When should wife take SS?

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lbrowning
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When should wife take SS?

Post by lbrowning » Sat Jun 17, 2017 8:37 pm

I've used several SS calculators and have a question. I will turn 65 this year and my wife will be 62.We are considering having her claim SS when she turns 62. However, the various calculators suggest having her wait until 63. The difference is only about $100/mo. Does the fact that I will be FRA when she turns 63 have any impact? We both have pensions, but they don't cover our monthly expenses. The SS check would cover the difference. Alternatively, we could tap my 401K to cover the difference, so we have a couple of options. Any insights would be much appreciated.

Zott
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Re: When should wife take SS?

Post by Zott » Sat Jun 17, 2017 9:05 pm

lbrowning wrote:I've used several SS calculators and have a question. I will turn 65 this year and my wife will be 62.We are considering having her claim SS when she turns 62. However, the various calculators suggest having her wait until 63. The difference is only about $100/mo. Does the fact that I will be FRA when she turns 63 have any impact? We both have pensions, but they don't cover our monthly expenses. The SS check would cover the difference. Alternatively, we could tap my 401K to cover the difference, so we have a couple of options. Any insights would be much appreciated.


Probably, because then you would be eligible to file a "restricted application" and receive benefits as a spouse, while your own benefit will grow with delayed retirement credits to age 70. (You are grandfathered into this benefit). But the difference in Present value is probably low, so it's mostly your preference--have a smaller benefit start earlier but with cash now, or a larger one down the road but no cash now. But you should definitely file for the restricted application at FRA, if I understand your situation.

onthecusp
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Re: When should wife take SS?

Post by onthecusp » Sat Jun 17, 2017 9:23 pm

The right answer depends on a few factors that if you supply will get you much better answers than mine.
Your age and your spouse's age.
Your FRA benefit and your spouse's.
Your expected expenses.
The value of your 401k.

The general advice, if your 401k is large enough, is for the higher earner to defer until 70 to maximize the future value and "longevity insurance" aspect of inflation adjusted SS payments. This means spending from your 401k in the meantime.

If the lower earner's FRA benefit is much less than the higher, then taking it at FRA is usually the optimum future value, but I don't think it is much of a penalty overall to take it at 62. Eventually they get a spousal benefit that bumps the total payment to half that of the higher benefit (so half of the age 70 benefit) of the higher income spouse.

I know you have tried some calculators, my favorite for predicting the maximum future value of spousal claims is http://www.bedrockcapital.com/ssanalyze/
The results are given in a clear do this on such and such a date. Also at the bottom you can enter your current plan and it then shows the difference with the "optimal" one (from a future value standpoint).

A problem with following the optimal plan is if it forces one to spend the 401k way down by the time you hit 70. That's my situation if I were to retire now. That seems to expose me to a nearer term sequence of returns risk. I'm going to work an extra year or so to compensate and go for SS at 70 but your decision may vary.

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David Jay
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Re: When should wife take SS?

Post by David Jay » Sat Jun 17, 2017 10:11 pm

On the cusp:

I hadn't seen that calculator before. I like the simplicity and the side-by-side comparison.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

lbrowning
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Re: When should wife take SS?

Post by lbrowning » Sun Jun 18, 2017 2:39 pm

If she does claim SS at age 62, can I just wait a year and file a restricted application for my spousal benefits when I reach FRA at 66?

basspond
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Re: When should wife take SS?

Post by basspond » Sun Jun 18, 2017 4:39 pm

onthecusp wrote:The general advice, if your 401k is large enough, is for the higher earner to defer until 70 to maximize the future value and "longevity insurance" aspect of inflation adjusted SS payments. This means spending from your 401k in the meantime.


I agree that delaying is longevity insurance but if a person has ample funds to gap the difference then my geneneral advice would be to take as soon as possible. Even though monthly payments and total payout could be more, people forget to calculate the NPV of payments.

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BL
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Re: When should wife take SS?

Post by BL » Sun Jun 18, 2017 5:07 pm

I suggest you pick up Mike Piper's latest book on SS or at least look up and read some of Mike's comments on Boglehead threads. There were changes made a year or so ago that are hard to keep straight, so best get it from an expert. The survivor at FRA still gets the amount the other, assuming higher income person, was receiving or was eligible to receive. Spousal is based on PIA.

Social Security Made Simple: Social Security Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less Paperback – February 20, 2017
by Mike Piper (Author)

spencer99
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Re: When should wife take SS?

Post by spencer99 » Sun Jun 18, 2017 6:14 pm

lbrowning wrote:If she does claim SS at age 62, can I just wait a year and file a restricted application for my spousal benefits when I reach FRA at 66?


Yes

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Peter Foley
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Re: When should wife take SS?

Post by Peter Foley » Sun Jun 18, 2017 8:27 pm

If the Op's spouse does not file and claim SS at age 62, can the OP still file a restricted application at FRA 66 and collect spousal benefits?

spencer99
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Re: When should wife take SS?

Post by spencer99 » Sun Jun 18, 2017 9:27 pm

Peter Foley wrote:If the Op's spouse does not file and claim SS at age 62, can the OP still file a restricted application at FRA 66 and collect spousal benefits?


No

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