Break is over (Yep, a SS question)

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Workinghard
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Break is over (Yep, a SS question)

Post by Workinghard »

I know everyone gets tired of the SS questions, and I really did try to wait. After reading the boards, I decided my dh should wait until he's 70. His SS will be ~ $2855 a month at that age. He's 6 years older, so I'll want spousal benefits, and he's the higher wage earner. My SS is about 1719 at age 661/2 or 2386 at age 70.

I'm confused when I should start drawing my SS since we won't need the money per se. Do I wait until I'm full retirement age? Draw sooner which will be less? I'm not sure when I'll retire. Perhaps at 62, so we can travel ( nothing extravagant) and still do things together since he'll be 68. We won't need the money per se although it will be hard to draw our principle down. We're looking at 1-1.2m portfolio depending on when we sell our home. I know..with a 4% SWR it should be okay without touching our principle. Our living expenses are around 36-40k a year which includes 12k+ a year going to charity. That will decrease as we cut down work hours.

I've tried the online calculators but don't know or understand file and suspend, spousal benefits, etc.
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Cut-Throat
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Re: Break is over (Yep, a SS question) 😔

Post by Cut-Throat »

Workinghard wrote: We're looking at 1-1.2m portfolio depending on when we sell our home. I know..with a 4% SWR it should be okay without touching our principle.
Not sure about your S.S. Question, but your above statement is NOT true.

The 4% Studies always deplete principle in the worst case historical time periods. And in some cases the portfolio does not even survive at 4% for 30 years.
b4real
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Re: Break is over (Yep, a SS question) 😔

Post by b4real »

gerrym51
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Re: Break is over (Yep, a SS question) 😔

Post by gerrym51 »

every study i've seen on this say for the 70 strategy is.

highest earner takes at 70

lower earner takes at 62.
vested1
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Re: Break is over (Yep, a SS question) 😔

Post by vested1 »

If you do decide to file for your own benefit at age 62 and he has still not filed, he will be 68 and can file a restricted application for half of your PIA, which is only an estimate at this point but should be somewhat more than $860 if you keep working until 62. He can draw that amount until 70 then convert to his own, which will have the added benefit of providing a larger survivor benefit should he pass before you do. That $860 a month for 2 years, assuming he is exactly 6 years older than you would amount to over $20,000 free money as his benefit continues to grow, or somewhat less depending on your birthdays.

If you don't need the money I would suggest delaying and reassessing periodically with your stepped up amount. At his age 70.5 RMD's will begin, and you will be 64, so figure out your various income streams and relate that to expected tax implications of RMD to determine the best choice.
dickenjb
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Re: Break is over (Yep, a SS question) 😔

Post by dickenjb »

You sound like a good candidate for wife files at 62, hubby files restricted app for spousal only at FRA, then his own at 70.

But really you need to understand this yourself. I recommend Mike Piper's $5 book, it is excellent and presents complex stuff in an easy to understand fashion.
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Re: Break is over (Yep, a SS question) 😔

Post by The Wizard »

Cut-Throat wrote:
Workinghard wrote: We're looking at 1-1.2m portfolio depending on when we sell our home. I know..with a 4% SWR it should be okay without touching our principle.
Not sure about your S.S. Question, but your above statement is NOT true.

The 4% Studies always deplete principle in the worst case historical time periods. And in some cases the portfolio does not even survive at 4% for 30 years.
OP may be cutting it close some years if the market misbehave, so may be advisable to make that 30% charitable contribution partly dependent on market performance...
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sscritic
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Re: Break is over (Yep, a SS question) 😔

Post by sscritic »

Workinghard wrote:I know everyone gets tired of the SS questions, and I really did try to wait. After reading the boards, I don't know or understand file and suspend, spousal benefits, etc.
OK, I cut out some of your words, but it was to make a point. When you read the posts about file and suspend, spousal benefit, etc., what did you learn? Before talking about a particular strategy for a particular person or couple, you should understand the rules. What is best for one might not be best for another, but the rules are the same for everyone.

I think if would be best if you asked a specific question about the rules for a specific topic. For example, write what you think you know about the rules for spousal benefits and ask about what part you don't think you understand. We will clear that up, and then move on.
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Re: Break is over (Yep, a SS question) 😔

Post by Ron »

Workinghard wrote:I know everyone gets tired of the SS questions <snip> ....
sscritic dosen't (thank goodness :mrgreen: )...

- Ron
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Re: Break is over (Yep, a SS question) 😔

Post by sscritic »

Ron wrote:
Workinghard wrote:I know everyone gets tired of the SS questions <snip> ....
sscritic dosen't (thank goodness :mrgreen: )...
Are you sure? :)

As long as there is effort on the other side, I am willing to do my part.
betterdays
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Re: Break is over (Yep, a SS question) 😔

Post by betterdays »

I'm waiting until I'm 70 to collect SS benefits. I'm currently 66 (FRA) spouse 57.

Do I need to "file and suspend" now?
What happends if I do nothing until I'm 70 to collect SS benefits?
Since my spouse will be 62 after I reach 70 is "file and suspend" neccessary at my FRA?
Faith20879
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Re: Break is over (Yep, a SS question) 😔

Post by Faith20879 »

sscritic wrote:As long as there is effort on the other side, I am willing to do my part.
I am one of the beneficiaries. Much appreciated!
betterdays wrote:Do I need to "file and suspend" now?
You might want to start your own thread so not to hijack OP's. Anyway, here is what I think:

If your spouse is 9 years younger and plans to fill at 62, you will be 71 by the time and would have already started your own. I don't see why "file and suspend" is relevant.

Regards,
Faith
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22twain
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Re: Break is over (Yep, a SS question) 😔

Post by 22twain »

betterdays wrote: Do I need to "file and suspend" now?
You don't need to file and suspend, but if you do it now, you open up the following possibility:

If (heaven forbid) you are diagnosed with a terminal illness between now and age 70, such that you'll probably live only a few more years, you can reinstate your benefits as of the date of suspension, and receive a lump sum for the payments that you would have received if you hadn't suspended. In this case, your monthly benefit going forward doesn't include delayed retirement credits; that is, you get the same monthly benefit that you would have gotten as of the date of suspension.
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sscritic
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Re: Break is over (Yep, a SS question) 😔

Post by sscritic »

22twain wrote:
betterdays wrote: Do I need to "file and suspend" now?
You don't need to file and suspend, but if you do it now, you open up the following possibility:

If (heaven forbid) you are diagnosed with a terminal illness between now and age 70, such that you'll probably live only a few more years, you can reinstate your benefits as of the date of suspension, and receive a lump sum for the payments that you would have received if you hadn't suspended. In this case, your monthly benefit going forward doesn't include delayed retirement credits; that is, you get the same monthly benefit that you would have gotten as of the date of suspension.
I hadn't known about revoking your suspension before Carl53 brought it to my attention in this thread, where pshonore said that he had actually done just that.

http://www.bogleheads.org/forum/viewtop ... 2&t=130036

You can actually pick any date at all to restart, not just the date of the original suspension.
Resume payments effective with the month requested (i.e., the current month, a future month or any past month during the suspension period).
The Wizard
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Re: Break is over (Yep, a SS question) 😔

Post by The Wizard »

OK, so to hijack this thread even further, all of us who are waiting till age 70 for SS should File & Suspend at FRA (or before?) to open the door for a lump sum possibility in the event of a significant change in projected lifespan.
We should add something about this to the Wiki if it's not there already...
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Faith20879
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Re: Break is over (Yep, a SS question) 😔

Post by Faith20879 »

I love BH's collaborated wisdom! :D :D :D
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ObliviousInvestor
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Re: Break is over (Yep, a SS question) 😔

Post by ObliviousInvestor »

The Wizard wrote:OK, so to hijack this thread even further, all of us who are waiting till age 70 for SS should File & Suspend at FRA (or before?) to open the door for a lump sum possibility in the event of a significant change in projected lifespan.
We should add something about this to the Wiki if it's not there already...
No. That is, "no" to the "or before" part, because you can't suspend prior to FRA. Also, "no" to anybody who is planning to collect a spousal benefit (via a restricted application) between FRA and 70.

But, for many people, "yes."
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patriciamgr2
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Re: Break is over (Yep, a SS question) 😔

Post by patriciamgr2 »

I want to hijack the thread for a moment to thank SSCritic, Oblivious Investor & others for all of the time & expertise devoted to answering these questions. I am certainly sympathetic to the request that posters do some research first so that the question is very specific & thus easier to answer. Even those of us not yet eligible for SS really are grateful for your willingness to share your expertise, Forum experts. Thanks!
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Re: Break is over (Yep, a SS question) 😔

Post by Alex Frakt »

What's the character at the end of the title thread? All I get is gibberish and I tried multiple encodings and two browsers.
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Re: Break is over (Yep, a SS question) 😔

Post by sscritic »

A type of smilie, but not smiling. I pasted it into google and added meaning and got to this page. [That might not have worked for you]

http://www.iemoji.com/browse/emoji/category/smileys

It is Pensive Face (third row)

I see it clearly in Safari 7.0.3 under OS X 10.9.3

Edit- Correction: actually google did nothing with the character. Since I knew it was emoji, I choose to use the auto complete with emoji meaning. googling just it with meaning gets me to definitions of meaning. Google seems to have ignored it.
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Re: Break is over (Yep, a SS question) 😔

Post by Alex Frakt »

So iOS has its own smiley scheme. Who knew? Anyway, from the forum policies:
We also require that you be considerate of our readers and:

use meaningful titles on new topics
refrain from posting naked links - all links should include an explanation or excerpt unless its meaning is clear from the context
avoid profanities, obscenities, lewd and otherwise offensive words and remarks
avoid posting in ALL CAPITAL LETTERS or otherwise using distracting formatting
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Re: Break is over (Yep, a SS question)

Post by sscritic »

It's not just an iOS thing. Using Character Viewer, I can add Emoji as a category of available characters under OS X. The symbol is there as well.
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Re: Break is over (Yep, a SS question) 😔

Post by 22twain »

sscritic wrote:It is Pensive Face (third row)

I see it clearly in Safari 7.0.3 under OS X 10.9.3
I also see it, in Firefox under OS X 10.9.3. I didn't think anything special about it and assumed it was one of the forum's smilies. Now I know better. I've seen the Emoji in Character Viewer when I use it to access those pesky European characters with diacritical marks that I can't enter using the various option-key combinations, but I didn't make the connection until now.
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Workinghard
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Re: Break is over (Yep, a SS question)

Post by Workinghard »

Last night I had no replies and almost deleted my post, and now today I have answers! I really appreciate the replies. I know the social security questions get old. I don't want to mess up with trying to cut and paste different replies, so will just put names.

Cutthroat, in the worst case scenario we could cut down expenses. I know my statement did not reflect that. I would like to leave an inheritance but that's a 'want" and needs come first.

B4real, thanks for the links. I'll read them after I respond. I did try a calculator but it wasn't the AARP one.

Gerrym51, thanks for the clarification. From previous posts I knew it was better for my dh, the higher earner, to wait until 70. I just didn't know when I should start drawing and if it would affect my income.

Vested1, thanks for understanding my question which was poorly worded. I was confused if my husband could file on my SS. If I wait too long, he would could just file on his own. I was born in March and his BD is in April. Both of us are at the beginning of the month so it's really close to 6 years. Once he retires, and our income drops, we will start converting tIRAs to Roths to cut down our RMDs.

Dickenjb, thanks for the confirmation and the book recommendation!

TheWizard, as our gross income drops, so will our contributions. Haven't thought about contributions, yet, in reference to performance. I need to think through that one. I thought about giving in reference to our Social Security. In a sense we have already tithed on that money since we pay on gross, but we only started paying on gross income a few years ago.

Sscritic, and critic of my post. Lol. My brother would agree with you that I'm not very articulate. If you think my writing is bad try talking to me in person. It's even worse. Here is what I think I know. It's better for the high earner to wait to take Social Security especially if there is an age gap between the two spouses. After the death of the higher earning spouse, the other spouse is eligible for the higher benefit. This changed my original plan of having my husband start taking Social Security at FRA. We are clear on the benefits of him waiting to age 70. I wasn't sure when I should start taking it. If I waited until my FRA, he would already be getting his Social Security. I guess a specific question would be if I started taking Social Security at age 62, is my income limited? I can Google that to find out. I wasn't sure of that question until I read through the posts and thought about the different options.

Haha, Ron. I wouldn't blame him if he did get tired of the questions!

Betterdays, I don't mind you hijacking my thread. It will get me off the hot seat! From what I've read, and sscritic will correct me if I'm wrong, I do think you need to file and suspend at FRA. Has something to do with Medicare supplemental benefits. I will let someone more knowledgeable, and more articulate, explain it. 22twain also brought up a good point.

ObliviiousInvestor,you lost me on the part about "no to anybody who is planning to collect a spousal benefits (via a restricted application) between FRA and 70.

Alex Frakt, the character was a sad face emoji. Sorry it didn't come through. This one might be better. :( thank you for sharing the rules.

Again, thank you to everyone who responds to the Social Security threads. If I keep reading them enough it will eventually sink in. If it's any consolation, I save answers to questions and put them in a document so I can access them later and not have to repeat the question.
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jjustice
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Re: Break is over (Yep, a SS question)

Post by jjustice »

I doubt that there is much "insurance" value in filing and suspending if a spouse is not old enough to receive a spousal benefit. It's the higher earner who ordinarily would file and suspend, and he or she in most cases would want to leave the widow or widower with the highest possible benefit.

If both spouses found out that they were going to die next year, they might want the sudden lump sum. That's an unlikely scenario.

Some hesitant single individuals may be more willing to delay if they can file and suspend.

With two wives (ex and current) to leave with benefits, filing and suspending has no appeal to me.

John
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Re: Break is over (Yep, a SS question)

Post by sscritic »

Workinghard:

So let's go over some of the rules:

First rule: To be a wife, your husband has to be entitled to retirement (old-age) benefits. He could be collecting or he could have suspended, it doesn't matter, as long as he is entitled. You also have to be 62. For example, if your husband files at age 68 or before, you could be his wife when you are 62.

A corollary is that the same is true for your husband. If he is not yet entitled to his own benefit and you file for your own benefit at 62, he could file as your husband and collect off your record for two years before turning 70.

Second rule: If you are eligible to be a wife, then if you file for your own old-age benefits before your FRA, you are automatically filing to be a wife as well. For example, if you file as yourself at 62 and your husband is not entitled, then you can be just yourself. If you file as yourself and your husband is entitled, then you must be both yourself and a wife. Your benefit will be a blend of the two benefits, both of them reduced because you are starting before FRA.

There is a corollary to the second rule: the same is true if you apply as a wife before FRA (you will be applying as yourself as well). Note that in the example of you filing as yourself at 62 and he filing as your husband at 68, this rule does not apply to him since he is over his FRA.

To your specific question: yes, if you are under FRA, then there is an earnings test. Your earnings reduce your own benefit and those of anyone collecting on your record. For example, you file as yourself at 62 and your husband files as your husband (but is not entitled to his own old-age benefit). Your earning would reduce both your benefit and his as your husband.
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Re: Break is over (Yep, a SS question)

Post by Dandy »

wife took her SS (lower earner) at 62. I am waiting until age 70 to take mine. But at age 66 I am taking a spousal from her SS. So, while your husband is waiting to age 70 make sure to have him take a spousal on your SS
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Workinghard
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Re: Break is over (Yep, a SS question)

Post by Workinghard »

Ugh. Just lost my post. I'll try this again. According to Social Security's website:

"Are under full retirement age all year. You are entitled to $800 a month in benefits. ($9,600 for the year)

You work and earn $25,080 ($9,600 over the $15,480 limit) during the year. Your Social Security benefits would be reduced by $4,800 ($1 for every $2 you earned over the limit), but you would still receive $4,800 of your $9,600 in benefits for the year. ($9,600 - $4,800 = $4,800)"

So it looks like if I file at 62, I would get $800'a month and my husband would get $400. Then at 70 he would file for his benefit of $2800. At that point in time I would file under him and get $1400 a month when I'm 64. That would be around $300 less then if I had waited until my FRA. I could also work part time an earn an additional 15k. Earnings from investments would not count as income. Does that sound right, or am I missing something, or confused about something? I knew it was better for him to wait until age 70. I hadn't thought about me taking Social Security at age 62 and him getting spousal benefits.
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Re: Break is over (Yep, a SS question)

Post by sscritic »

Workinghard wrote:Ugh. Just lost my post. I'll try this again. According to Social Security's website:

"Are under full retirement age all year. You are entitled to $800 a month in benefits. ($9,600 for the year)

You work and earn $25,080 ($9,600 over the $15,480 limit) during the year. Your Social Security benefits would be reduced by $4,800 ($1 for every $2 you earned over the limit), but you would still receive $4,800 of your $9,600 in benefits for the year. ($9,600 - $4,800 = $4,800)"

So it looks like if I file at 62, I would get $800'a month and my husband would get $400. Then at 70 he would file for his benefit of $2800. At that point in time I would file under him and get $1400 a month when I'm 64. That would be around $300 less then if I had waited until my FRA. I could also work part time an earn an additional 15k. Earnings from investments would not count as income. Does that sound right, or am I missing something, or confused about something? I knew it was better for him to wait until age 70. I hadn't thought about me taking Social Security at age 62 and him getting spousal benefits.
You correctly quoted the earnings test for this year for someone not turning 66, but do you make only $25k a year? With a PIA of $1719, it seems a little low. Did you do the math? PIA = 1719. Start 54 months early, so do that reduction. Then figure out your earnings test reduction. Apply it to the total family benefit on your record, starting in January. You will get nothing for the number of months it takes to total the reduction.

I think you are very confused on one issue. I think you heard a myth that a spouse gets 1/2 of what the worker gets. I deduced this from your $800-$400 and your $2800-$1400. This is a myth that has been perpetrated for years, but it is still just a myth no matter how many times it is repeated. If you came up with your numbers not using the myth, perhaps you could explain.

Everything is based on your PIA (and his) and your (and his) age at claiming. So let's go a little slower. Figure out your own benefit if you were to claim at 62. Figure out his benefit as your husband if he claims at 68. Figure out the reduction for the earnings test using your earnings for the year. Add your two benefits for the year, then subtract the reduction. This is what you would collect as a family for the year for the period in which you have claimed your old-age benefit and he has claimed as your husband (but not as himself). This will last for two years.

After we get that straight, we can move on to what you would collect at 64 as his wife. I see you as diving into the deep end without learning to swim first. Not that I teach swimming, but I think you need to take baby steps first, if that isn't mixing metaphors too badly.
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Re: Break is over (Yep, a SS question)

Post by Pacific »

sscritic wrote:This is a myth that has been perpetrated for years, but it is still just a myth no matter how many times it is repeated.
But, but, I read it somewhere on the internet so it must be true. :shock:
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Workinghard
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Re: Break is over (Yep, a SS question)

Post by Workinghard »

sscritic wrote:
You correctly quoted the earnings test for this year for someone not turning 66, but do you make only $25k a year? With a PIA of $1719, it seems a little low. Did you do the math? PIA = 1719. Start 54 months early, so do that reduction. Then figure out your earnings test reduction. Apply it to the total family benefit on your record, starting in January. You will get nothing for the number of months it takes to total the reduction.

I think you are very confused on one issue. I think you heard a myth that a spouse gets 1/2 of what the worker gets. I deduced this from your $800-$400 and your $2800-$1400. This is a myth that has been perpetrated for years, but it is still just a myth no matter how many times it is repeated. If you came up with your numbers not using the myth, perhaps you could explain.

Everything is based on your PIA (and his) and your (and his) age at claiming. So let's go a little slower. Figure out your own benefit if you were to claim at 62. Figure out his benefit as your husband if he claims at 68. Figure out the reduction for the earnings test using your earnings for the year. Add your two benefits for the year, then subtract the reduction. This is what you would collect as a family for the year for the period in which you have claimed your old-age benefit and he has claimed as your husband (but not as himself). This will last for two years.

After we get that straight, we can move on to what you would collect at 64 as his wife. I see you as diving into the deep end without learning to swim first. Not that I teach swimming, but I think you need to take baby steps first, if that isn't mixing metaphors too badly.
No, I make around 55k but based on the SS website my benefits would be reduced if I made over 15K. I would have to work part time or there would be little sense in starting withdrawls. I didn't do the math. I just went by what they said- $800. :oops:

Sscritic, I am not a math person. I'm math impaired and have only mastered napkin math which is how I started out years ago doing the rule of 7. Honestly, I don't know how to do the math. If I did, I probably wouldn't have to be here. My benefit and his benefit is based on what SS says. I know that's not always accurate but I'm okay with a ballpark figure.

At age 66.5 mine would be 1719. At age 70 it would be 2386. His benefit at age 66 is 2145. At age 70 it will be 2855. It looks like if I start drawing at 62 my benefit will be around 1100 a month based on a SS calculator. I'm in the learning how to tread water phase. I have to go to work so will need to wait on the rest to try to figure out. I'll be back later! :D
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Re: Break is over (Yep, a SS question)

Post by sscritic »

Workinghard wrote: No, I make around 55k but based on the SS website my benefits would be reduced if I made over 15K. I would have to work part time or there would be little sense in starting withdrawls. I didn't do the math. I just went by what they said- $800. :oops:
So here is the rough math. $55k - $15k = $40k. That is how much you will be over $15k. Since the reduction is $1 for every $2 you are over the limit, your combined benefits based on your record would be reduced by half of $40k = $20k for the year, or about $1670 a month.
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Re: Break is over (Yep, a SS question)

Post by sscritic »

At this point, I want to go back to my original question so we can go through this one step at a time.

You said you had read other threads. You said you were confused about benefits for spouses, husbands and wives.

I asked what you had learned from the threads you had read about benefits for spouses. (This was not a math question).
write what you think you know about the rules for spousal benefits and ask about what part you don't think you understand. We will clear that up, and then move on.
I never saw your answer. You thought I was criticizing your writing, but I was trying to find out what you already knew about spousal benefits. Instead of telling me what you knew, you asked about the earnings test.

I am asking you to please stick to one topic at a time. Since you started by writing about your confusion about spousal benefits, let's stick to that and nothing else.

Of course, you can ignore me and have a conversation with other posters. That would be fine if that is how you want to proceed.
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Re: Break is over (Yep, a SS question)

Post by The Wizard »

This other poster thinks it is not a good idea to claim SS before FRA if you plan to continue working for pay as well.
The spousal benefit just complicates the issue.
Wait till either FRA or until you exit the workforce; you can thank me then...
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Workinghard
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Re: Break is over (Yep, a SS question)

Post by Workinghard »

The Wizard wrote:This other poster thinks it is not a good idea to claim SS before FRA if you plan to continue working for pay as well.
The spousal benefit just complicates the issue.
Wait till either FRA or until you exit the workforce; you can thank me then...
I agree. It definitely complicates things. I'm not sure when I'll pull the plug on working. Our youngest son is planning on getting married next year and grandchildren will eventually be in the picture. That will be the deciding factor. I missed out on the others as they were growing up. This is our last chance. Lol

Sscritic, I have to put the conversation on hold for a few days. I work 12-14 hr shifts on the weekend and I'm also scheduled for Monday. Getting up at 4am means my mental acuity in the evenings is non-existent. I was teasing and making a play on your name about criticism. I don't take things personally and I appreciate your responses and trying to guide me step by step. I'll try to narrow my focus/questions and be more specific vs the generalization of SS as the topic.
Topic Author
Workinghard
Posts: 379
Joined: Fri Apr 04, 2014 4:56 am

Re: Break is over (Yep, a SS question)

Post by Workinghard »

Okay, I have some time this morning and a few active brain cells. Sscritic, you asked what I learned from reading the other posts.

1. I learned that it's better for my husband to wait until age 70 to collect SS benefits if we don't need the money.
2. I learned that the guaranteed increase (8%a yr) each year would be financially more beneficial than waiting to start SWRs.
3. I learned that if he lived longer than me, I would get his benefit at the higher rate. It would be a difference of $500 a month if we both waited until age 70. If I started drawing at my FRA it would be a difference of $1100.
4. I learned that I may be eligible for spousal benefits up to 50% IF I wait until FRA. If I don't it can be reduced to 35%.
5. I learned that my husband can claiming spousal benefits on me if I draw first.
6. I learned that you can file and suspend at FRA. This allows one spouse to claim benefits with the other one continuing to get credits.
7. I learned that file and suspend automatically makes you eligible for Medicare part A. At that point a person is not eligible to contribute to HSA.
8. I learned had if you claims benefits before FRA, you can continue to work, but your benefits may be reduced or withheld. However they will be returned to you at your FRA.
9. I learned that I can apply for spousal benefits which will be around 1K a month at FRA even if my husband waits until age 70. Then I can apply for my own Social Security at age 70.

My confusion is based on doing the math and figuring out which way would give us the most money. We know he should file and suspend at age 65 and wait until age 70 to start benefits.

I don't know when I should file (assuming I'm no longer working when I file).
I don't know if/when he should file spousal benefits on me.
sscritic
Posts: 21853
Joined: Thu Sep 06, 2007 8:36 am

Re: Break is over (Yep, a SS question)

Post by sscritic »

Workinghard wrote:Okay, I have some time this morning and a few active brain cells. Sscritic, you asked what I learned from reading the other posts.

4. I learned that I may be eligible for spousal benefits up to 50% IF I wait until FRA. If I don't it can be reduced to 35%.
Almost. The full spousal benefit at FRA is 50% of the other person's Primary Insurance Amount (PIA), not 50% of the other person's benefit.

example one. He has PIA of $2000. He files at 62 and collects $1500. Later, she files as wife at 66 and collects $1000, half of his PIA, but more than half of his benefit.

example two. He has PIA of $2000. He files at 70 and collects $2640. Later, she files as wife at 66 and collects $1000, half of his PIA, but less than half of his benefit.

Filing early for any benefit reduces what you get, which you understand. The presumption is that you will be collecting over a lifetime. The earlier you claim, the more payments you will receive, so each one is smaller. Buying a lifetime annuity at 65 won't pay as much per month as one purchased for the same amount at 85. The actual reduction for a spouse with a FRA of 66 is 30% at 62 (the reduction for your own benefit is 25%). Turned around, you get 70% of the full spousal benefit, which is 35% of the other person's PIA (70% of 50% is 35%).

This will apply to your husband if he were to file as such against your record, as it will to you if you file as a wife against his record. Note that you can't both file against the other because of two of the requirements to be entitled to a spousal benefit:

1) you cannot be entitled to your own benefit that is based on a PIA that is half or more of the PIA of the person you are claiming against.
2) the person you are claiming against has to be entitled to an old-age (retirement, own) benefit.

Examples:
husband has PIA of $2000. wife has PIA of $1200. husband claims own (suspended or not). If wife claims her own benefit, she can't be a wife. If wife waits until FRA, she can file a restricted application to be a wife without claiming her own benefit (this cannot be done before FRA). Now wife can be a wife and collect $1000 a month while waiting until 70 to claim her own. However, he can't be her husband as she isn't entitled to her own benefit (she deliberately filed a restricted application for wife only).

same PIAs, but both husband and wife file and suspend at FRA. Since both are entitled to their own benefits (suspended), neither can be a spouse (2000 is more than 1/2 of 1200, 1200 is more than 1/2 of 2000).

Even if you change the PIAs to 2000 and 800, at most one person can be a spouse.
Topic Author
Workinghard
Posts: 379
Joined: Fri Apr 04, 2014 4:56 am

Re: Break is over (Yep, a SS question)

Post by Workinghard »

PIA has been so confusing to me and I'm Just beginning to understand it albeit not the calculations. That's okay as I don't understand the intricacies of what makes a car run either.
http://www.ssa.gov/oact/cola/piaformula.html

So know I understand we can't change midstream. I remember reading that before but in trying to figure out the best scenario I forgot about it. Sigh

Honestly, I am still confused but I truly appreciate your efforts to try to educate me. I'm going to share the info with my brother, who will probably immediately whip up an excel spreadsheet, and let him crunch the numbers. I give him my napkin math and he gives me the actual figures.

Thanks again, everyone...
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