Another when to start Social Security question.

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rixer
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Another when to start Social Security question.

Post by rixer »

I'm throwing this question out here because I value the wise bogelhead opinions.

I'm retired and will turn 66 in late August. The wife is 62, still working and will retire Dec. 31 this year when she will be 63. Our plan was for her to claim early SS at the end of the year when she retires and I would draw spousal benefit on restricted application.

I'm beginning to wonder if it makes sense for us to wait until the end of the year to do this. Would it be better to just file for this in late August when I turn 66 instead of waiting till the end of the year? I know she would lose money from SS because she will still be working until the end of the year but it's starting to seem like waiting to do this beyond my 66th b'day isn't really an advantage.

What do you bogelheads think? Claim in late August or wait till Dec 31? :?:
sscritic
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Re: Another when to start Social Security question.

Post by sscritic »

If she takes early and makes too much, that will only reduce her benefit as herself until she is FRA. If you delay starting as her husband, you will lose that many months of the husband's benefit. You need to know the numbers, as you will either get this much more and that much less or that much more and this much less. Without knowing how much this much and that much are, it's hard to know.
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jjustice
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Re: Another when to start Social Security question.

Post by jjustice »

Can she not file and suspend until January? She could do this now.

I don't think that you should give up 5 months of spousal benefit.

John
sscritic
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Re: Another when to start Social Security question.

Post by sscritic »

jjustice wrote:Can she not file and suspend until January? She could do this now.

I don't think that you should give up 5 months of spousal benefit.

John
She has to be FRA to file and suspend. She is 62.
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jjustice
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Re: Another when to start Social Security question.

Post by jjustice »

Thanks for the correction, sscritic. Another question: does she actually lose anything by making too much for the earnings test? Isn't this a de facto way of delaying social security?

John
sscritic
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Re: Another when to start Social Security question.

Post by sscritic »

jjustice wrote:Thanks for the correction, sscritic. Another question: does she actually lose anything by making too much for the earnings test? Isn't this a de facto way of delaying social security?

John
If you have a deduction for excess earnings, they recompute your benefit at FRA. If she waits to start until after she quits working, she will get more each month, but only until FRA. If she starts early, after the recomputation she will get the same amount as if she had waited to start (assuming she gets no benefit at all during the months she is still working). This was the basis of my previous statement:
If she takes early and makes too much, that will only reduce her benefit as herself until she is FRA.
Topic Author
rixer
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Re: Another when to start Social Security question.

Post by rixer »

sscritic wrote:
jjustice wrote:Thanks for the correction, sscritic. Another question: does she actually lose anything by making too much for the earnings test? Isn't this a de facto way of delaying social security?

John
If you have a deduction for excess earnings, they recompute your benefit at FRA. If she waits to start until after she quits working, she will get more each month, but only until FRA. If she starts early, after the recomputation she will get the same amount as if she had waited to start (assuming she gets no benefit at all during the months she is still working). This was the basis of my previous statement:
If she takes early and makes too much, that will only reduce her benefit as herself until she is FRA.
Thanks sscritic. I value your insight greatly but I'm not sure I understand what you're telling me.
If she takes her benefit 4 months before she retires, does that deduction for excess earnings stay with her until she reaches FRA or just for the 4 months she works?
sscritic
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Re: Another when to start Social Security question.

Post by sscritic »

rixer wrote:
sscritic wrote: If you have a deduction for excess earnings, they recompute your benefit at FRA. If she waits to start until after she quits working, she will get more each month, but only until FRA. If she starts early, after the recomputation she will get the same amount as if she had waited to start (assuming she gets no benefit at all during the months she is still working). This was the basis of my previous statement:
If she takes early and makes too much, that will only reduce her benefit as herself until she is FRA.
Thanks sscritic. I value your insight greatly but I'm not sure I understand what you're telling me.
If she takes her benefit 4 months before she retires, does that deduction for excess earnings stay with her until she reaches FRA or just for the 4 months she works?
All the way to FRA.

Example: start at 62 at 75% of PIA (assume FRA of 66). Make too much so that full benefits are not paid for 3 months (it doesn't matter if these are the first three or January of three consecutive years). At FRA, your benefit is recomputed as if you had started 45 months early rather than 48 months early. However, the 45 benefit checks you received before your FRA were at 75% of FRA, i.e., the reduction for starting at 62 stayed with you until FRA when the adjustment is made.
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jjustice
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Re: Another when to start Social Security question.

Post by jjustice »

Can't Rixer's question be answered with the information we have? It all depends on his wife's age and percentages of whatever her PIA may be, right?

Suppose her PIA is $1,000. Suppose, given what Rixer said, she turns 63 on January 1. If she files in August rather than 5 months later in January, she reduces her monthly benefit by 5/12 X $50 = $20.83. She gets this reduction for the three years before FRA, when her benefit is recomputed. So, it costs them 36 X $20.83 = $ 750.

He gains spousal benefit of $500 X 5 months = $2500. By her filing in August rather than January, they come out $1,750 ahead. I probably don't have her age exactly right, but that would make very little difference.

I offer these calculations with the assurance that they will be corrected if I have made any mistake in my reasoning.

John
Topic Author
rixer
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Re: Another when to start Social Security question.

Post by rixer »

jjustice wrote:Can't Rixer's question be answered with the information we have? It all depends on his wife's age and percentages of whatever her PIA may be, right?

Suppose her PIA is $1,000. Suppose, given what Rixer said, she turns 63 on January 1. If she files in August rather than 5 months later in January, she reduces her monthly benefit by 5/12 X $50 = $20.83. She gets this reduction for the three years before FRA, when her benefit is recomputed. So, it costs them 36 X $20.83 = $ 750.

He gains spousal benefit of $500 X 5 months = $2500. By her filing in August rather than January, they come out $1,750 ahead. I probably don't have her age exactly right, but that would make very little difference.

I offer these calculations with the assurance that they will be corrected if I have made any mistake in my reasoning.

John
Thanks John, that's the way I understand it also. What I'm really trying to understand is how her 5 months of earnings before she actually retires will affect her ss benefit going forward. I can't seem to word my question so it makes sense. :(

If she is slated to receive $1000 mth at August and starts ss then. I know they will deduct some money from her because of the income. After she retires from work at the end of the year, will she start receiving the $1000 per month in January?
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jjustice
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Re: Another when to start Social Security question.

Post by jjustice »

I was working on the assumption that if she filed in August, she would get no social security for the last five months (Aug. - Dec.) that she was working. I assumed that her salary would be higher than the earnings permitted for any benefit. After she quit, then her reduced--because of starting 3 years and 5 months before FRA--benefits would start coming.

In other words, I assume that whether she files in August or in January, her first benefits are for January. They'll be somewhat reduced for 3 years if she files in August.

John
Topic Author
rixer
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Re: Another when to start Social Security question.

Post by rixer »

jjustice wrote:I was working on the assumption that if she filed in August, she would get no social security for the last five months (Aug. - Dec.) that she was working. I assumed that her salary would be higher than the earnings permitted for any benefit. After she quit, then her reduced--because of starting 3 years and 5 months before FRA--benefits would start coming.

In other words, I assume that whether she files in August or in January, her first benefits are for January. They'll be somewhat reduced for 3 years if she files in August.

John
Thank you John.
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plannerman
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Re: Another when to start Social Security question.

Post by plannerman »

There is a special rule that applies to earnings in the first year of retirement. See this: http://www.ssa.gov/retire2/rule.htm

plannerman
sscritic
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Re: Another when to start Social Security question.

Post by sscritic »

That would matter if she quit working in August when she applied, but I read the OP
still working and will retire Dec. 31
Actually, we don't know how much she makes a month and we don't know her PIA, so with no facts other than she works and is 62 going on 63, it's hard to know what would happen.
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