Social Security Claiming Strategy review

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SpideyIndexer
Posts: 404
Joined: Thu Apr 02, 2015 10:13 pm

Social Security Claiming Strategy review

Post by SpideyIndexer » Thu Sep 20, 2018 5:14 pm

My spouse is turning 62 in early 2019. I will reach FRA in late 2019 and have a much higher benefit. Due to my birthdate, I am grandfathered from the deeming rules. Could you SS experts out there double check my strategy as outlined below:

1. Spouse does a restricted filing for their benefit to start when turning 62 early 2019.
2. I do a restricted filing for my spousal benefit to start when reaching FRA later 2019. (I haven't seen a full explanation of why I wait for FRA but seems to be something to do with the new law.)
3. Years later, I file for my benefit to start when reaching 70 and my spouse files for spousal benefits.

Thanks.

Ace1
Posts: 215
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Location: Twinsburg Ohio

Re: Social Security Claiming Strategy review

Post by Ace1 » Thu Sep 20, 2018 6:02 pm

Spidey,
Check this link...
https://www.ssa.gov/planners/retire/deemedfaq.html

I believe your spouse, born on or after Jan 2, 1954, is deemed (required) to file for maximum benefit
(In this case spousal, and since before FRA, reduced), whenever she files.
Yes, you are grandfathered, however you must wait to your FRA, to file for unreduced spousal benefit,
which then allows you to file for your own increased benefit anytime after FRA.
Ace

SpideyIndexer
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Re: Social Security Claiming Strategy review

Post by SpideyIndexer » Thu Sep 20, 2018 6:59 pm

Ace1, thanks. So my spouse would be deemed to be filing for all benefits, but could not actually receive any (reduced) spousal benefits until I file for my earned benefits? That would be a bad situation!

I looked into a Social Security planner from Financial Engines and they advocated this strategy: spouse files for earned benefits at age 65 in early 2022 and I do a restricted filing for spousal benefits. Then at age 70 in late 2023, I file for earned benefits and my spouse files for spousal benefits. This is puzzling! Why file should my spouse file at age 65 before FRA? Does my spouse's deeming go away before FRA?

I entered life expectancies as "much longer than average."

SpideyIndexer
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Re: Social Security Claiming Strategy review

Post by SpideyIndexer » Thu Sep 20, 2018 7:05 pm

Maybe I need the Kotlikoff "Maximize My Social Security" program. I have the latest edition of his book "Get What's Yours" which is interesting but I find in it the issues are not presented very clearly.

vested1
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Re: Social Security Claiming Strategy review

Post by vested1 » Thu Sep 20, 2018 7:13 pm

- Your wife files at age 62 for a reduced benefit based on her own PIA in early 2019.
- You file for a restricted application on her benefit (spousal only) at your FRA and receive 1/2 of her PIA, even though she filed early.
- You file for your own benefit anytime after your FRA, with the maximum amount paid out at age 70. After you reach FRA, each month that you delay adds 2/3 of 1% to your PIA plus COLA.

So yes you are correct, although you stated that your wife was filing a restricted application, she is not. You will be filing the restricted application on her PIA benefit (amount she would have received at her FRA). If you die after reaching FRA but before age 70 while receiving restricted benefits, your wife will receive whatever you would have received had you filed on your own record at the date of your death. If you die after you eventually file she will receive whatever you were entitled to at the date of death with COLA increases going forward.

The rules say that you can't file a restricted application until your FRA, although you can submit the application 3 months before your FRA.

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galeno
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Re: Social Security Claiming Strategy review

Post by galeno » Thu Sep 20, 2018 7:17 pm

I played around with this: https://opensocialsecurity.com/

1. Wife is 61. I will be 61 in several months. I assumed $2000 PIA for me and $1000 PIA for spouse. PIA for both is 66 years 6 months.

Advice: I take SS at 70 years 0 months. Wife takes SS at 62 years 1 month.

NPV of SS for both is $609,934.


2. Wife is 61. I will be 61 in several months. Assumed $2000 PIA for me and $0 PIA for spouse. PIA for me is 66 years 6 months.

Advice: Both take SS at 68 years 1 months.

NPV of SS for both is $570,272.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

SpideyIndexer
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Re: Social Security Claiming Strategy review

Post by SpideyIndexer » Thu Sep 20, 2018 9:31 pm

vested1 wrote:
Thu Sep 20, 2018 7:13 pm
- Your wife files at age 62 for a reduced benefit based on her own PIA in early 2019.
- You file for a restricted application on her benefit (spousal only) at your FRA and receive 1/2 of her PIA, even though she filed early.
- You file for your own benefit anytime after your FRA, with the maximum amount paid out at age 70. After you reach FRA, each month that you delay adds 2/3 of 1% to your PIA plus COLA.

So yes you are correct, although you stated that your wife was filing a restricted application, she is not. You will be filing the restricted application on her PIA benefit (amount she would have received at her FRA). If you die after reaching FRA but before age 70 while receiving restricted benefits, your wife will receive whatever you would have received had you filed on your own record at the date of your death. If you die after you eventually file she will receive whatever you were entitled to at the date of death with COLA increases going forward.

The rules say that you can't file a restricted application until your FRA, although you can submit the application 3 months before your FRA.
Thanks, vested1. I goofed in saying my spouse would file a restricted application; that is no longer permitted. But I haven't yet found any clear explanation of what happens if a person born in 1954 or later files for earned benefits before their spouse files for earned benefits. Wouldn't this person be deemed to be filing for both earned and spousal benefits, although his or her spousal benefits would not yet be paid? And wouldn't full spousal benefits then be paid as soon as the spouse files for earned benefits? If not, why not?

Zott
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Re: Social Security Claiming Strategy review

Post by Zott » Thu Sep 20, 2018 9:52 pm

SpideyIndexer wrote:
Thu Sep 20, 2018 9:31 pm
vested1 wrote:
Thu Sep 20, 2018 7:13 pm
- Your wife files at age 62 for a reduced benefit based on her own PIA in early 2019.
- You file for a restricted application on her benefit (spousal only) at your FRA and receive 1/2 of her PIA, even though she filed early.
- You file for your own benefit anytime after your FRA, with the maximum amount paid out at age 70. After you reach FRA, each month that you delay adds 2/3 of 1% to your PIA plus COLA.

So yes you are correct, although you stated that your wife was filing a restricted application, she is not. You will be filing the restricted application on her PIA benefit (amount she would have received at her FRA). If you die after reaching FRA but before age 70 while receiving restricted benefits, your wife will receive whatever you would have received had you filed on your own record at the date of your death. If you die after you eventually file she will receive whatever you were entitled to at the date of death with COLA increases going forward.

The rules say that you can't file a restricted application until your FRA, although you can submit the application 3 months before your FRA.
Thanks, vested1. I goofed in saying my spouse would file a restricted application; that is no longer permitted. But I haven't yet found any clear explanation of what happens if a person born in 1954 or later files for earned benefits before their spouse files for earned benefits. Wouldn't this person be deemed to be filing for both earned and spousal benefits, although his or her spousal benefits would not yet be paid? And wouldn't full spousal benefits then be paid as soon as the spouse files for earned benefits? If not, why not?
Yes, in your case, your spouse would receive her own reduced benefit from age 62 until you file at age 70. Her benefit would increase to the spousal benefit when you file at your age 70. Note that the reduction in her own benefit (because of filing at age 62 instead of FRA) would continue to be assessed after she starts receiving the spousal benefit. It likely won't be a large dollar amount though. So you basically had the scenario correct in your first post except for the "restricted" application on the part of your spouse in step 1.

SpideyIndexer
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Re: Social Security Claiming Strategy review

Post by SpideyIndexer » Thu Sep 20, 2018 11:34 pm

Zott wrote:
Thu Sep 20, 2018 9:52 pm
SpideyIndexer wrote:
Thu Sep 20, 2018 9:31 pm
vested1 wrote:
Thu Sep 20, 2018 7:13 pm
- Your wife files at age 62 for a reduced benefit based on her own PIA in early 2019.
- You file for a restricted application on her benefit (spousal only) at your FRA and receive 1/2 of her PIA, even though she filed early.
- You file for your own benefit anytime after your FRA, with the maximum amount paid out at age 70. After you reach FRA, each month that you delay adds 2/3 of 1% to your PIA plus COLA.

So yes you are correct, although you stated that your wife was filing a restricted application, she is not. You will be filing the restricted application on her PIA benefit (amount she would have received at her FRA). If you die after reaching FRA but before age 70 while receiving restricted benefits, your wife will receive whatever you would have received had you filed on your own record at the date of your death. If you die after you eventually file she will receive whatever you were entitled to at the date of death with COLA increases going forward.

The rules say that you can't file a restricted application until your FRA, although you can submit the application 3 months before your FRA.
Thanks, vested1. I goofed in saying my spouse would file a restricted application; that is no longer permitted. But I haven't yet found any clear explanation of what happens if a person born in 1954 or later files for earned benefits before their spouse files for earned benefits. Wouldn't this person be deemed to be filing for both earned and spousal benefits, although his or her spousal benefits would not yet be paid? And wouldn't full spousal benefits then be paid as soon as the spouse files for earned benefits? If not, why not?
Yes, in your case, your spouse would receive her own reduced benefit from age 62 until you file at age 70. Her benefit would increase to the spousal benefit when you file at your age 70. Note that the reduction in her own benefit (because of filing at age 62 instead of FRA) would continue to be assessed after she starts receiving the spousal benefit. It likely won't be a large dollar amount though. So you basically had the scenario correct in your first post except for the "restricted" application on the part of your spouse in step 1.
That's great, Zott. Just to be sure, in this case my spouse's spousal benefit after I file would not be reduced but equal to half of my PIA?

SpideyIndexer
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Re: Social Security Claiming Strategy review

Post by SpideyIndexer » Fri Sep 21, 2018 12:24 am

If the output of the SS Optimizers is correct, it seems that one cannot be deemed to be filing for spousal benefits if one's spouse has not yet filed for earned benefits. They suggest that a younger spouse with lower earnings first apply for earned benefits, and later apply for spousal benefits after their spouse files for earned benefits. This implies no automatic deeming of the spousal benefits had taken place. Am I interpreting this correctly? I haven't seen it explicitly stated.

Ron Scott
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Re: Social Security Claiming Strategy review

Post by Ron Scott » Fri Sep 21, 2018 3:21 am

SpideyIndexer wrote:
Fri Sep 21, 2018 12:24 am
If the output of the SS Optimizers is correct, it seems that one cannot be deemed to be filing for spousal benefits if one's spouse has not yet filed for earned benefits. They suggest that a younger spouse with lower earnings first apply for earned benefits, and later apply for spousal benefits after their spouse files for earned benefits. This implies no automatic deeming of the spousal benefits had taken place. Am I interpreting this correctly? I haven't seen it explicitly stated.
I use Quicken SSO and their recommendation for my likely scenarios is as you say: Wife files for her own benefits at FRA. I file at 70. Wife converts to spousal benefits when I file.

People should run a dozen or so scenarios IMO to get a feel for this thing. You can test varying longevities, test varying start dates, even get yourself a new wife, and the outputs are not always intuitive.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

smitcat
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Re: Social Security Claiming Strategy review

Post by smitcat » Fri Sep 21, 2018 7:49 am

How do all these 'maximize SS ' posts take into consideration the affects outside of SS such as potential Roth conversions, other pensions, RMD's , potential single spouse etc?
I have found that if you want to maximize your incomes over extended time periods when retired it is imperative that you consider all of your portfolio and other income as well as your heirs (if they exist). Using the extended IORP as well as the RPM calculators running various scenarios is a real eye opener.
Discalimer - I did first spend an inordinate amount of time maximizing SS with various calculators before this Bogle site clued me in that I was potentially winning the battle and losing the war.

SpideyIndexer
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Re: Social Security Claiming Strategy review

Post by SpideyIndexer » Fri Sep 21, 2018 10:22 am

smitcat wrote:
Fri Sep 21, 2018 7:49 am
How do all these 'maximize SS ' posts take into consideration the affects outside of SS such as potential Roth conversions, other pensions, RMD's , potential single spouse etc?
I have found that if you want to maximize your incomes over extended time periods when retired it is imperative that you consider all of your portfolio and other income as well as your heirs (if they exist). Using the extended IORP as well as the RPM calculators running various scenarios is a real eye opener.
Discalimer - I did first spend an inordinate amount of time maximizing SS with various calculators before this Bogle site clued me in that I was potentially winning the battle and losing the war.
Is it ever better to get less Social Security payments? That seems surprising.

In my case, both the majority of SS payments and all RMDs will not occur until after age 70 which will help with Roth conversions. Though it is true the early filings will bring in some near term income that reduces the amount of potential conversions. I don't think this is enough to be a concern but will try to run some numbers.

vested1
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Re: Social Security Claiming Strategy review

Post by vested1 » Fri Sep 21, 2018 10:34 am

SpideyIndexer wrote:
Thu Sep 20, 2018 11:34 pm
Zott wrote:
Thu Sep 20, 2018 9:52 pm
SpideyIndexer wrote:
Thu Sep 20, 2018 9:31 pm
vested1 wrote:
Thu Sep 20, 2018 7:13 pm
- Your wife files at age 62 for a reduced benefit based on her own PIA in early 2019.
- You file for a restricted application on her benefit (spousal only) at your FRA and receive 1/2 of her PIA, even though she filed early.
- You file for your own benefit anytime after your FRA, with the maximum amount paid out at age 70. After you reach FRA, each month that you delay adds 2/3 of 1% to your PIA plus COLA.

So yes you are correct, although you stated that your wife was filing a restricted application, she is not. You will be filing the restricted application on her PIA benefit (amount she would have received at her FRA). If you die after reaching FRA but before age 70 while receiving restricted benefits, your wife will receive whatever you would have received had you filed on your own record at the date of your death. If you die after you eventually file she will receive whatever you were entitled to at the date of death with COLA increases going forward.

The rules say that you can't file a restricted application until your FRA, although you can submit the application 3 months before your FRA.
Thanks, vested1. I goofed in saying my spouse would file a restricted application; that is no longer permitted. But I haven't yet found any clear explanation of what happens if a person born in 1954 or later files for earned benefits before their spouse files for earned benefits. Wouldn't this person be deemed to be filing for both earned and spousal benefits, although his or her spousal benefits would not yet be paid? And wouldn't full spousal benefits then be paid as soon as the spouse files for earned benefits? If not, why not?
Yes, in your case, your spouse would receive her own reduced benefit from age 62 until you file at age 70. Her benefit would increase to the spousal benefit when you file at your age 70. Note that the reduction in her own benefit (because of filing at age 62 instead of FRA) would continue to be assessed after she starts receiving the spousal benefit. It likely won't be a large dollar amount though. So you basically had the scenario correct in your first post except for the "restricted" application on the part of your spouse in step 1.
That's great, Zott. Just to be sure, in this case my spouse's spousal benefit after I file would not be reduced but equal to half of my PIA?
The benefit is never reduced, but rather the higher of the two amounts is paid.

smitcat
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Re: Social Security Claiming Strategy review

Post by smitcat » Fri Sep 21, 2018 10:36 am

SpideyIndexer wrote:
Fri Sep 21, 2018 10:22 am
smitcat wrote:
Fri Sep 21, 2018 7:49 am
How do all these 'maximize SS ' posts take into consideration the affects outside of SS such as potential Roth conversions, other pensions, RMD's , potential single spouse etc?
I have found that if you want to maximize your incomes over extended time periods when retired it is imperative that you consider all of your portfolio and other income as well as your heirs (if they exist). Using the extended IORP as well as the RPM calculators running various scenarios is a real eye opener.
Discalimer - I did first spend an inordinate amount of time maximizing SS with various calculators before this Bogle site clued me in that I was potentially winning the battle and losing the war.
Is it ever better to get less Social Security payments? That seems surprising.

In my case, both the majority of SS payments and all RMDs will not occur until after age 70 which will help with Roth conversions. Though it is true the early filings will bring in some near term income that reduces the amount of potential conversions. I don't think this is enough to be a concern but will try to run some numbers.
"Is it ever better to get less Social Security payments? That seems surprising."
The point is I cannot answer that for your numbers ...only ours.
Solving for SS maximization without knowing the potential interaction with the balance of the moving parts is what I have learned to avoid.
What will happen with your numbers, your specific goals and your variables is unknowable untill you solve for them.

JoeRetire
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Re: Social Security Claiming Strategy review

Post by JoeRetire » Fri Sep 21, 2018 10:44 am

smitcat wrote:
Fri Sep 21, 2018 7:49 am
How do all these 'maximize SS ' posts take into consideration the affects outside of SS such as potential Roth conversions, other pensions, RMD's , potential single spouse etc?
They all handle "single spouse", most handle "other pensions".

I don't know of any that take RMDs or potential Roth conversions into account.

A good financial adviser will take all of those and more into account and help you come up with an optimal strategy for you.[/quote]

JoeRetire
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Joined: Tue Jan 16, 2018 2:44 pm

Re: Social Security Claiming Strategy review

Post by JoeRetire » Fri Sep 21, 2018 10:46 am

SpideyIndexer wrote:
Fri Sep 21, 2018 10:22 am
Is it ever better to get less Social Security payments? That seems surprising.
If you need the money, then taking lower SS payments starting at 62 is certainly better, and not very surprising.

smitcat
Posts: 2075
Joined: Mon Nov 07, 2016 10:51 am

Re: Social Security Claiming Strategy review

Post by smitcat » Fri Sep 21, 2018 10:50 am

JoeRetire wrote:
Fri Sep 21, 2018 10:44 am
smitcat wrote:
Fri Sep 21, 2018 7:49 am
How do all these 'maximize SS ' posts take into consideration the affects outside of SS such as potential Roth conversions, other pensions, RMD's , potential single spouse etc?
They all handle "single spouse", most handle "other pensions".

I don't know of any that take RMDs or potential Roth conversions into account.

A good financial adviser will take all of those and more into account and help you come up with an optimal strategy for you.
[/quote]

I did post above that I get good results planning with the RPM to deal with the variables.
I had used the Blackrockcapital SS calculator extensively and while it did allow for single spouse it did nothing for after tax issues nor Roth conversions.

spencer99
Posts: 316
Joined: Thu Apr 01, 2010 5:17 pm

Re: Social Security Claiming Strategy review

Post by spencer99 » Fri Sep 21, 2018 6:01 pm

SpideyIndexer wrote:
Thu Sep 20, 2018 6:59 pm
Ace1, thanks. So my spouse would be deemed to be filing for all benefits, but could not actually receive any (reduced) spousal benefits until I file for my earned benefits? That would be a bad situation!

I looked into a Social Security planner from Financial Engines and they advocated this strategy: spouse files for earned benefits at age 65 in early 2022 and I do a restricted filing for spousal benefits. Then at age 70 in late 2023, I file for earned benefits and my spouse files for spousal benefits. This is puzzling! Why file should my spouse file at age 65 before FRA? Does my spouse's deeming go away before FRA?

I entered life expectancies as "much longer than average."
Curious about the advice that spouse apply at age 65. Will spouse have earned income after age 62?

S

SpideyIndexer
Posts: 404
Joined: Thu Apr 02, 2015 10:13 pm

Re: Social Security Claiming Strategy review

Post by SpideyIndexer » Sat Sep 22, 2018 1:33 am

No, my spouse will not have earned income after age 62 AFAIK. Could that scenario have been mistakenly entered? Maybe! I redid the run and got the expected recommendation: spouse files at age 62, I file a restricted application for spousal benefits at 66, then when I reach 70 file for earned benefits and spouse files for spousal. Both on Financial Engines and Open Social Security.

Both say spouse must file for spousal benefits when I turn 70, which seems to imply that this not deemed to have taken place.

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