Social Security - Maximizing a couples benefits

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mrgeeze
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Social Security - Maximizing a couples benefits

Post by mrgeeze » Sun Oct 15, 2017 8:46 am

Getting close to the age of getting paid.

I have significantly greater income history that my wife.
I also expect she will outlive me.

My current plan is to take benefits starting at 62.5.
My Break even calc (versus waiting till 66.3 +-) is around 80 years of age.
I reckon I'll be dead by then.
She may be also.

Have not determined when/if she should start.

I don't really want to argue/discuss the difference between 62.5 and 66. I have done the math.
If it has a real implication before age 80 or even 85 perhaps, but lets not derail the thread on philosophical difference.

The focus is maximizing benefits for both of us to lets say age 82.

I guess I do not fully understand survivor benefits yet.
Wondering what strategy gets us the most $$$.

Thanks in advance for helping me start this decision making process

TheNightsToCome
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Re: Social Security - Maximizing a couples benefits

Post by TheNightsToCome » Sun Oct 15, 2017 9:28 am

mrgeeze wrote:
Sun Oct 15, 2017 8:46 am
Getting close to the age of getting paid.

I have significantly greater income history that my wife.
I also expect she will outlive me.

My current plan is to take benefits starting at 62.5.
My Break even calc (versus waiting till 66.3 +-) is around 80 years of age.
I reckon I'll be dead by then.
She may be also.

Have not determined when/if she should start.

I don't really want to argue/discuss the difference between 62.5 and 66. I have done the math.
If it has a real implication before age 80 or even 85 perhaps, but lets not derail the thread on philosophical difference.

The focus is maximizing benefits for both of us to lets say age 82.

I guess I do not fully understand survivor benefits yet.
Wondering what strategy gets us the most $$$.

Thanks in advance for helping me start this decision making process
"I have significantly greater income history that my wife.
I also expect she will outlive me."

Me too. My wife is 11 years younger and will probably outlive me by 14-15 years.

I'm not concerned with maximizing the total dollars from SS in case we don't live long lives. Instead, I'm concerned with maximizing the benefit in case one or both of us live to a very old age while our investment portfolio does poorly. Therefore, I expect to start SS benefits at 70, and my wife will plan to collect spousal benefits at her full retirement age.

I purchased Maximize My Social Security and was very satisfied with the product: https://maximizemysocialsecurity.com/.

You can enter your salary history and ages at death in the program, and it will tell you what strategy will maximize your benefits. When I used the program I had a couple of questions which the company answered promptly by email. I think it was $140 for a one-year subscription. Money well-spent in my opinion.

goblue100
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Re: Social Security - Maximizing a couples benefits

Post by goblue100 » Sun Oct 15, 2017 9:57 am

Not really an expert, but I believe the higher earner should wait until at least FRA to maximize the survivor benefit for the lower earning spouse.
https://www.cnbc.com/2017/06/02/how-mar ... efits.html

"Here are the basics of spousal benefits: Those who were married for at least 10 consecutive years can claim either their own benefits based on their earnings — or half of the former spouse's benefits, whichever is higher, once they reach full retirement age.

That means that a higher earner in the couple may wait to file at 70 while the lower earner can claim at full retirement age to maximize their total benefits as a couple.

"A higher earner should not base his or her strategy on their own life expectancy, but rather base it on the joint life expectancy of the couple," Kron said. He noted that actuarially, there is a 50 percent chance that one member of a healthy 65-year-old couple will live to age 93."
Some people are immune to good advice. - Saul Goodman

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WoodSpinner
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Re: Social Security - Maximizing a couples benefits

Post by WoodSpinner » Sun Oct 15, 2017 9:58 am

Op,

I suggest you look into survivors benefits closely before making a decision. This can often be a strong decision criteria for planning.

SSAnalyzer by Bedrock has been a really useful tool for me to compare approaches.

I would pay careful attention to:
- cash flow requirements
- your age and expected longevity
- her age and expected longevity
- impact of your death on cash flow, taxes etc.

Sometimes the SS decision comes down to a Longevity Insurance play to insure adequate cash flow in your later years. For others it’s a cash flow decision. We don’t have enough info on your circumstances to provide deep insight.

I hope the tools and approach provided in this thread are of some help.

Good luck

8-)
Last edited by WoodSpinner on Mon Oct 16, 2017 10:38 am, edited 1 time in total.

dbr
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Re: Social Security - Maximizing a couples benefits

Post by dbr » Sun Oct 15, 2017 10:03 am

Yes, a person should probably try out one or two of the SS planning programs out there.

It will often turn out that security of having maximum benefit at extended ages will come back to the one spouse at 70, spousal benefit at FRA formula.

vested1
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Re: Social Security - Maximizing a couples benefits

Post by vested1 » Sun Oct 15, 2017 10:23 am

More information is needed in order to provide advice on maximizing SS. However, when to take SS is not particularly a philosophy, but rather an exercise in economics. If you provide your ages, and your estimated PIA's at your respective FRA's you will get more helpful responses.

1. How do you know you will be dead at age 80, and that your wife may be also?
2. You seem to have made up your mind on not delaying, so why ask how to maximize benefits?
3. Many use break even as a determining factor on when to file, but SS is purely income, not a pot of gold that can be accessed all at once. It is an annuity, or acts like one, only far better than can be purchased for a comparable cost.

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FiveK
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Re: Social Security - Maximizing a couples benefits

Post by FiveK » Sun Oct 15, 2017 10:28 am

See Tools_and_calculators#Social_Security and links therein for several programs that will calculate a strategy for maximize benefits - depending on your inputs for life expectancy, etc.

spammagnet
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Re: Social Security - Maximizing a couples benefits

Post by spammagnet » Sun Oct 15, 2017 10:51 am

TheNightsToCome wrote:
Sun Oct 15, 2017 9:28 am
... I purchased Maximize My Social Security and was very satisfied with the product: https://maximizemysocialsecurity.com/. ... I think it was $140 for a one-year subscription.
There are free alternatives but I concur with the recommendation. The cost is $40/yr, not $140/yr.

Purchase page, MaximizeMySocialSecurity.com.

JW-Retired
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Re: Social Security - Maximizing a couples benefits

Post by JW-Retired » Sun Oct 15, 2017 12:24 pm

goblue100 wrote:
Sun Oct 15, 2017 9:57 am
Not really an expert, but I believe the higher earner should wait until at least FRA to maximize the survivor benefit for the lower earning spouse.
Assuming OP lives at least to FRA, the widow benefit will be the high earner's benefit amount at the time he dies. Maximizing the survivor benefit for the lower earning spouse requires the high earner to wait until 70. Every year earlier than that will reduce that benefit by 8%.
JW
disclosure: My wife and I were in that position so it was a no-brainer.
Last edited by JW-Retired on Sun Oct 15, 2017 12:37 pm, edited 1 time in total.
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TheNightsToCome
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Re: Social Security - Maximizing a couples benefits

Post by TheNightsToCome » Sun Oct 15, 2017 12:36 pm

JW-Retired wrote:
Sun Oct 15, 2017 12:24 pm
goblue100 wrote:
Sun Oct 15, 2017 9:57 am
Not really an expert, but I believe the higher earner should wait until at least FRA to maximize the survivor benefit for the lower earning spouse.
Assuming OP lives at least to FRA, the widow benefit will be the high earner's benefit amount at the time he dies. Maximizing the survivor benefit for the lower earning spouse requires the high earner to wait until 70. Every year earlier than that will reduce that benefit by 8%.
JW
My understanding is that my wife's spousal benefit is maximized as long as I wait until my FRA to claim benefits. My benefits increase another 8%/year if I then wait until 70, but my wife's spousal benefit will not increase beyond what it is at my FRA (i.e., 1/2 of my FRA benefit).

JW-Retired
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Re: Social Security - Maximizing a couples benefits

Post by JW-Retired » Sun Oct 15, 2017 12:39 pm

TheNightsToCome wrote:
Sun Oct 15, 2017 12:36 pm
JW-Retired wrote:
Sun Oct 15, 2017 12:24 pm
goblue100 wrote:
Sun Oct 15, 2017 9:57 am
Not really an expert, but I believe the higher earner should wait until at least FRA to maximize the survivor benefit for the lower earning spouse.
Assuming OP lives at least to FRA, the widow benefit will be the high earner's benefit amount at the time he dies. Maximizing the survivor benefit for the lower earning spouse requires the high earner to wait until 70. Every year earlier than that will reduce that benefit by 8%.
JW
My understanding is that my wife's spousal benefit is maximized as long as I wait until my FRA to claim benefits. My benefits increase another 8%/year if I then wait until 70, but my wife's spousal benefit will not increase beyond what it is at my FRA (i.e., 1/2 of my FRA benefit).
That is spousal benefit, survivor benefit is completely different. Google it. (and I will look for the SS link too)
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JW-Retired
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Re: Social Security - Maximizing a couples benefits

Post by JW-Retired » Sun Oct 15, 2017 12:49 pm

See https://www.ssa.gov/pubs/EN-05-10084.pdf
SS wrote: Social Security uses the deceased worker’s basic benefit
amount to calculate the percentage survivors can get.
The percentage depends on the survivor’s age and
relationship to the worker. If the worker who died was
getting reduced benefits, we’ll base your survivor’s benefit
on that amount. In most typical claims for benefits:
A widow or widower, at full retirement age or older,
generally gets 100 percent of the worker’s basic
benefit amount
;
JW
Retired at Last

TheNightsToCome
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Re: Social Security - Maximizing a couples benefits

Post by TheNightsToCome » Sun Oct 15, 2017 12:52 pm

JW-Retired wrote:
Sun Oct 15, 2017 12:39 pm
TheNightsToCome wrote:
Sun Oct 15, 2017 12:36 pm
JW-Retired wrote:
Sun Oct 15, 2017 12:24 pm
goblue100 wrote:
Sun Oct 15, 2017 9:57 am
Not really an expert, but I believe the higher earner should wait until at least FRA to maximize the survivor benefit for the lower earning spouse.
Assuming OP lives at least to FRA, the widow benefit will be the high earner's benefit amount at the time he dies. Maximizing the survivor benefit for the lower earning spouse requires the high earner to wait until 70. Every year earlier than that will reduce that benefit by 8%.
JW
My understanding is that my wife's spousal benefit is maximized as long as I wait until my FRA to claim benefits. My benefits increase another 8%/year if I then wait until 70, but my wife's spousal benefit will not increase beyond what it is at my FRA (i.e., 1/2 of my FRA benefit).
That is spousal benefit, survivor benefit is completely different. Google it. (and I will look for the SS link too)
Got it.

delamer
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Re: Social Security - Maximizing a couples benefits

Post by delamer » Sun Oct 15, 2017 2:53 pm

I think your focus is wrong:

"The focus is maximizing benefits for both of us to lets say age 82."

In your position -- and in your wife's -- I'd be focused on making sure my wife had adequate income once I died, given that I expect her to outlive me.

Her survivor benefit will equal the Social Security benefit that you have while you are alive. That probably means that you should maximize your benefit to give her a solid "floor" of income regardless of what happens to the markets.

Of course, the same is true if you survive her. Her SS benefit goes away, and your benefit is your floor.

dbr
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Re: Social Security - Maximizing a couples benefits

Post by dbr » Sun Oct 15, 2017 3:09 pm

delamer wrote:
Sun Oct 15, 2017 2:53 pm

In your position -- and in your wife's -- I'd be focused on making sure my wife had adequate income once I died, given that I expect her to outlive me.
I don't know exactly what we expect, but our SS strategy includes consideration of what happens when one of us is gone. That has also been our focus.

mrgeeze
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Re: Social Security - Maximizing a couples benefits

Post by mrgeeze » Sun Oct 15, 2017 3:48 pm

Thanks to some of you.

SS tools out there that allow you to work through some scenarios should help.
I find that useful advice & appreciate that information.

'nuff said.

delamer
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Re: Social Security - Maximizing a couples benefits

Post by delamer » Sun Oct 15, 2017 3:49 pm

dbr wrote:
Sun Oct 15, 2017 3:09 pm
delamer wrote:
Sun Oct 15, 2017 2:53 pm

In your position -- and in your wife's -- I'd be focused on making sure my wife had adequate income once I died, given that I expect her to outlive me.
I don't know exactly what we expect, but our SS strategy includes consideration of what happens when one of us is gone. That has also been our focus.
Yes, planning needs to be done based on one spouse outliving the other because that is the most likely scenario -- whether it turns out to be by 20 days or 20 years.

I believe the planning should start with determining how much each spouse will need to cover basic expenses if s/he is the survivor and the best way to provide that income. Then looking at maximizing SS is fine. But that strategy is dependent on estimating ages of death which no one knows.

Both of my grandmothers outlived their husbands by at least 25 years. Yet, oddly enough, among my parents and their siblings -- or 7 married couples -- in only 2 cases did the wife outlive her husband.

My point is that you never know.

rgs92
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Re: Social Security - Maximizing a couples benefits

Post by rgs92 » Sun Oct 15, 2017 4:34 pm

Yep, you never know. In both the case of me and my wife (our 2 sets of parents), the husbands are currently outliving the wife by 10 years+ and counting, and not from accidents or anything unexpected at latter ages. They both did some planning expecting the reverse to happen. So it's hard to plan.

spammagnet
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Re: Social Security - Maximizing a couples benefits

Post by spammagnet » Sun Oct 15, 2017 4:49 pm

delamer wrote:
Sun Oct 15, 2017 3:49 pm
My point is that you never know.
We don't know what will happen but we have a pretty good idea about the likelihood of what will happen.

delamer
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Re: Social Security - Maximizing a couples benefits

Post by delamer » Sun Oct 15, 2017 5:52 pm

spammagnet wrote:
Sun Oct 15, 2017 4:49 pm
delamer wrote:
Sun Oct 15, 2017 3:49 pm
My point is that you never know.
We don't know what will happen but we have a pretty good idea about the likelihood of what will happen.
Agreed -- but given the devastating impact of a surviving spouse being left with very little income, even an unlikely outcome has to be considered in planning.

cherijoh
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Location: Charlotte NC

Re: Social Security - Maximizing a couples benefits

Post by cherijoh » Sun Oct 15, 2017 6:19 pm

mrgeeze wrote:
Sun Oct 15, 2017 8:46 am
Getting close to the age of getting paid.

I have significantly greater income history that my wife.
I also expect she will outlive me.

My current plan is to take benefits starting at 62.5.
My Break even calc (versus waiting till 66.3 +-) is around 80 years of age.
I reckon I'll be dead by then.
She may be also.

Have not determined when/if she should start.

I don't really want to argue/discuss the difference between 62.5 and 66. I have done the math.
If it has a real implication before age 80 or even 85 perhaps, but lets not derail the thread on philosophical difference.

The focus is maximizing benefits for both of us to lets say age 82.

I guess I do not fully understand survivor benefits yet.
Wondering what strategy gets us the most $$$.

Thanks in advance for helping me start this decision making process
If you already decided to take your benefit at 62.5 then there is very little to discuss about strategy to get you the most $$$$. You have already disabled any of the levers that would have any substantial impact. Some people don't have a choice and need to start collecting SS immediately but that doesn't sound like the case here.

IMO breakeven calculations for SS are questionable even for single people and really shortsighted for married couples. You are placing the same value on having extra money now ("Getting close to the age of getting paid") and the possibility that your widow could run out of money in her old age because you locked in a substantially lower SS benefit for both of your life spans. That may seem harsh, but that is the reality of the way you are approaching this decision.

A key component in making the best decision is the difference in age between you and your wife. "I expect she will outlive me" covers a lot of ground. On an actuarial basis that covers her being a whole lot younger than you to a few years older since women on average live longer than men. In general, a couple in your circumstances (i.e., male having substantially higher earnings) favors the male waiting to collect benefits in order to give his wife longevity insurance. This is even more of a favored approach for an older husband/younger wife. I didn't see that you mentioned your wife's age in your post.

spammagnet
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Re: Social Security - Maximizing a couples benefits

Post by spammagnet » Sun Oct 15, 2017 6:57 pm

delamer wrote:
Sun Oct 15, 2017 5:52 pm
spammagnet wrote:
Sun Oct 15, 2017 4:49 pm
We don't know what will happen but we have a pretty good idea about the likelihood of what will happen.
Agreed -- but given the devastating impact of a surviving spouse being left with very little income, even an unlikely outcome has to be considered in planning.
That is the likelihood I referred to. Our plans for SS benefits are to optimize the income of the surviving spouse by deferring my benefits to 70. We may or may not defer DWs.

dollarsaver
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Re: Social Security - Maximizing a couples benefits

Post by dollarsaver » Sun Oct 15, 2017 7:00 pm

TheNightsToCome wrote:
Sun Oct 15, 2017 12:36 pm
JW-Retired wrote:
Sun Oct 15, 2017 12:24 pm
goblue100 wrote:
Sun Oct 15, 2017 9:57 am
Not really an expert, but I believe the higher earner should wait until at least FRA to maximize the survivor benefit for the lower earning spouse.
Assuming OP lives at least to FRA, the widow benefit will be the high earner's benefit amount at the time he dies. Maximizing the survivor benefit for the lower earning spouse requires the high earner to wait until 70. Every year earlier than that will reduce that benefit by 8%.
JW
My understanding is that my wife's spousal benefit is maximized as long as I wait until my FRA to claim benefits. My benefits increase another 8%/year if I then wait until 70, but my wife's spousal benefit will not increase beyond what it is at my FRA (i.e., 1/2 of my FRA benefit).

Does the wife's spousal benefit increase by COLA's if she takes it at her FRA and husband waits until age 70 to earn DRC? If husband already is 66 and suspended his benefit and it is earning COLA + 8% per year, when wife takes spousal benefit in 3 years is hers 1/2 of the amount that her husband has earned with COLA's and DRC"S?

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#Cruncher
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Re: Social Security - Maximizing a couples benefits

Post by #Cruncher » Sun Oct 15, 2017 9:22 pm

goblue100 wrote:
Sun Oct 15, 2017 9:57 am
That means that a higher earner in the couple may wait to file at 70 while the lower earner can claim at full retirement age to maximize their total benefits as a couple.
I don't believe one can get a spousal benefit until the other spouse has filed for his own benefits. (See the Aug 2016 thread, Social Security - Spousal Benefits - Basics.) So for example assume the worker and the spouse are the same age, the worker claims at age 70, and the spouse claims at Normal Retirement Age (NRA or FRA). She will not get spousal benefits until age 70. Between NRA and 70 she will collect based only on her own work record. If that is less than 50% of the worker's Primary Insurance Amount (PIA), at age 70 she will begin collecting that higher amount. Is this correct?

I would also appreciate comments as to whether the following analysis is correct. Since the original poster provided little information, I'm assuming the following:
  • Both husband and wife born in 1956 (in the same month) and hence have a NRA of 66-1/3. (See Effect of Early or Delayed retirement.)
  • Husband does not work after age 62 or if he does, it doesn't increase his average wages upon which his PIA is calculated.
  • Wife is entitled to no SS benefit on her own work record.
  • Husband and wife both claim at the same time.
  • Claiming after NRA increases benefits for the husband by 8% per year (2/300 per month).
  • Claiming before NRA reduces benefits according to the following. (See Early or Late Retirement and Benefits for Spouses.)

    Code: Select all

                 1-36 mo         > 36 mo
             --------------   -------------              
    Worker    5/ 900 per mo   5/1200 per mo
    Spouse   25/3600 per mo   5/1200 per mo

Code: Select all

             Husband                  Wife
     ----------------------   ----------------------
           Months  Benefit          Months   Benefit    Total
Row  Age   vs NRA    % PIA    Age   vs NRA    % PIA     % PIA

Code: Select all

  8  62      (52)   73.333%   62      (52)   34.167%   107.500%
  9  62.5    (46)   75.833%   62.5    (46)   35.417%   111.250%
 10  63      (40)   78.333%   63      (40)   36.667%   115.000%
 11  64      (28)   84.444%   64      (28)   40.278%   124.722%
 12  65      (16)   91.111%   65      (16)   44.444%   135.556%
 13  66       (4)   97.778%   66       (4)   48.611%   146.389%
 14  66.333    0   100.000%   66.333    0    50.000%   150.000%
 15  67        8   105.333%   67        8    50.000%   155.333%
 16  68       20   113.333%   68       20    50.000%   163.333%
 17  69       32   121.333%   69       32    50.000%   171.333%
 18  70       44   129.333%   70       44    50.000%   179.333%
So, for example if the husband's PIA is $1,000 per month and both spouses claim at age 62, they will receive $1,075 per month (Total: 1000 * 107.5%) while both are alive and $733 per month (Husband: 1000 * 73-1/3%) after one of them dies.

Which claiming age is best depends of many things. It helps the decision to estimate the yearly benefits weighted by the probability of one or both spouses surviving to all possible ages. To illustrate this, the next to the right column shows the sum of the survival weighted cash flows per $1,000 of monthly PIA assuming both spouses have mortality probabilities as given by the SSA 1960 Cohort Life Table.

Code: Select all

                    Mo Benefit          At Age 62
   Age     Years    while Alive    Surv-Wtd   Discounted
Man  Wife  Delay    Both  Only 1   Cash Flow    at 2%
---  ----  -----   -----  ------   ---------  ---------- 
 62   62      0    1,075     733    309,000     239,000
 63   63      1    1,150     783    317,000     242,000
 64   64      2    1,247     844    328,000     247,000
 65   65      3    1,356     911    339,000     253,000
 66   66      4    1,464     978    348,000     256,000 <--
 67   67      5    1,553   1,053    354,000     257,000 <--
 68   68      6    1,633   1,133    357,000     256,000 <--
 69   69      7    1,713   1,213    358,000     253,000
 70   70      8    1,793   1,293    357,000     249,000
The far right column shows the Present Value (PV) of the survival-weighted cash flows discounted at 2%. (2% being an estimate of the real return for an investment as safe as Social Security.) Given the mortality table and the 2% discount rate, the highest probable Present Value occurs when both spouses retire at ages 66, 67, or 68. (I calculated the surival-weighted cash flows and the present values using my longevity estimator.)

One can dispense with mortality tables and survival-weighting and just compute the present value (PV) of the cash flows with specific assumptions for longevity. For example, the following table is based on the age 62 $1,075 and $733 monthly benefits for various combinations of the age when the first spouse dies and the years the other spouse survives after that. For example, if the first spouse dies at age 80 and the other one lives 8 more years, the PV is $240,200. The next table shows that for the same longevity the PV is $258,400 when based on the age 66 $1,464 and $978 monthly benefits . [*]

PV discounted @ 2% when both spouses claim at age 62

Code: Select all

1st / 2nd ->    0        2        4        6        8       10       12
---          -------  -------  -------  -------  -------  -------  -------
 74          137,500  151,100  164,100  176,600  188,600  200,200  211,300
 76          157,400  170,400  182,900  195,000  206,500  217,600  228,300
 78          176,500  189,000  201,000  212,600  223,700  234,400  244,600
 80          194,900  206,900  218,400  229,500 [240,200] 250,500  260,300 [*]
 82          212,500  224,100  235,200  245,800  256,100  265,900  275,400
 84          229,400  240,500  251,200  261,500  271,300  280,800  289,900
 86          245,700  256,400  266,600  276,500  285,900  295,000  303,800
 88          261,400  271,600  281,500  290,900  300,000  308,700  317,100
 90          276,400  286,200  295,700  304,800  313,500  321,900  330,000
 92          290,800  300,300  309,400  318,100  326,500  334,600  342,300
 94          304,700  313,800  322,500  330,900  339,000  346,700  354,200
PV discounted @ 2% when both spouses claim at age 66

Code: Select all

1st / 2nd ->    0        2        4        6        8       10       12
---          -------  -------  -------  -------  -------  -------  -------
 74          119,800  137,900  155,300  172,000  188,000  203,400  218,200
 76          146,900  164,300  181,000  197,000  212,400  227,200  241,500
 78          172,900  189,600  205,600  221,100  235,900  250,100  263,800
 80          197,900  213,900  229,400  244,200 [258,400] 272,100  285,200 [*]
 82          221,900  237,300  252,100  266,400  280,000  293,200  305,800
 84          245,000  259,800  274,000  287,700  300,800  313,500  325,600
 86          267,200  281,400  295,100  308,200  320,800  333,000  344,600
 88          288,500  302,100  315,300  327,900  340,000  351,700  362,900
 90          308,900  322,100  334,700  346,800  358,500  369,700  380,400
 92          328,600  341,200  353,400  365,000  376,200  387,000  397,300
 94          347,500  359,600  371,300  382,500  393,200  403,600  413,500
* Calculation using the Excel PV function:

Code: Select all

240,200 = PV(2%/12, 12*18, -1075, 0, 0)                    + PV(2%/12, 12*8, -733, 0, 0) / (1+2%/12)^(12*18)
258,400 = PV(2%/12, 12*14, -1464, 0, 0) / (1+2%/12)^(12*4) + PV(2%/12, 12*8, -978, 0, 0) / (1+2%/12)^(12*18)

TheNightsToCome
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Re: Social Security - Maximizing a couples benefits

Post by TheNightsToCome » Mon Oct 16, 2017 10:18 pm

dollarsaver wrote:
Sun Oct 15, 2017 7:00 pm
TheNightsToCome wrote:
Sun Oct 15, 2017 12:36 pm
JW-Retired wrote:
Sun Oct 15, 2017 12:24 pm
goblue100 wrote:
Sun Oct 15, 2017 9:57 am
Not really an expert, but I believe the higher earner should wait until at least FRA to maximize the survivor benefit for the lower earning spouse.
Assuming OP lives at least to FRA, the widow benefit will be the high earner's benefit amount at the time he dies. Maximizing the survivor benefit for the lower earning spouse requires the high earner to wait until 70. Every year earlier than that will reduce that benefit by 8%.
JW
My understanding is that my wife's spousal benefit is maximized as long as I wait until my FRA to claim benefits. My benefits increase another 8%/year if I then wait until 70, but my wife's spousal benefit will not increase beyond what it is at my FRA (i.e., 1/2 of my FRA benefit).

Does the wife's spousal benefit increase by COLA's if she takes it at her FRA and husband waits until age 70 to earn DRC? If husband already is 66 and suspended his benefit and it is earning COLA + 8% per year, when wife takes spousal benefit in 3 years is hers 1/2 of the amount that her husband has earned with COLA's and DRC"S?
I initially assumed that if I waited until 70, then my wife's spousal benefit would increase to 1/2 of my increased benefit. I learned that isn't the case. The spousal benefit will not increase beyond half of my benefit at my full retirement age (even if I wait til 70 to claim my benefits).

ResearchMed
Posts: 5360
Joined: Fri Dec 26, 2008 11:25 pm

Re: Social Security - Maximizing a couples benefits

Post by ResearchMed » Mon Oct 16, 2017 10:25 pm

TheNightsToCome wrote:
Mon Oct 16, 2017 10:18 pm
dollarsaver wrote:
Sun Oct 15, 2017 7:00 pm
TheNightsToCome wrote:
Sun Oct 15, 2017 12:36 pm
JW-Retired wrote:
Sun Oct 15, 2017 12:24 pm
goblue100 wrote:
Sun Oct 15, 2017 9:57 am
Not really an expert, but I believe the higher earner should wait until at least FRA to maximize the survivor benefit for the lower earning spouse.
Assuming OP lives at least to FRA, the widow benefit will be the high earner's benefit amount at the time he dies. Maximizing the survivor benefit for the lower earning spouse requires the high earner to wait until 70. Every year earlier than that will reduce that benefit by 8%.
JW
My understanding is that my wife's spousal benefit is maximized as long as I wait until my FRA to claim benefits. My benefits increase another 8%/year if I then wait until 70, but my wife's spousal benefit will not increase beyond what it is at my FRA (i.e., 1/2 of my FRA benefit).

Does the wife's spousal benefit increase by COLA's if she takes it at her FRA and husband waits until age 70 to earn DRC? If husband already is 66 and suspended his benefit and it is earning COLA + 8% per year, when wife takes spousal benefit in 3 years is hers 1/2 of the amount that her husband has earned with COLA's and DRC"S?
I initially assumed that if I waited until 70, then my wife's spousal benefit would increase to 1/2 of my increased benefit. I learned that isn't the case. The spousal benefit will not increase beyond half of my benefit at my full retirement age (even if I wait til 70 to claim my benefits).
That is correct for spousal benefits.
However, don't forget that waiting until age 70 will provide the highest *survivor* benefits, as the survivor gets the higher of the two benefits, and for life.

RM
This signature is a placebo. You are in the control group.

vested1
Posts: 1034
Joined: Wed Jan 04, 2012 4:20 pm

Re: Social Security - Maximizing a couples benefits

Post by vested1 » Tue Oct 17, 2017 8:22 am

mrgeeze wrote:
Sun Oct 15, 2017 3:48 pm
Thanks to some of you.
Priceless 8-)

onthecusp
Posts: 262
Joined: Mon Aug 29, 2016 3:25 pm

Re: Social Security - Maximizing a couples benefits

Post by onthecusp » Tue Oct 17, 2017 9:30 am

WoodSpinner wrote:
Sun Oct 15, 2017 9:58 am
Op,

I suggest you look into survivors benefits closely before making a decision. This can often be a strong decision criteria for planning.

SSAnalyzer by Bedrock has been a really useful tool for me to compare approaches.

I would pay careful attention to:
- cash flow requirements
- your age and expected longevity
- her age and expected longevity
- impact of your death on cash flow, taxes etc.

Sometimes the SS decision comes down to a Longevity Insurance play to insure adequate cash flow in your later years. For others it’s a cash flow decision. We don’t have enough info on your circumstances to provide deep insight.

I hope the tools and approach provided in this thread are of some help.

Good luck

8-)

I also like this calculator. For something fairly simple and easy to use you can answer many different questions by adjusting the entries from the standard. For example if you plan to (or simply want to know what happens if you) die at 82, you can put that in. It seems to get the correct answers for the SS rules that change based on birth dates as well.

racy
Posts: 152
Joined: Sun Mar 30, 2008 7:38 am
Location: Earth

Re: Social Security - Maximizing a couples benefits

Post by racy » Tue Oct 17, 2017 9:38 am

onthecusp wrote:
Tue Oct 17, 2017 9:30 am
WoodSpinner wrote:
Sun Oct 15, 2017 9:58 am
Op,

I suggest you look into survivors benefits closely before making a decision. This can often be a strong decision criteria for planning.

SSAnalyzer by Bedrock has been a really useful tool for me to compare approaches.

I would pay careful attention to:
- cash flow requirements
- your age and expected longevity
- her age and expected longevity
- impact of your death on cash flow, taxes etc.

Sometimes the SS decision comes down to a Longevity Insurance play to insure adequate cash flow in your later years. For others it’s a cash flow decision. We don’t have enough info on your circumstances to provide deep insight.

I hope the tools and approach provided in this thread are of some help.

Good luck

8-)

I also like this calculator. For something fairly simple and easy to use you can answer many different questions by adjusting the entries from the standard. For example if you plan to (or simply want to know what happens if you) die at 82, you can put that in. It seems to get the correct answers for the SS rules that change based on birth dates as well.
I also like that calculator. Besides putting in age 82, try entering an age 1 year more than the default age used by the calculator. Made a significant difference in the results for us.

TheNightsToCome
Posts: 130
Joined: Fri Jun 30, 2017 11:48 pm

Re: Social Security - Maximizing a couples benefits

Post by TheNightsToCome » Tue Oct 17, 2017 10:34 am

ResearchMed wrote:
Mon Oct 16, 2017 10:25 pm
TheNightsToCome wrote:
Mon Oct 16, 2017 10:18 pm
dollarsaver wrote:
Sun Oct 15, 2017 7:00 pm
TheNightsToCome wrote:
Sun Oct 15, 2017 12:36 pm
JW-Retired wrote:
Sun Oct 15, 2017 12:24 pm

Assuming OP lives at least to FRA, the widow benefit will be the high earner's benefit amount at the time he dies. Maximizing the survivor benefit for the lower earning spouse requires the high earner to wait until 70. Every year earlier than that will reduce that benefit by 8%.
JW
My understanding is that my wife's spousal benefit is maximized as long as I wait until my FRA to claim benefits. My benefits increase another 8%/year if I then wait until 70, but my wife's spousal benefit will not increase beyond what it is at my FRA (i.e., 1/2 of my FRA benefit).

Does the wife's spousal benefit increase by COLA's if she takes it at her FRA and husband waits until age 70 to earn DRC? If husband already is 66 and suspended his benefit and it is earning COLA + 8% per year, when wife takes spousal benefit in 3 years is hers 1/2 of the amount that her husband has earned with COLA's and DRC"S?
I initially assumed that if I waited until 70, then my wife's spousal benefit would increase to 1/2 of my increased benefit. I learned that isn't the case. The spousal benefit will not increase beyond half of my benefit at my full retirement age (even if I wait til 70 to claim my benefits).
That is correct for spousal benefits.
However, don't forget that waiting until age 70 will provide the highest *survivor* benefits, as the survivor gets the higher of the two benefits, and for life.

RM
Yes, this is key for us. My wife is significantly younger and is likely to have a long life after I'm gone.

smitcat
Posts: 676
Joined: Mon Nov 07, 2016 10:51 am

Re: Social Security - Maximizing a couples benefits

Post by smitcat » Tue Oct 17, 2017 10:36 am

racy wrote:
Tue Oct 17, 2017 9:38 am
onthecusp wrote:
Tue Oct 17, 2017 9:30 am
WoodSpinner wrote:
Sun Oct 15, 2017 9:58 am
Op,

I suggest you look into survivors benefits closely before making a decision. This can often be a strong decision criteria for planning.

SSAnalyzer by Bedrock has been a really useful tool for me to compare approaches.

I would pay careful attention to:
- cash flow requirements
- your age and expected longevity
- her age and expected longevity
- impact of your death on cash flow, taxes etc.

Sometimes the SS decision comes down to a Longevity Insurance play to insure adequate cash flow in your later years. For others it’s a cash flow decision. We don’t have enough info on your circumstances to provide deep insight.

I hope the tools and approach provided in this thread are of some help.

Good luck

8-)

I also like this calculator. For something fairly simple and easy to use you can answer many different questions by adjusting the entries from the standard. For example if you plan to (or simply want to know what happens if you) die at 82, you can put that in. It seems to get the correct answers for the SS rules that change based on birth dates as well.
I also like that calculator. Besides putting in age 82, try entering an age 1 year more than the default age used by the calculator. Made a significant difference in the results for us.
I too like the calculator - but pay close attention to what you place in the variables "COLA" and "Discount rate" as they change the outputs/choices quite a bit.

boglegirl
Posts: 123
Joined: Mon Dec 17, 2012 1:41 pm

Re: Social Security - Maximizing a couples benefits

Post by boglegirl » Tue Oct 17, 2017 11:03 am

vested1 wrote:
Tue Oct 17, 2017 8:22 am
mrgeeze wrote:
Sun Oct 15, 2017 3:48 pm
Thanks to some of you.
Priceless 8-)
Yes, that comment made me laugh also.

I know this isn't what mrgeeze wants to hear, but I'll agree with the others (who are not being thanked) that he should wait as long as possible to claim, to maximize the benefit for the survivor. My husband is 7 years older than I, and his earnings have been much higher. We are going to claim for both of us when he's 70 and I'm 63. That way he gets the maximum benefit which one of us gets to keep no matter who dies first. My benefit won't be maximized because I'll claim it early...but the chances are decent that one of will die before the other, making the smaller second benefit irrelevant.

smitcat
Posts: 676
Joined: Mon Nov 07, 2016 10:51 am

Re: Social Security - Maximizing a couples benefits

Post by smitcat » Tue Oct 17, 2017 11:18 am

boglegirl wrote:
Tue Oct 17, 2017 11:03 am
vested1 wrote:
Tue Oct 17, 2017 8:22 am
mrgeeze wrote:
Sun Oct 15, 2017 3:48 pm
Thanks to some of you.
Priceless 8-)
Yes, that comment made me laugh also.

I know this isn't what mrgeeze wants to hear, but I'll agree with the others (who are not being thanked) that he should wait as long as possible to claim, to maximize the benefit for the survivor. My husband is 7 years older than I, and his earnings have been much higher. We are going to claim for both of us when he's 70 and I'm 63. That way he gets the maximum benefit which one of us gets to keep no matter who dies first. My benefit won't be maximized because I'll claim it early...but the chances are decent that one of will die before the other, making the smaller second benefit irrelevant.
Agreed and similar for us as well - that move will also likely enhance the amounts of money you see after tax as well.

JW-Retired
Posts: 6471
Joined: Sun Dec 16, 2007 12:25 pm

Re: Social Security - Maximizing a couples benefits

Post by JW-Retired » Tue Oct 17, 2017 12:26 pm

boglegirl wrote:
Tue Oct 17, 2017 11:03 am
vested1 wrote:
Tue Oct 17, 2017 8:22 am
mrgeeze wrote:
Sun Oct 15, 2017 3:48 pm
Thanks to some of you.
Priceless 8-)
Yes, that comment made me laugh also.

I know this isn't what mrgeeze wants to hear, but I'll agree with the others (who are not being thanked) that he should wait as long as possible to claim, to maximize the benefit for the survivor. My husband is 7 years older than I, and his earnings have been much higher. We are going to claim for both of us when he's 70 and I'm 63.
mrgeeze said in the first post that he didn't "fully understand survivor benefits yet." I too expected some kind of ah-ha that he might be going about this backwards. (Or maybe the above was it?) :?
Retired at Last

delamer
Posts: 3128
Joined: Tue Feb 08, 2011 6:13 pm

Re: Social Security - Maximizing a couples benefits

Post by delamer » Tue Oct 17, 2017 12:50 pm

JW-Retired wrote:
Tue Oct 17, 2017 12:26 pm
boglegirl wrote:
Tue Oct 17, 2017 11:03 am
vested1 wrote:
Tue Oct 17, 2017 8:22 am
mrgeeze wrote:
Sun Oct 15, 2017 3:48 pm
Thanks to some of you.
Priceless 8-)
Yes, that comment made me laugh also.

I know this isn't what mrgeeze wants to hear, but I'll agree with the others (who are not being thanked) that he should wait as long as possible to claim, to maximize the benefit for the survivor. My husband is 7 years older than I, and his earnings have been much higher. We are going to claim for both of us when he's 70 and I'm 63.
mrgeeze said in the first post that he didn't "fully understand survivor benefits yet." I too expected some kind of ah-ha that he might be going about this backwards. (Or maybe the above was it?) :?
Agreed. It just doesn't make sense to predetermine certain choices when you admit to not understanding the whole picture.

beardsworth
Posts: 1964
Joined: Fri Jun 15, 2007 4:02 pm

Re: Social Security - Maximizing a couples benefits

Post by beardsworth » Tue Oct 17, 2017 1:06 pm

vested1 wrote:
Tue Oct 17, 2017 8:22 am
mrgeeze wrote:
Sun Oct 15, 2017 3:48 pm
Thanks to some of you.
Priceless 8-)
And graceless. Everyone posting above has taken time from their own personal lives to help the OP, a total stranger; and everyone has given perspective and advice in good faith; and no one has been rude or snarky to the OP. Therefore, "thanks to all," even to those who made recommendations the OP didn't necessarily wish to hear, would have been the well-mannered and tactful acknowledgement.

Beyond that point, I agree with those here who suggest that the OP delay Social Security, for reasons they've already stated.

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