Is this [Social Security] claiming strategy legal

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BBSinger
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Is this [Social Security] claiming strategy legal

Post by BBSinger »

Dan - 65 years old, assume FRA of 67, PIA = 2000/month
Dawm - 62 years old, assume FRA of 67, PIA = 800/month

Dawn files for RIB at 62 and recieves 70% of 800 or 560/month

(Since Dan has not filed yet Dawn is not deemed to have filed for a spousal benefit because she is not eligible.}

Dan - files for spousal only benefit at age 67 and recieves 50% of 800 or 400/month.

Dan - files for his RIB at 70 and recives 124% of 2000 or 2480/month
Dawn then files for spousal and recieves 50% of 2000 or 1000/month

The last step is were I am a little confused since dawn was not eligible for a spousal benefit when she filed for her own benefit she is not deemed to have filed for the spousal. When she finally does file is the spousal reduction factor carried over from her original applicatioin at age 62.

Thank you
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Taylor Larimore
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Unknown initials

Post by Taylor Larimore »

Hi BB:

Welcome to the Bogleheads Forum!

It will be helpful if you would give us a description for these initials:

FRA
PIA
RIB

Thank you.
"Simplicity is the master key to financial success." -- Jack Bogle
Alex Frakt
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Post by Alex Frakt »

It's a Social Security question. I've edited the title.

PIA - Primary Insurance Amount
FRA - full retirement age
RIB - Retirement Insurance Benefits
earlyout
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Post by earlyout »

If you both filed for benefits at your FRA Dawn would receive her $800 and an additional $200 from your account for a total of $1000. (This is 50% of your PIA.) If Dawn starts at 62 her $800 benefit is reduced to $560. If Dawn starts at 62 and you wait until you are 70, Dawn's spousal benefit would be her $560 plus the $200 from your account -- $760.

Another current thread also addresses a similar situation: http://www.bogleheads.org/forum/viewtop ... 1314982799

EO
Last edited by earlyout on Fri Sep 02, 2011 9:50 pm, edited 1 time in total.
sscritic
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Post by sscritic »

EO is correct.

Dawn PIA = $800
Dawn benefit = 70% of $800 = $560
Difference between 1/2 of Dan's PIA and Dawn's PIA = $1000 - $800 = $200.

Dawn's total benefit if she claims as wife at FRA or later =
$560 + $200 = $760.

You always get your own benefit. If Dawn had waited until FRA to make her initial claim, she would have received $800 + $200 = $1000. Note that the add-on as a wife is the same $200. If she had started as wife before FRA, that portion would have been reduced as well. Example, she starts her own benefit at 62, but when she is 64 Dan files his own claim, so she files as a wife. Both her own $800 and the wife add-on of $200 will be reduced, each by their own number of months early and each by their own formulas.

P.S. This is why there is (or this is consistent with) the rule that you can't be a spouse if you are collecting on your own record and your PIA is at least half the PIA of the other worker. If Dawn's PIA had been $1000, the add-on would have been zero, no matter what age she claimed as a wife.
livesoft
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Post by livesoft »

Did I understand that the OP's questions were actually not answered?

That is, Dan files as a spouse first, then later files under his own record.

Maybe y'all are implying that if the OP's scenario was actually used that they end up with less money?

Sorry to be dense, but that's what Friday evening margaritas do to me.
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sscritic
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Post by sscritic »

livesoft wrote:Did I understand that the OP's questions were actually not answered?
I just double checked the OP and didn't see a question mark anywhere. I do see yours, right after the d in answered.

Maybe your margaritas are making you see double or at least see a ? where there is actually a . (now do I need to put another period to mark the end of that sentence?)


P.S. I saw an implied question about Dawn, who was mentioned in the last step where he was confused:
The last step is were I am a little confused
I thought EO and I both addressed his Dawn confusion.

Now go back and have another Margarita.
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VictoriaF
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Post by VictoriaF »

sscritic wrote:Maybe your margaritas are making you see double or at least see a ? where there is actually a .
? is a spiral
. is a black hole

Victoria
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BBSinger
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Post by BBSinger »

lThis is exactly the information I was looking for and it actually makes sense to me. Tlhank you for your time in answering my question.

BBSinger
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