Help, reaching my full retirement age of 66

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Help, reaching my full retirement age of 66

Postby rich137 » Sun Mar 24, 2013 10:31 am

In July, 2013 I will reach my full retirement age of 66. My full retirement benefit will be $2329. I plan to start receiving my benefits as of July, 2013.

In September, 2014 my wife will reach her full retirement age of 66. Since she didn't work full-time the payments on her record are $231 at full retirement age.

We also plan to claim her spousal benefits in July, 2013. Her spousal benefit will be $2329×45.1% = $1050.

1. Is there anything else I should consider? File and suspend?

2. I am still working and I intend to continue to work. I am president of a small S corporation. I was under the impression I could not collect Social Security earlier unless I retired. That I would have to fill out a self employment/corporate officer questionnaire. Social Security's publication how work affects your benefits reads 'if you work between 15 and 45 hours a month, you will not be considered retired'.

That's why I waited till full retirement age to claim benefits. The Social Security retirement planner reads 'starting with the month you reach full retirement age, you can get your benefits with no limit when your earnings'.

I would appreciate any help or advice, I realize this is a big decision and I do not want to make a mistake.

Thanks,

Rich
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Re: Help, reaching my full retirement age of 66

Postby Cut-Throat » Sun Mar 24, 2013 10:46 am

I would not take S.S. until Age 70, especially since you are still working.

I assume that you don't need the money now, right?.....the increase in benefits will average about 8% a year from 66 to age 70
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Re: Help, reaching my full retirement age of 66

Postby 22twain » Sun Mar 24, 2013 10:55 am

If you don't "need" your own SS benefit right now because you're still working, then you should delay collecting benefits until you're 70 or stop working, whichever comes first, to take advantage of the resulting increase. However, in order for your wife to collect her spousal benefit, you need to file for your own first. Therefore you should "file and suspend" in July 2013 or soon afterwards.

Unless, of course, you think you'll come out ahead by starting to collect your benefit in July, and investing it. Arguments about this pop up regularly here and in other financial forums.
Last edited by 22twain on Sun Mar 24, 2013 10:59 am, edited 1 time in total.
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Sun Mar 24, 2013 10:57 am

Cut-Throat wrote:I would not take S.S. until Age 70, especially since you are still working.

I assume that you don't need the money now, right?.....the increase in benefits will average about 8% a year from 66 to age 70


What about my wife's Social Security? Take it now?

I sort of feel that a bird in the hand is worth two in the bush. I am a little uneasy about waiting until age 70. Even though it's not too far away. :D

You are right we really don't need the money right now.
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Sun Mar 24, 2013 11:00 am

22twain wrote:If you don't "need" your own SS benefit right now because you're still working, then you should delay collecting benefits until you're 70 or stop working, whichever comes first. However, in order for your wife to collect her spousal benefit, you need to file for your own first. Therefore you should "file and suspend" in July 2013 or soon afterwards.


Thank you for the feedback, would she then get the approximate amount of $1050 a month?
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Re: Help, reaching my full retirement age of 66

Postby 22twain » Sun Mar 24, 2013 11:01 am

Your wife doesn't gain anything by delaying her spousal benefit, because it's based on your age-66 amount and won't go up any further.

My understanding is that it's 50% of the age-66 amount (your Principal Insurance Amount = PIA), but I don't know enough to recognize the 45.1% that you cited.
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Sun Mar 24, 2013 11:12 am

22twain wrote:Your wife doesn't gain anything by delaying her spousal benefit, because it's based on your age-66 amount and won't go up any further.

My understanding is that it's 50% of the age-66 amount (your Principal Insurance Amount = PIA), but I don't know enough to recognize the 45.1% that you cited.


It's from how your Social Security benefit is reduced. If I start getting benefits at age 66 and my spouse starts receiving benefits at age 64 and 10 months my Spouses benefit is reduced to 45.1% of my full retirement benefits.

Thanks very much for your feedback.
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Re: Help, reaching my full retirement age of 66

Postby Cut-Throat » Sun Mar 24, 2013 11:56 am

rich137 wrote:I sort of feel that a bird in the hand is worth two in the bush. I am a little uneasy about waiting until age 70. Even though it's not too far away. :D


You need to look at your whole retirement portfolio and how much you get to spend in retirement.....rather than the bird in hand.....

Leaving S.S. 'On the Table' when you die, is the same as leaving money in your portfolio when you die. Unless of course you are planning on leaving money to heirs. Your wife will benefit greatly, if you die first and she lives well into her 90s. She will be receiving the larger S.S. check if you delay to age 70. So 'The bird in hand' is irrelevant.
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Re: Help, reaching my full retirement age of 66

Postby gerntz » Sun Mar 24, 2013 12:45 pm

rich137 wrote:
Cut-Throat wrote:I would not take S.S. until Age 70, especially since you are still working.

I assume that you don't need the money now, right?.....the increase in benefits will average about 8% a year from 66 to age 70


What about my wife's Social Security? Take it now?

I sort of feel that a bird in the hand is worth two in the bush. I am a little uneasy about waiting until age 70. Even though it's not too far away. :D

You are right we really don't need the money right now.

Well waiting is probably worth more than one bird in hand if your income & thus taxes will be lower whenever you retire. A) Besides the 8% benefit gain/yr till 70, you'll likely keep a bigger percentage of the benefit after taxes with lower income in retirement. B) Assuming your wife outlives you, she'll retain a larger SS benefit after you're gone the longer you wait. C) SInce you don't need it, her waiting till she's 66 is also an outsize gain.
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Re: Help, reaching my full retirement age of 66

Postby gerntz » Sun Mar 24, 2013 12:46 pm

rich137 wrote:
22twain wrote:Your wife doesn't gain anything by delaying her spousal benefit, because it's based on your age-66 amount and won't go up any further.

My understanding is that it's 50% of the age-66 amount (your Principal Insurance Amount = PIA), but I don't know enough to recognize the 45.1% that you cited.


It's from how your Social Security benefit is reduced. If I start getting benefits at age 66 and my spouse starts receiving benefits at age 64 and 10 months my Spouses benefit is reduced to 45.1% of my full retirement benefits.

Thanks very much for your feedback.

YES.
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Re: Help, reaching my full retirement age of 66

Postby Austintatious » Sun Mar 24, 2013 1:38 pm

Just yesterday, I sat in on an investment webinar presented by Morningstar, part of which included an excellent albeit short discussion on SS, including some discussion on the strategies involved in taking benefits. SS experts Mary Beth Franklin and Mark Miller gave very high marks to http://www.socialsecuritysolutions.com, an online service that advises folks on their options. They praised the quality and value of the service this entity provides, saying that the relatively small fee one pays for the service can result in tens if not hundreds of thousands of dollars that might otherwise be missed by the poorly informed. You might want to consider availing yourself of their services.
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Sun Mar 24, 2013 5:49 pm

I am still working and I intend to continue to work. I am president of a small S corporation. I was under the impression I could not collect Social Security earlier then full retirement age unless I actually am retired. That I would have to fill out a self employment/corporate officer questionnaire. Social Security's publication how work affects your benefits reads 'if you work between 15 and 45 hours a month, you will not be considered retired'.

Can I continue to work in a business that I have set up as a S corporation and collect Social Security if I have reached my full retirement age of 66?

Thanks, I appreciate the feedback.
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Re: Help, reaching my full retirement age of 66

Postby ObliviousInvestor » Sun Mar 24, 2013 6:03 pm

rich137 wrote:I was under the impression I could not collect Social Security earlier then full retirement age unless I actually am retired.

You can file for benefits, but, depending on how much you earn, the earnings test may result in you receiving a reduced benefit or nothing at all. (Note, however, that these dollars are not exactly lost. When you reach FRA, your benefit would then be recalculated to account for the months in which you did not actually receive a benefit due to the earnings test.)

This page may be of use: http://www.ssa.gov/oact/cola/rtea.html
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Re: Help, reaching my full retirement age of 66

Postby BostonBoy » Sun Mar 24, 2013 6:22 pm

I would recommend looking at the T-Rowe Price Social Security calculator. It's free and the best one out there that I've come across.
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Sun Mar 24, 2013 6:29 pm

ObliviousInvestor wrote:
rich137 wrote:I was under the impression I could not collect Social Security earlier then full retirement age unless I actually am retired.

You can file for benefits, but, depending on how much you earn, the earnings test may result in you receiving a reduced benefit or nothing at all. (Note, however, that these dollars are not exactly lost. When you reach FRA, your benefit would then be recalculated to account for the months in which you did not actually receive a benefit due to the earnings test.)

This page may be of use: http://www.ssa.gov/oact/cola/rtea.html


Thank you Mike, I'm a big fan of yours and of your blog and your weekly Roundup and your books! :happy

I believe that would not be a factor since I'm not filing for benefits until I reach my FRA. Do you agree?
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Sun Mar 24, 2013 6:34 pm

BostonBoy wrote:I would recommend looking at the T-Rowe Price Social Security calculator. It's free and the best one out there that I've come across.


Thanks for the information BostonBoy , I will check into it right away.
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Re: Help, reaching my full retirement age of 66

Postby ObliviousInvestor » Sun Mar 24, 2013 6:35 pm

rich137 wrote:
ObliviousInvestor wrote:
rich137 wrote:I was under the impression I could not collect Social Security earlier then full retirement age unless I actually am retired.

You can file for benefits, but, depending on how much you earn, the earnings test may result in you receiving a reduced benefit or nothing at all. (Note, however, that these dollars are not exactly lost. When you reach FRA, your benefit would then be recalculated to account for the months in which you did not actually receive a benefit due to the earnings test.)

This page may be of use: http://www.ssa.gov/oact/cola/rtea.html


Thank you Mike, I'm a big fan of yours and of your blog and your weekly Roundup and your books! :happy

I believe that would not be a factor since I'm not filing for benefits until I reach my FRA. Do you agree?

I'm happy to hear that you enjoy the blog/books. :)

And, yes, I agree that the earnings test is not a factor if you are not filing for your retirement benefit until you reach your FRA. My point was just that it is not necessarily impossible to be a) younger than FRA, b) working, and c) collecting a Social Security retirement benefit.
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Re: Help, reaching my full retirement age of 66

Postby Cut-Throat » Sun Mar 24, 2013 6:46 pm

BostonBoy wrote:I would recommend looking at the T-Rowe Price Social Security calculator. It's free and the best one out there that I've come across.


Unfortunately for me.

At this point in time, the Social Security Benefits Evaluator is not able to offer suggestions for couples with more than a six year difference in age. Please know that we are currently working to expand the tool's capabilities. Please check back regularly.
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Sun Mar 24, 2013 7:09 pm

ObliviousInvestor wrote:
rich137 wrote:
ObliviousInvestor wrote:
rich137 wrote:I was under the impression I could not collect Social Security earlier then full retirement age unless I actually am retired.

You can file for benefits, but, depending on how much you earn, the earnings test may result in you receiving a reduced benefit or nothing at all. (Note, however, that these dollars are not exactly lost. When you reach FRA, your benefit would then be recalculated to account for the months in which you did not actually receive a benefit due to the earnings test.)

This page may be of use: http://www.ssa.gov/oact/cola/rtea.html


Thank you Mike, I'm a big fan of yours and of your blog and your weekly Roundup and your books! :happy

I believe that would not be a factor since I'm not filing for benefits until I reach my FRA. Do you agree?

I'm happy to hear that you enjoy the blog/books. :)

And, yes, I agree that the earnings test is not a factor if you are not filing for your retirement benefit until you reach your FRA. My point was just that it is not necessarily impossible to be a) younger than FRA, b) working, and c) collecting a Social Security retirement benefit.


What about the self employment/corporate officer questionnaire?
Social Security's publication how work affects your benefits reads 'if you work between 15 and 45 hours a month, you will not be considered retired'.
Do you know if that's a factor if you reach the FRA?

Thanks for your help.
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Sun Mar 24, 2013 7:12 pm

rich137 wrote:
BostonBoy wrote:I would recommend looking at the T-Rowe Price Social Security calculator. It's free and the best one out there that I've come across.


Thanks for the information BostonBoy , I will check into it right away.


The Rowe Price Social Security calculator Is very impressive. It's simple and it gives you a lot of information. I like that you can compare different scenarios.

Thanks for a great tip!
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Re: Help, reaching my full retirement age of 66

Postby ObliviousInvestor » Sun Mar 24, 2013 7:28 pm

rich137 wrote:What about the self employment/corporate officer questionnaire?
Social Security's publication how work affects your benefits reads 'if you work between 15 and 45 hours a month, you will not be considered retired'.
Do you know if that's a factor if you reach the FRA?

This is dealing with the "grace year" concept. See "C" in section 1805 of the Social Security Handbook, as well as Section 1807:
http://www.ssa.gov/OP_Home/handbook/han ... -1805.html
http://www.ssa.gov/OP_Home/handbook/han ... -1807.html

The idea of a grace year is that there are certain circumstances in which, even if you are younger than FRA and you exceed the annual earnings threshold, you still might not have your benefit reduced. If you are not claiming any benefit until reaching FRA anyway, this is not something you need to be concerned with, because the earnings test is not something you need to be concerned with.
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Sun Mar 24, 2013 7:33 pm

ObliviousInvestor wrote:
rich137 wrote:What about the self employment/corporate officer questionnaire?
Social Security's publication how work affects your benefits reads 'if you work between 15 and 45 hours a month, you will not be considered retired'.
Do you know if that's a factor if you reach the FRA?

This is dealing with the "grace year" concept. See "C" in section 1805 of the Social Security Handbook, as well as Section 1807:
http://www.ssa.gov/OP_Home/handbook/han ... -1805.html
http://www.ssa.gov/OP_Home/handbook/han ... -1807.html

The idea of a grace year is that there are certain circumstances in which, even if you are younger than FRA and you exceed the annual earnings threshold, you still might not have your benefit reduced. If you are not claiming any benefit until reaching FRA anyway, this is not something you need to be concerned with, because the earnings test is not something you need to be concerned with.


Thanks, I appreciate the feedback. :happy
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Re: Help, reaching my full retirement age of 66

Postby johnep » Mon Mar 25, 2013 8:34 am

I agree that your wife should begin collecting her SS spousal benefit when you reach age 66. Also, there is a strong case for you to defer your SS benefit until age 70, but that is predicated on multiple factors including the assumption that you will not be impacted by future changes to SS. SS has financial shortfalls that must be dealt with at some point. How the shortfall will be dealt with is not clear at this time but one of the possible ways is to apply a income means test which could reduce the benefits for high income people. Anyone who has a substantial pension or income from investments and RMDs could be affected by that. No one knows what SS will do to cope with their shortfall and everyone must decide for themselves which strategy makes the most sense: "a bird in the hand" or wait until age 70.
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Re: Help, reaching my full retirement age of 66

Postby Carl53 » Mon Mar 25, 2013 9:43 am

You might want to revisit the 45.1% spousal benefit that you are quoting.

According to http://www.ssa.gov/oact/quickcalc/spouse.html

A spouse can choose to retire as early as age 62, but doing so may result in a benefit as little as 32.5 percent of the worker's primary insurance amount. A spousal benefit is reduced 25/36 of one percent for each month before normal retirement age, up to 36 months.

Seems to me that 2 months early would be 50%- 2*(25/36) or 48.61%. There is a calculator that appears on that webpage in which you may enter the birthdate and desired date of benefit. Actually I entered 9/15/47 as birthdate and 7/2013 and it only says that the reduction would be equivalent to 1 not 2 months. The calculator seems to be a little screwed up to me, but 25/36% per month is correct.

Whether you file and suspend with your spouse taking spousal benefits in July or Sept, do file and suspend. Let yours grow until age 70. If something happens to you, your spouse will be stepped up to your delayed benefit rate as a widow.

EDIT: misread spouse date as 2013 rather than 2014, you get 45.14% from the calculator if you enter the correct date!
Last edited by Carl53 on Mon Mar 25, 2013 9:50 am, edited 2 times in total.
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Re: Help, reaching my full retirement age of 66

Postby sscritic » Mon Mar 25, 2013 9:46 am

How many months are there from July, 2013 to September, 2014?
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Re: Help, reaching my full retirement age of 66

Postby Carl53 » Mon Mar 25, 2013 9:48 am

sscritic wrote:How many months are there from July, 2013 to September, 2014?


It would help if I read the correct date better.
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Mon Mar 25, 2013 5:52 pm

johnep wrote:I agree that your wife should begin collecting her SS spousal benefit when you reach age 66. Also, there is a strong case for you to defer your SS benefit until age 70, but that is predicated on multiple factors including the assumption that you will not be impacted by future changes to SS. SS has financial shortfalls that must be dealt with at some point. How the shortfall will be dealt with is not clear at this time but one of the possible ways is to apply a income means test which could reduce the benefits for high income people. Anyone who has a substantial pension or income from investments and RMDs could be affected by that. No one knows what SS will do to cope with their shortfall and everyone must decide for themselves which strategy makes the most sense: "a bird in the hand" or wait until age 70.


Thanks for the feedback, I really appreciate it. I think I'm leaning towards "a bird in the hand".
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Mon Mar 25, 2013 5:57 pm

Carl53 wrote:You might want to revisit the 45.1% spousal benefit that you are quoting.

According to http://www.ssa.gov/oact/quickcalc/spouse.html

A spouse can choose to retire as early as age 62, but doing so may result in a benefit as little as 32.5 percent of the worker's primary insurance amount. A spousal benefit is reduced 25/36 of one percent for each month before normal retirement age, up to 36 months.

Seems to me that 2 months early would be 50%- 2*(25/36) or 48.61%. There is a calculator that appears on that webpage in which you may enter the birthdate and desired date of benefit. Actually I entered 9/15/47 as birthdate and 7/2013 and it only says that the reduction would be equivalent to 1 not 2 months. The calculator seems to be a little screwed up to me, but 25/36% per month is correct.

Whether you file and suspend with your spouse taking spousal benefits in July or Sept, do file and suspend. Let yours grow until age 70. If something happens to you, your spouse will be stepped up to your delayed benefit rate as a widow.

EDIT: misread spouse date as 2013 rather than 2014, you get 45.14% from the calculator if you enter the correct date!


Thanks for taking the time to respond to my question. There are lots of pros and cons to consider.
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Re: Help, reaching my full retirement age of 66

Postby dbr » Mon Mar 25, 2013 6:00 pm

Austintatious wrote:Just yesterday, I sat in on an investment webinar presented by Morningstar, part of which included an excellent albeit short discussion on SS, including some discussion on the strategies involved in taking benefits. SS experts Mary Beth Franklin and Mark Miller gave very high marks to http://www.socialsecuritysolutions.com, an online service that advises folks on their options. They praised the quality and value of the service this entity provides, saying that the relatively small fee one pays for the service can result in tens if not hundreds of thousands of dollars that might otherwise be missed by the poorly informed. You might want to consider availing yourself of their services.


I ante'd up to try them out and would recommend the service. They are very clear about exactly what to do.
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Mon Mar 25, 2013 6:36 pm

dbr wrote:
Austintatious wrote:Just yesterday, I sat in on an investment webinar presented by Morningstar, part of which included an excellent albeit short discussion on SS, including some discussion on the strategies involved in taking benefits. SS experts Mary Beth Franklin and Mark Miller gave very high marks to http://www.socialsecuritysolutions.com, an online service that advises folks on their options. They praised the quality and value of the service this entity provides, saying that the relatively small fee one pays for the service can result in tens if not hundreds of thousands of dollars that might otherwise be missed by the poorly informed. You might want to consider availing yourself of their services.


I ante'd up to try them out and would recommend the service. They are very clear about exactly what to do.


Have you/anyone tried this? Which program did you purchase? There are 4 different options ranging in price from $19.95 to $249.95. Does anyone have a recommendation as to which one I should try?
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Re: Help, reaching my full retirement age of 66

Postby dbr » Mon Mar 25, 2013 8:50 pm

I sure didn't pay more than $19.95.

The result they gave me made complete sense based on what I already know about how SS works. That is, they confirmed my previous understanding.
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Re: Help, reaching my full retirement age of 66

Postby JW Nearly Retired » Mon Mar 25, 2013 9:46 pm

If you are still working and don't have any urgent need for the money, IMO it's not that close a call for you to delay SS until 70. You are basically deferring income from when you and wife don't need it to a later time when you might.

If you file and suspend she can claim spousal benefits of half your PIA, or a little less if she claims earlier that 66. If you suspend at 66 then you will get 132% of your cola adjusted PIA when you claim at 70. If/when you die, she would lose her own benefit but will get boosted up to that 132% survivor amount. She is about a year younger so actuarially she will live on something like 4 years after you do. Possibly far longer than that.

Someone here said I was a cad when I was even thinking about such tradeoffs. However, you know something about your health situations so you may have an advantage over the acturary tables.
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Tue Mar 26, 2013 10:58 am

dbr wrote:I sure didn't pay more than $19.95.

The result they gave me made complete sense based on what I already know about how SS works. That is, they confirmed my previous understanding.


$19.95 it is. :happy
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Re: Help, reaching my full retirement age of 66

Postby Bill M » Tue Mar 26, 2013 12:35 pm

I'm curious about your decision to start your wife's spouse benefits early. It seems from your calculations that she would receive $1050/mo now, or $1164/mo by waiting until Sep 2014. Thats $14,700 now, versus $114/mo forever, and a breakeven point at age 76. If you are reasonably healthy, you'd collectively receive more by her waiting, also.
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Re: Help, reaching my full retirement age of 66

Postby rich137 » Tue Mar 26, 2013 5:59 pm

Bill M wrote:I'm curious about your decision to start your wife's spouse benefits early. It seems from your calculations that she would receive $1050/mo now, or $1164/mo by waiting until Sep 2014. Thats $14,700 now, versus $114/mo forever, and a breakeven point at age 76. If you are reasonably healthy, you'd collectively receive more by her waiting, also.


I really did not make a decision yet. I'm still trying to decide if a bird in the hand is worth two in the bush. I really like the response that I received from johnep. I am trying to keep an open mind. I don't want to make a wrong decision. I am receiving a lot of helpful advice from the bogleheads, so the jury is still out.

johnep wrote:I agree that your wife should begin collecting her SS spousal benefit when you reach age 66. Also, there is a strong case for you to defer your SS benefit until age 70, but that is predicated on multiple factors including the assumption that you will not be impacted by future changes to SS. SS has financial shortfalls that must be dealt with at some point. How the shortfall will be dealt with is not clear at this time but one of the possible ways is to apply a income means test which could reduce the benefits for high income people. Anyone who has a substantial pension or income from investments and RMDs could be affected by that. No one knows what SS will do to cope with their shortfall and everyone must decide for themselves which strategy makes the most sense: "a bird in the hand" or wait until age 70.
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Re: Help, reaching my full retirement age of 66

Postby Epsilon Delta » Tue Mar 26, 2013 7:24 pm

rich137 wrote:I really did not make a decision yet. I'm still trying to decide if a bird in the hand is worth two in the bush. I really like the response that I received from johnep. I am trying to keep an open mind. I don't want to make a wrong decision. I am receiving a lot of helpful advice from the bogleheads, so the jury is still out.

If you think a bird in the hand is worth two in the bush you should take it early. Delaying makes sense somewhere south of 1.20 in the bush. :)

Your choice also depends on what you are trying to optimize. If you're leaving a large inheritance you might want to optimize net present value. If you have less wealth you might want to maximize guaranteed income later in life. At the current time both favor delay, but the later favors delay much more strongly.
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