When to claim Social Security: two reasons not to wait

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ObliviousInvestor
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Re: When to claim Social Security: two reasons not to wait

Post by ObliviousInvestor »

delamer wrote: Thu Dec 27, 2018 7:57 pm Say my spouse has a benefit of $2000 per month, based on claiming at 65. My FRA is 66 (PIA of $1,000).

He dies at 68, when I am 65. I claim my survivor’s benefit immediately.

Then the $2000 would be reduced because I am under my FRA?
Yes.
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DrGoogle2017
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Re: When to claim Social Security: two reasons not to wait

Post by DrGoogle2017 »

delamer wrote: Thu Dec 27, 2018 5:03 pm
DrGoogle2017 wrote: Thu Dec 27, 2018 4:39 pm So then @delamer is not correct then. That’s the clarification I need.
I could be, and I apologize if so.

I said “ The survivor benefit is the higher of the two SS benefits being paid, regardless of when the spouse or survivor claimed his/her benefit.”

Assume the following:

Both spouses are 62 or older.
No SSDI for either.
Spouse with higher PIA is receiving a benefit.

If the spouse with higher PIA dies first, does the age of either (at the time of death) affect the survivor’s benefit?

Likewise, does the age when either initially claimed (or not) their personal benefit affect the survivor’s benefit?
No apology is necessary. I just want some clarification because I’m writing down instructions for my kids and husband, all this knowledge I have regarding SS is a bit of tribal knowledge, it’s lost otherwise if I don’t document for them.
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Re: When to claim Social Security: two reasons not to wait

Post by DrGoogle2017 »

TravelforFun wrote: Thu Dec 27, 2018 8:17 pm
David Jay wrote: Mon May 14, 2018 6:15 pm
jeffyscott wrote: Mon May 14, 2018 5:25 pm
David Jay wrote: Mon May 14, 2018 3:52 pm
JoeRetire wrote: Sun May 13, 2018 7:52 am(Full disclosure: I'm 64 and my wife is 63 this year. We are planning to both wait until 70 to start our benefits. We still have 6-7 years to change our minds. No matter what, we intend to be happy.)
Joe:

I would take a good look at the numbers if the lower-earning spouse takes SS at FRA (likely 66 for you two) and higher earner waits until 70. There is no impact on survivor's benefit (survivor's benefit is the higher earner's benefit) and yields 4 years of additional benefits at the rate of the lower-earning spouse.
That is the case even if lower earning spouse takes it at 62, isn't it?
Yes it is.

Spousal (if lower earning spouse qualifies) is reduced if filing before FRA, which is our case. That may have been what I was thinking, good catch.
Be careful. If you're born after Jan 1, 1954, you can't restrict your application to just spousal. When you file, you will automatically be deemed to be filing for all benefits for which you are eligible.

TravelforFun
I don’t think this is true. I believe you can’t file for spousal at 62, which I had plan until the loophole was closed. However, survivor’s benefit is different. I plan to file survivor’s benefit at 62 for max 82.50% of my husband’s SS or PIA, but I’m delaying my own SS until age 70.

Edit to add the following link says so.
https://www.ssa.gov/planners/survivors/ifyou.html
dknightd
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Re: When to claim Social Security: two reasons not to wait

Post by dknightd »

Church Lady wrote: Thu Jan 25, 2018 1:50 am I stumbled upon this article today in my web travels:

http://danielamerman.com/va/BenefitAge.html
Making optimal decisions about when to claim Social Security benefits is of vital importance. For a person of retirement age with average savings, this choice may be more important than any other aspect of financial planning when it comes to the standard of living in retirement – yet, much of the information available is overly simplistic. This analysis looks at the claiming decision on four different levels, to better capture the tradeoffs involved and the impact that different choices can have.
Whereas I see much Boglehead discussion about the benefit to waiting until age 70 to claim, I don't see much discussion of 'hold harmless' and trust fund depletion.

So is this guy onto something? Or not? I have a few years before I can claim, but the discussion may help persons age 62+.
I'm assuming he is single. As others have pointed out spousal and survivor benefits probably out weigh his analysis.
The hold harmless does not apply to me, my retirement health insurance will cover part B premiums. Yes my retirement health care premiums will increase - probably faster than inflation - aarg.
I doubt trust fund depletion will effect anybody 62 or older. You can always file earlier, but as I understand it you can not easily decide to file later once you have filed. My plan is to claim SS as late as I can = just in case I live to 90!
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mickroark
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Re: When to claim Social Security: two reasons not to wait

Post by mickroark »

The main reason to file at 62 is that people over estimate the day of their death. For a male its about 80 if all goes really well. Longer if you are female. :(
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Re: When to claim Social Security: two reasons not to wait

Post by JW-Retired »

mickroark wrote: Fri Dec 28, 2018 4:04 am The main reason to file at 62 is that people over estimate the day of their death. For a male its about 80 if all goes really well. Longer if you are female. :(
It's not that bad and they only need to be average. For a median US male at age 62 there is a 50% chance he will make it to 82. A median female gets to 84.8.
https://www.ssa.gov/oact/STATS/table4c6.html
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vested1
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Re: When to claim Social Security: two reasons not to wait

Post by vested1 »

mickroark wrote: Fri Dec 28, 2018 4:04 am The main reason to file at 62 is that people over estimate the day of their death. For a male its about 80 if all goes really well. Longer if you are female. :(
From SSA.gov, a U.S. male at age 62 is expected to live 20 more years to age 82. A Female at age 62 is expected to live to age 82.81. This actuarial table was last updated for 2015.
https://www.ssa.gov/oact/STATS/table4c6.html
This means that the SSA expects 50% of those insured to live to that age and 50% to live longer. However, as you get older your life expectancy increases. You can follow this link and enter your age to find out how long they think you'll live.
https://www.ssa.gov/oact/population/longevity.html

Example: I am 66.5 and have a 50% chance of living to age 84.5. My wife is 65.5 (same birthday 1 year later) and has a 50% chance of living to age 86.7.

One member of a couple has a 50% chance of living until age 89.1 and a 45% chance of living to age 90, according to the Society of Actuaries.
https://personal.vanguard.com/us/insigh ... ol?lang=en
https://www.forbes.com/sites/wadepfau/2 ... 137dc2585b

Then there are familial trends and overall health to consider when determining the best filing strategy. Discounting suicide, no one knows when they will die, but for a couple, the delay of SS for the higher earner is more advantageous for survivor benefit purposes and thus, peace of mind. If you can afford to delay, a significantly increased survivor benefit is meaningful for a couple.
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Re: When to claim Social Security: two reasons not to wait

Post by DrGoogle2017 »

Plus delaying to take SS allows one to do Roth conversion. If your tax situation is higher when you have to take RMD then it’s a win win.
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munemaker
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Re: When to claim Social Security: two reasons not to wait

Post by munemaker »

MathWizard wrote: Thu Jan 25, 2018 3:08 pm
Church Lady wrote: Thu Jan 25, 2018 1:50 am
...
Whereas I see much Boglehead discussion about the benefit to waiting until age 70 to claim, I don't see much discussion of 'hold harmless' and trust fund depletion.

So is this guy onto something? Or not? I have a few years before I can claim, but the discussion may help persons age 62+.
Not really, I'm not interested in maximizing what I get from SS, I am interested in making sure every outcome is
acceptable.

The biggest part of waiting until 70 for me are three factors:
1) Longevity insurance: I cannot know how long my spouse and I will live. Averages do not matter. If they did, I would never
buy life insurance, and just buy it for the year of the average age of mortality.

2) Survivor benefits for spouse: For a couple where one has significantly different benefits (more than a factor of 2x), and where
the spouse with the lower benefits can draw some benefits on their own record (at least at their FRA), it pays to have the one
with larger benefits delay to 70, and have the one with lesser benefits take their benefits at FRA, and switch to spousal when
their spouse takes theirs. The key is that the larger benefit becomes the benefit for either surviving spouse, so you need to
look at the expected age when the last of the pair dies, not just the one with the higher benefit.

3) Taxation of SS benefits and RMDs: For people with significant tax deferred, RMDs can push the amount that they are required to
withdraw from tax deferred, and can cause up to 85% of SS benefits to be taxable income. Even not considering that,
RMDs can push you into a higher tax bracket. Deferring SS, and doing ROTH conversions before age 70 can mitigate
those effects.
+1 - Exactly my thinking!
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