Another Social Security Strategy Question

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pennywise
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Another Social Security Strategy Question

Post by pennywise » Thu Jun 28, 2018 5:10 pm

Social security claiming strategies sure get hard to figure out!

My husband and I are four years apart in age with me the younger; our birthdays are a week apart. Today we are 60/64 and birthdays are in August/September. Our PIA monthly benefits are almost identical.

Using the wonderful https://opensocialsecurity.com/(thank you Mike Piper AKA obliviousinvestor), the maximizing claiming strategy is for me to start my SS at age 62, when he will be 66 and at his FRA. At the time I take my reduced benefit the calculator shows he can start his spousal benefit, then at age 70 he can claim on his own record. Should I survive him I can then claim as a survivor's benefit that higher amount for the rest of my life

I assumed that if he took a spousal benefit it would be half of mine, which of course would be substantially below my own PIA since I started benefits at 62 YO. However in the calculator the monthly figure for his spousal benefit is half his PIA. Is this true? I can't understand how he receives that large an amount if I take my own SS early thus triggering the 'penalty' ie lower benefit payment.

Very confusing, but if it is true it just triggered the pleasant realization that we may have access to a heretofore untapped source of significant income that could start a lot sooner than we thought.
Last edited by pennywise on Thu Jun 28, 2018 8:34 pm, edited 2 times in total.

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oldcomputerguy
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Re: Another Social Security Strategy Question

Post by oldcomputerguy » Thu Jun 28, 2018 5:23 pm

pennywise wrote:
Thu Jun 28, 2018 5:10 pm
I assumed that if he took a spousal benefit it would be half of mine, which of course would be substantially below my own PIA since I started benefits at 62 YO. However in the calculator the monthly figure for his spousal benefit is half his PIA. Is this true? I can't understand how he receives that large an amount if I take my own SS early thus triggering the 'penalty' ie lower benefit payment.
I believe that is incorrect. According to Mike Piper's "Social Security Made Simple", if he files for spousal benefits after reaching FRA, his spousal benefit will be half of your PIA, not half of his.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

bearwithbear
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Re: Another Social Security Strategy Question

Post by bearwithbear » Thu Jun 28, 2018 6:02 pm

Pennywise,

Be careful about the 2016 changes, specifically "Deemed Filing Rules"

Bear

mhalley
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Re: Another Social Security Strategy Question

Post by mhalley » Thu Jun 28, 2018 6:58 pm

As he is 64 now, I assume his birthday is prior to 01/01/54, in which case he is still eligible to file a restricted application. So his benefit should be half of the spousal pia. If it is showing half of his, you might bring it to Mike Pipers attention as a bug at the thread on the calculator:
viewtopic.php?f=2&t=251065&newpost=3990825

Austintatious
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Re: Another Social Security Strategy Question

Post by Austintatious » Thu Jun 28, 2018 7:40 pm

mhalley wrote:
Thu Jun 28, 2018 6:58 pm
As he is 64 now, I assume his birthday is prior to 01/01/54, in which case he is still eligible to file a restricted application. So his benefit should be half of the spousal pia. If it is showing half of his, you might bring it to Mike Pipers attention as a bug at the thread on the calculator:
viewtopic.php?f=2&t=251065&newpost=3990825
Even if his bd was on 01/01/54, he'd still qualify for filing a restricted application for spousal benefits. Anyone born after that date has lost this option. I believe he must be at full retirement age when he files.

https://www.ssa.gov/planners/retire/applying6.html

relevant part of the text:
If you were born before January 2, 1954 and have already reached full retirement age, you can choose to receive only the spouse’s benefit and delay receiving your retirement benefit until a later date. If your birthday is January 2, 1954 or later, the option to take only one benefit at full retirement age no longer exists. If you file for one benefit, you will be effectively filing for all retirement or spousal benefits.

pennywise
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Re: Another Social Security Strategy Question

Post by pennywise » Thu Jun 28, 2018 8:33 pm

mhalley wrote:
Thu Jun 28, 2018 6:58 pm
As he is 64 now, I assume his birthday is prior to 01/01/54, in which case he is still eligible to file a restricted application. So his benefit should be half of the spousal pia. If it is showing half of his, you might bring it to Mike Pipers attention as a bug at the thread on the calculator:
viewtopic.php?f=2&t=251065&newpost=3990825
Sorry I misspoke--the spousal benefit showing is indeed half of my PIA, which happens to be the same as his (dual career/income couple). And yes he is eligible for the strategy since he was born before January 1, 1954. I am amazed that he can claim half my PIA even though I'm not going to get it myself, since if we opt for this strategy I'll be starting SS income at 62 so will get the lower annuity amount. OTOH as long as he sticks to the spousal benefit until he turns 70 and claims his own higher payments, I'll get the benefit of that if I am the longer lived partner. Wow.

Thank you to those who responded because it does appear my understanding-based on Mike's calculator-is correct.

Looks like we are eligible for a nice additional chunk of income that can start barely a year from now. That's a sweet double birthday gift indeed and again MANY thanks to oblivousinvestor for sharing the calculator :wink:

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dwickenh
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Re: Another Social Security Strategy Question

Post by dwickenh » Thu Jun 28, 2018 8:38 pm

At full retirement age he would be eligible to claim 50% of the FRA for her until he claims his benefit at age 70. She will receive 75% of her FRA benefit by claiming early. As long as he turned 64 on or before 01-01-2018 he should qualify to file and suspend his own benefit while claiming spousal benefits.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

vtMaps
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Re: Another Social Security Strategy Question

Post by vtMaps » Thu Jun 28, 2018 8:45 pm

dwickenh wrote:
Thu Jun 28, 2018 8:38 pm
As long as he turned 64 on or before 01-01-2018 he should qualify to file and suspend his own benefit while claiming spousal benefits.
No. He claims restricted spousal benefits. File and suspend is no longer an option.

--vtMaps
The optimist proclaims that we live in the best of all possible worlds; and the pessimist fears this is true. --James Branch Cabell

Austintatious
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Re: Another Social Security Strategy Question

Post by Austintatious » Thu Jun 28, 2018 9:00 pm

vtMaps wrote:
Thu Jun 28, 2018 8:45 pm
dwickenh wrote:
Thu Jun 28, 2018 8:38 pm
As long as he turned 64 on or before 01-01-2018 he should qualify to file and suspend his own benefit while claiming spousal benefits.
No. He claims restricted spousal benefits. File and suspend is no longer an option.

--vtMaps
vtMaps has it right. He needs to make sure that he applies for spousal benefits, only, under his wife's SS history. The "file and suspend" option pertained to one's own SS benefits (as opposed to one's spouse's benefits) is no longer available.

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dwickenh
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Re: Another Social Security Strategy Question

Post by dwickenh » Thu Jun 28, 2018 9:24 pm

vtMaps wrote:
Thu Jun 28, 2018 8:45 pm
dwickenh wrote:
Thu Jun 28, 2018 8:38 pm
As long as he turned 64 on or before 01-01-2018 he should qualify to file and suspend his own benefit while claiming spousal benefits.
No. He claims restricted spousal benefits. File and suspend is no longer an option.

--vtMaps
I misstated the file and suspend as it has been eliminated- you are correct.

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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Peter Foley
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Re: Another Social Security Strategy Question

Post by Peter Foley » Fri Jun 29, 2018 3:59 pm

For him to claim restricted spousal benefits, does his wife have to file for hers?

Austintatious
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Re: Another Social Security Strategy Question

Post by Austintatious » Fri Jun 29, 2018 4:10 pm

Peter Foley wrote:
Fri Jun 29, 2018 3:59 pm
For him to claim restricted spousal benefits, does his wife have to file for hers?
Yes, the primary spouse must already have filed for his/her own benefits. It's important to remember that the spousal claimant is entitled to a full half of the primary spouse's Primary Insurance Amount even if the primary claimant claimed early, as long as the spousal claimant has reached full retirement age when his/her claim is made. SS reps frequently are confused about this and will just assume that the spousal benefit is to be based on the reduced amount the primary claimant is receiving for having claimed early.

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