expectancy.
Mike Piper | Roth is a name, not an acronym. If you type ROTH, you're just yelling about retirement accounts.
User avatar
archbish99
Posts: 1649
Joined: Fri Jun 10, 2011 6:02 pm

Re: One More Social Security Question --- Please

Post by archbish99 »

Well, the strategy that maximizes monthly income is:
  • Husband files and suspends at FRA; collects nothing at this time
  • Wife files restricted application for spousal benefits at FRA: Collects $1254/month for ~four years
  • Both collect maximum amount at age 70: $6316/month for however long he lives
  • She collects his increased amount ($3310/month) for the remainder of her life after he dies
Let's say he lives to 72 and she lives to 90. This strategy would net:
  • Ages 62-65: $0/year, $0 total
  • Ages 66-69: $15k/year, $60k total
  • Ages 70-71: $76k/year, $212k total
  • Ages 72-89: $40k/year, $887k total
However, you would increase income over time with something that looks more like this:
  • Wife files at age 62, collecting 75% of PIA: $1708/month
  • Husband files restricted application at FRA, collecting an additional $1138/month for four years
  • Husband collects maximum amount at age 70: $3310/month (plus her ongoing $1708/month)
  • She collects his increased amount ($3310/month) for the remainder of her life after he dies
This would stretch it out more:
  • Ages 62-65: $20k/year, $82k total
  • Ages 66-69: $34k/year, $219k total
  • Ages 70-71: $60k/year, $339k total
  • Ages 72-89: $40k/year, $1M total
Both depend on maximizing the survivor benefit. You generally want the higher-earner to delay as long as possible. If the higher earner also has the shorter life expectancy, the lower earner should file as soon as possible since the time collecting on that separate benefit is limited.

There might be a strategy with higher total income, but it probably relies on knowing the exact longevity of each.

Your proposed strategy was:
  • Husband files at 62: $1880/month
  • Wife files restricted application at FRA: additional $1254/month
  • Wife switches to her own benefit at age 70: $3006/month
  • When husband dies, no survivor benefit
Using my randomly selected longevity numbers, that gives:
  • Age 62-65: $22k/year, $90k total
  • Age 66-69: $38k/year, $240k total
  • Age 70-71: $58k/year, $358k total
  • Age 72-89: $36k/year, $971k total
I'm not a financial advisor, I just play one on the Internet.
sscritic
Posts: 21853
Joined: Thu Sep 06, 2007 8:36 am

Re: One More Social Security Question --- Please

Post by sscritic »

While having the higher earner delay until 70 is generally the better strategy, that assumes the higher earner lives until 70. If the higher earner dies at 69, that sets one of the benefits. Note that the "few months" might matter, but perhaps not in the way I am thinking right now (let's come back to that later).

Using your numbers:

H: 2508 PIA at 66; 2708 at 67; 2909 at 68; 3109 at 69; 3310 at 70.
W: 2277 PIA at 66; 2459 at 67; 2641 at 68; 2823 at 69; 3005 at 70.

If you knew H was going to die before age 68, you get the maximum last to die benefit of 3005 by having the wife delay to 70. Using months, you could find the "break-even" (not in the sense it is usually used) point (or age).

This flaw in the W claim early strategy is eliminated with the "no one collects until FRA" strategy laid out by archbish99.

Example:
Husband files and suspends at FRA; collects nothing at this time
Wife files restricted application for spousal benefits at FRA: Collects $1254/month until age 70 or H dies, whichever comes first.
a) H death before 70: W can collect as widow and still delay her own until 70 if death is before break-even; otherwise she stays widow for life.
b) H death after 70: as laid out by archbish99.

P.S. I guess I am not going to worry about the months. My thinking may be wrong; I am not even sure what I was thinking.

Edit added:
But archbish99 is also correct that by having W delay, you are giving up benefits for up to 8 years. If H dies at 70, W only gets the spousal benefits for less than 48 months (ah, here's where those "few months" come in). Since starting early doesn't cost W when she is a widow, you really have to do four (or more) workups: H dies at 67, H dies at 68, H dies at 69, H dies at 70.
Topic Author
Texas Green
Posts: 10
Joined: Sun May 23, 2010 2:47 pm

Re: One More Social Security Question --- Please

Post by Texas Green »

ObliviousInvestor, Archbish99, and sscritic:

Thank you all very much for your informative and amazingly rapid responses. You have provided an excellent framework that my wife and I can use to make a decision. Thanks for helping me think through the implications.

Will the ANYPIA software allow me to run the permutations you suggest? I have already downloaded the model and entered the data for the two of us.

Unfortunately, the data is not completely up-to-date as it is taken from paper statements issued in 2010, I believe. No longer receiving annual statements via the mail is a bit of a disappointment. Not that I have any reservations about accessing the statements on line; it is instead because the SSA has “partnered” with one of the credit reporting agencies, and my attempts at logging in have failed, likely due to the fact that I have placed a credit freeze on my credit reporting accounts (or it could be because of a recent move). I will see what may work best in order to get the freeze temporarily lifted for this purpose. I did order hard-copy statements, but that was two months ago and I have not heard anything back as yet. I really don’t want to go in person to the local SSA office if I can avoid doing so. I had to do this once to get an error corrected and it took more time than I would have thought possible. The employees were incredibly busy. Oh, well. Anyway, this is just an aside. Other people have real problems.

Again, sincere thanks for the help.
sscritic
Posts: 21853
Joined: Thu Sep 06, 2007 8:36 am

Re: One More Social Security Question --- Please

Post by sscritic »

Texas Green wrote: No longer receiving annual statements via the mail is a bit of a disappointment. Not that I have any reservations about accessing the statements on line; it is instead because the SSA has “partnered” with one of the credit reporting agencies, and my attempts at logging in have failed, likely due to the fact that I have placed a credit freeze on my credit reporting accounts (or it could be because of a recent move). I will see what may work best in order to get the freeze temporarily lifted for this purpose. I did order hard-copy statements, but that was two months ago and I have not heard anything back as yet. I really don’t want to go in person to the local SSA office if I can avoid doing so.
I thought they had resumed mailing paper to those of a certain age, but it looks like they stopped.

Is this your problem?
You cannot create a my Social Security account online if you have a security freeze, fraud alert, or both on your Experian credit report. You first must ask Experian to remove the freeze or alert. For more information, please visit:

Experian security freeze; or
Experian fraud alert.
To create a my Social Security account in person without removing the security freeze or fraud alert, please visit your local Social Security office.
http://ssa-custhelp.ssa.gov/app/answers ... /related/1

So if you don't want to go to an office, you have to remove your freeze at Experian just long enough to create your my Social Security account. Then you can freeze it again.

If you just want your earnings, you can get them but it costs, e.g. $15 for certified annual earnings or $17.50 for two (non-certified) years showing all your employers. [This is all news to me.] You also have to wait four months.
http://ssa-custhelp.ssa.gov/app/answers ... l-security
http://www.socialsecurity.gov/online/ssa-7050.pdf
Topic Author
Texas Green
Posts: 10
Joined: Sun May 23, 2010 2:47 pm

Re: One More Social Security Question --- Please

Post by Texas Green »

Yes, that looks to be the issue (the credit freeze).

I'll take the steps to seek a temporary unfreeze. Thanks again.

If, in fact, the SSA does send paper copies to people of at least a certain age, I guess I haven't yet achieved that age. Maybe I should look upon this as being the silver lining!
sscritic
Posts: 21853
Joined: Thu Sep 06, 2007 8:36 am

Re: One More Social Security Question --- Please

Post by sscritic »

Texas Green wrote:Yes, that looks to be the issue (the credit freeze).

I'll take the steps to seek a temporary unfreeze. Thanks again.

If, in fact, the SSA does send paper copies to people of at least a certain age, I guess I haven't yet achieved that age. Maybe I should look upon this as being the silver lining!
As I said, I think they stopped.

A rough history:
They sent out statements to old people
They sent out statement to everyone
They sent out statements to no one
They said they would have an online system
They took longer than they thought to get the online system working
They sent out statements to old people again
They got the online system working
They stopped sending statements

A sampling of links from google social security annual statement which fill in some dates:
In light of the current budget situation, we have suspended the Request a Social Security Statement service.
http://ssa-custhelp.ssa.gov/app/answers ... -statement (updated yesterday)
Earlier this year, Social Security said that to save money it would stop sending out those annual statements that tell us how much we can expect to receive when we retire. Are they ever going to bring back those statements?

A. Social Security plans to resume sending them out soon — but only to people 60 and older.
http://www.aarp.org/work/social-securit ... ement.html from 2011
But there's good news: Social Security has resumed mailing paper statements to workers 60 and older who aren't already receiving benefits. And, they recently launched a new Social Security Statement tool that allows you to access the same information online.
http://www.huffingtonpost.com/jason-ald ... 58196.html late in 2012
UPDATED: 2:20 p.m.: Those Social Security statements you once got each year in the mail? They were supposed to be available online by now. They aren't, and it's not clear when they'll be there or whether they'll be mailed instead, as promised.

The Social Security Administration continues to work to get annual statements online, a spokesman said yesterday. UPDATE: Agency spokeswoman Dorothy Clark clarified today that the agency plans to resume sending statements to people age 60 and older who are not receiving benefits.
http://www.oregonlive.com/finance/index ... ity_s.html from early in 2012

Now you put them in the correct order. :)
Carl53
Posts: 2687
Joined: Sun Mar 07, 2010 7:26 pm

Re: One More Social Security Question --- Please

Post by Carl53 »

sscritic wrote:To create a my Social Security account in person without removing the security freeze or fraud alert, please visit your local Social Security office.
I cannot recommend this route. I made three visits to my not so local office over several months, received a password via mail, made two call inquiries as to how to overcome obstacles/error messages and still am unable to gain access. The local office does not understand why, but does something and you are left to try it online after you've left only to find that it is not fixed. The toll free number they provide in the letter is incorrect, when you get someone to tell you the correct number, you get a HQ customer service rep that is unable to physically rectify the problem and only able to send you back to the local rep.
sscritic
Posts: 21853
Joined: Thu Sep 06, 2007 8:36 am

Re: One More Social Security Question --- Please

Post by sscritic »

Carl53 wrote:
sscritic wrote:To create a my Social Security account in person without removing the security freeze or fraud alert, please visit your local Social Security office.

I cannot recommend this route. I made three visits to my not so local office over several months, received a password via mail, made two call inquiries as to how to overcome obstacles/error messages and still am unable to gain access. The local office does not understand why, but does something and you are left to try it online after you've left only to find that it is not fixed. The toll free number they provide in the letter is incorrect, when you get someone to tell you the correct number, you get a HQ customer service rep that is unable to physically rectify the problem and only able to send you back to the local rep.
Are you sure you know who wrote what you quoted? It doesn't appear so. Where did I write the words that you have attached my name to? I try to protect my name, for good or for bad, so please only attach my name to the garbage I write, not the garbage written by others. :)
Carl53
Posts: 2687
Joined: Sun Mar 07, 2010 7:26 pm

Re: One More Social Security Question --- Please

Post by Carl53 »

sscritic wrote:
Carl53 wrote:
sscritic wrote:To create a my Social Security account in person without removing the security freeze or fraud alert, please visit your local Social Security office.

I cannot recommend this route. I made three visits to my not so local office over several months, received a password via mail, made two call inquiries as to how to overcome obstacles/error messages and still am unable to gain access. The local office does not understand why, but does something and you are left to try it online after you've left only to find that it is not fixed. The toll free number they provide in the letter is incorrect, when you get someone to tell you the correct number, you get a HQ customer service rep that is unable to physically rectify the problem and only able to send you back to the local rep.
Are you sure you know who wrote what you quoted? It doesn't appear so. Where did I write the words that you have attached my name to? I try to protect my name, for good or for bad, so please only attach my name to the garbage I write, not the garbage written by others. :)
Yes using the Boglehead quote feature makes it appear that the quote you included in your post is originally yours. My bad, but it is an accurate quote of the reference you cite and posted.
http://ssa-custhelp.ssa.gov/app/answers ... /related/1
My past experience in trying to act upon the original SS reference was less than satisfactory.
sscritic
Posts: 21853
Joined: Thu Sep 06, 2007 8:36 am

Re: One More Social Security Question --- Please

Post by sscritic »

Carl53 wrote: Yes using the Boglehead quote feature makes it appear that the quote you included in your post is originally yours. My bad, but it is an accurate quote of the reference you cite and posted.
http://ssa-custhelp.ssa.gov/app/answers ... /related/1
Exactly. When quoting someone quoting someone, we used to use double quotes and single quotes:

Carl53 said, "why can't sscritic admit that he wrote 'To create a my Social Security account in person without removing the security freeze or fraud alert, please visit your local Social Security office'?"

Using the quote feature, you still need two quotes.
Carl53 wrote: Why can't sscritic admit that he wrote
To create a my Social Security account in person without removing the security freeze or fraud alert, please visit your local Social Security office
?
P.S. I certainly accept your experience as being a valid one worth reporting.
Carl53
Posts: 2687
Joined: Sun Mar 07, 2010 7:26 pm

Re: One More Social Security Question --- Please

Post by Carl53 »

SS has changed their security and those logging into my social security will need to register again.

"IMPORTANT

We upgraded our password services on January 5, 2013. If you receive benefits and currently have a password under our old system, your password no longer works. You must create a my Social Security account to access the same or similar online services.



BTW, I finally did a temp thaw on my credit to gain access. Glad I did not do this previously as I would have to do it again with the SS notice.
suming
Posts: 69
Joined: Thu Mar 15, 2012 3:00 pm

Re: One More Social Security Question --- Please

Post by suming »

My husband and I are having pretty much the same SS amounts and similar health situation (his mother died as age of 63, 8 years after diagnosed of diabetics and he has diabetics too). The only difference is he is 2 year older than me. Do I use different strategy?
(Sorry, OP. I don't mean to interrupt your post. I just don't want everyone repeat their suggestion in another post.)
Post Reply