# The Payoff in Waiting to Collect Social Security



## MULTIZ321 (Nov 17, 2013)

The Payoff in Waiting to Collect Social Security - by Tara Siegel Bernard/ Your Money/ Business Day/ The New York Times. com

I know this topic has been discussed several times on Tug. Not a bad idea to revisit it.  

Tara's article generated 298 comments, be sure to look at those too if you're interested.


Richard


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## rapmarks (Nov 17, 2013)

I have heard something about the wife taking her husband's benefit and waiting til 70 to take her own.  this supposedly really raises her benefit a lot.  
 My SS is only $56 a month and my husband isn't eligible at all, so I don't study this .


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## simpsontruckdriver (Nov 17, 2013)

Here's one part of collecting Social Security. The longer you wait, the more $$ you get per year. BUT, in order to save money, sign up for Medicare Parts A, B, and D (or Parts A & B and sign up for a Medicare Advantage with Part-D plan - aka MAPD) at 64 yrs 9 months. If you choose ONLY Part-A, and want to hold off on Parts B and D, you will be charged a monthly Late Enrollment Penalty, once you DO sign up. The only way to NOT get charged it is to sign up when you're eligible.

The cost for 2014 Part-B Premium (charged to everyone) is $104.90 per month. If you DO NOT take Social Security at 65 when signing up for Medicare Parts A & B, you would be charged every quarter ($104.90 x 4) by mail. Part-D premiums vary. Some - like the company I work for in Central/West/Southeast Florida - pays members a Part-B Rebate (my company: $100 per month, so my customers wind up paying $5 per month).

TS


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## csxjohn (Nov 17, 2013)

simpsontruckdriver said:


> Here's one part of collecting Social Security. The longer you wait, the more $$ you get per year. BUT, in order to save money, sign up for Medicare Parts A, B, and D (or Parts A & B and sign up for a Medicare Advantage with Part-D plan - aka MAPD) at 64 yrs 9 months. If you choose ONLY Part-A, and want to hold off on Parts B and D, you will be charged a monthly Late Enrollment Penalty, once you DO sign up. The only way to NOT get charged it is to sign up when you're eligible.
> 
> The cost for 2014 Part-B Premium (charged to everyone) is $104.90 per month. If you DO NOT take Social Security at 65 when signing up for Medicare Parts A & B, you would be charged every quarter ($104.90 x 4) by mail. Part-D premiums vary. Some - like the company I work for in Central/West/Southeast Florida - pays members a Part-B Rebate (my company: $100 per month, so my customers wind up paying $5 per month).
> 
> TS



It is my understanding that if you currently have coverage from your employer there is no need to sign up for parts B and D at this time and there will not be additonal expenses when you do finally retire and apply for those plans.

Is this correct?

You are making it sound like if you don't sign up for them at age 64-9 you will be charged the extra fees later.


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## Talent312 (Nov 17, 2013)

Re: Medicare.
I too read that, as long as you're covered by an employer-plan, you don't need to sign up.
My DW is covered by mine, so she hasn't. The Medicare website shows her group coverage.

Re: Waiting on SS.
I agree with the comment that says waiting may get you nothing 'cept up to 8 more
years of work, if you don't live long enuff to come out ahead from the higher benefit.
It's a crapshoot. The only thing certain is those extra years of work.  <just sayin'>
.


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## Timeshare Von (Nov 17, 2013)

Talent312 said:


> Re: Waiting on SS.
> I agree with the comment that says waiting may get you nothing 'cept up to 8 more
> years of work, if you don't live long enuff to come out ahead from the higher benefit.
> It's a crapshoot. The only thing certain is those extra years of work.  <just sayin'>
> .



This is one of the biggest considerations I'm having in my decision, which even for 62 isn't for a few years . . . but could affect my current short term decisions relative to my job search now.

My dad died at age 46 and my mom at 57.  I'm feeling like if I make it to 70 I will have done really well.  (I'll be 56 at the end of this month.)


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## Conan (Nov 17, 2013)

csxjohn said:


> It is my understanding that if you currently have coverage from your employer there is no need to sign up for parts B and D at this time and there will not be additonal expenses when you do finally retire and apply for those plans.
> 
> Is this correct?
> 
> You are making it sound like if you don't sign up for them at age 64-9 you will be charged the extra fees later.



Totally correct - - Be sure to apply for (free) Part A at age 65, and just let them know you have medical coverage from your or your spouse's employer and there won't be any penalty when you later need Part B and D.


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## Conan (Nov 17, 2013)

Talent312 said:


> Re: Waiting on SS.
> I agree with the comment that says waiting may get you nothing 'cept up to 8 more
> years of work, if you don't live long enuff to come out ahead from the higher benefit.
> It's a crapshoot. The only thing certain is those extra years of work.  <just sayin'> .



Whether you keep working beyond age 62, 66, etc. is a separate question from when you start collecting Social Security benefits (except there's a reduction or loss of benefits if you start collecting Social Security prior to age 66 and have more than about $15,000 of annual earnings during those years).


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## x3 skier (Nov 17, 2013)

My wife took hers when she was eligible while I waited until the employment reduction expired.  She wanted "her" account to "splurge with" ASAP. 

Cheers


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## csxjohn (Nov 17, 2013)

Conan said:


> Whether you keep working beyond age 62, 66, etc. is a separate question from when you start collecting Social Security benefits (except there's a reduction or loss of benefits if you start collecting Social Security prior to age 66 and have more than about $15,000 of annual earnings during those years).



Age 66 is not the magic number for everyone.  Social Security uses the term Full Retirement Age which is based on when you were born.

If you start collecting before your FRA, they will deduct a percentage times the number of months you have to go before you reach FRA.  The further out you are the bigger the reduction.

I totally agree with talent on this.  By waiting the only thing for sure is that you will work longer.

Here's how I look at it.

Your life is a line with a beginning point and an ending point.

We know the exact beginning point and how far along that line we have traveled so far.

We don't know where the end point is but one thing is for certain.  Everyday you get one day closer to the end point where ever it is and every day you work past when you need to, you have added a days work and subtracted a days retirement.

I was eligible for full benefits at 60 through the Rail Road Retirement system but could have continued to work to increase my benefits.  I'm 66 and have been retired for 6 years.  You can't put a value on those 6 years of freedom but if I tried it would be very very high.

My wife went at 62 with a reduction and has loved every minute of it.  No regrets if she live past the break even point.


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## pacodemountainside (Nov 17, 2013)

One must keep in mind that SS is based on statistics covering a very large group so no one can predict effect on *one* individual.

I decided to go for benefits at age 62 as I had just had a stroke and have lost at first glance.


Age 62 benefit is 12 years at $800 or $9,600

Age 65 benefit is 9 years at $1,000 or $9,000.


However,  COLA is based on higher benefit at 65 making  around age  74 break even point.

However, had I elected instead to take money out of IRA and pay taxes at 25% federal and 4.6% state would have reduced  principal and lost tax  deferred appreciation.

If one does not need money, is in good health and parents lived to  90 then probably makes sense to wait until 70.

My brother,  who is Tax CPA is running the numbers where spouse is involved and gets very complicated.

One definitely should use calculators to help.  Could also use one of those  age predictors on Internet

As far as I know there is no statute requiring one to sign up for Plan B, but all of the employer plans I am familiar with mandate one must sign up for Part B and make Medicare primary. Employer want to pass  most costs on to Medicare.


This is based on BC  and TRICARE among others but given   tons of plans  sure there are exceptions.


IMHO Medicare Advantage is only way to go as over subsidized relative to other plans. Got 2014 benefits book and no drastic changes, but can change under Obama Care.


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## MULTIZ321 (Nov 17, 2013)

csxjohn said:


> It is my understanding that if you currently have coverage from your employer there is no need to sign up for parts B and D at this time and there will not be additonal expenses when you do finally retire and apply for those plans.
> 
> Is this correct?
> 
> You are making it sound like if you don't sign up for them at age 64-9 you will be charged the extra fees later.





Conan said:


> Totally correct - - Be sure to apply for (free) Part A at age 65, and just let them know you have medical coverage from your or your spouse's employer and there won't be any penalty when you later need Part B and D.



Well, I think your statement is only partially correct and does not tell the full story. It is arbitrary to Sign up for Medicare Parts B and D at the time you sign up for Medicare Part A. You won't be charged the extra fees if you sign up for Part B later if you're currently insured at the time you sign up for Part A.  You also have to take into consideration that your insurance usually pays a percentage of your medical bill (e.g. 80%).  You are responsible for the remaining percentage (20% in this example).

I work for the VA and have Federal Blue Cross and Blue Shield. I also have Medicare, Parts A and B.  I signed up for B because I did not want to pay late-enrollment penalty expenses.  I get a quarterly bill from Medicare for Part B which I pay. The Medicare Part A payment is deducted out of my paycheck.  So BC is my primary and Medicare is my Secondary. From the above example, the 20% balance gets submitted to Medicare to pay. 

So the benefit of choosing to enroll in Part B as soon as you are eligible for Part A, is you will have less out of pocket expenses for medical bills.


Richard


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## csxjohn (Nov 17, 2013)

MULTIZ321 said:


> ... The Medicare Part A payment is deducted out of my paycheck.  ...



Richard, part A is free.  Check to see what is being deducted.


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## Conan (Nov 17, 2013)

csxjohn said:


> Age 66 is not the magic number for everyone.  Social Security uses the term Full Retirement Age which is based on when you were born.



I used 66 as a simplifying example.  The actual NRD ages aren't much different.

Birth Year
1943-1954         66
1955            66 and 2 months
1956            66 and 4 months
1957            66 and 6 months
1958            66 and 8 months
1959            66 and 10 months
1960 and later    67


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## Conan (Nov 17, 2013)

MULTIZ321 said:


> BC is my primary and Medicare is my Secondary. From the above example, the 20% balance gets submitted to Medicare to pay.
> 
> So the benefit of choosing to enroll in Part B as soon as you are eligible for Part A, is you will have less out of pocket expenses for medical bills.
> 
> Richard



You're paying the full Medicare B premium, for most people that's $104.90 per month, to secure coverage for the 20% portion that your employer-provided insurance doesn't cover.  Nothing wrong with that, if the numbers justify it.
Medicare 2013 & 2014 costs at a glance
http://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html


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## pedro47 (Nov 17, 2013)

If you can afford to wait until age 67 please wait.  An 8% increase per year in your SS check is not a bad return for waiting until you turn 67 in this day and time.

Plus, if you have a good job and in good health that is five (5) more years you can invest in your company/employer deferred comp plan. 

Good planning is the key to retirement.  That is my opinion only.


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## Conan (Nov 17, 2013)

pacodemountainside said:


> My brother,  who is Tax CPA is running the numbers where spouse is involved and gets very complicated.



The main point when there's a spouse involved is the benefit of having two horses in the race.  Even if the bigger earner ("John") dies young, the surviving spouse ("Mary") will take over John's full benefit (in place of her own) for the balance of her life.  That's a good argument for John to defer taking his benefit to age 70. 

If Mary does not have a significant earnings record of her own, then once Mary is age 66 (I'm assuming she's younger than John), Mary can start collecting half of John's benefit whether or not John is waiting for age 70 (if John wants to wait to age 70, he 'files and suspends' so Mary can start collecting.)

If Mary has a significant earnings record of her own then one if not both of the couple should defer claiming benefits to age 70.  The one who defers can start collecting half of the others benefit at age 66 and then switch to their own benefit at age 70 (which allows their own benefit to increase by 32% compared to age 66).  If both are not deferring to age 70, choosing which of them should file and suspend and which of them should start collecting half the others benefit is a tricky question, since I think their relative ages and their separate earnings histories both figure into the calculation.

[All references to age 66 are really references to the Normal Retirement Age.]


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## simpsontruckdriver (Nov 17, 2013)

I forgot to mention, if your work benefits EQUAL or are BETTER than Medicare, you will not be charged a LEP. But, if your work benefits DO NOT equal Medicare, you will be charged. For some, taking both Medicare WITH your work benefits will mean less out-of-pocket for you.

TS


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## artringwald (Nov 17, 2013)

*File and Suspend Spousal Benefit*

I took a social security class and was surprised to find out about a strategy that applies when you can afford to delay and one spouse earned much more than the other. Here's how it works. 

1) The high earning spouse waits until 66 (or full retirement age) and does a file and suspend.
2) The high earning spouse waits until 70 to start drawing benefits, gaining 8% per year in monthly benefits.
3) The low earning spouse starts drawing spousal benefit at 66 for 50% of what the high earning spouse would have drawn at 66.
4) As long as both are alive they can both be drawing their own benefits.
5) When one dies, the surviving spouse draws the high earning spouses benefit.

This web site has an example of how it works: http://www.socialsecuritychoices.com/info/fileandsuspend.php


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## SmithOp (Nov 17, 2013)

Make sure you get 35 years paying in to SS before you take early retirement, even if you wait until 70 to collect benefits.  SS amount is based on average of 35 yrs, so you don't want any goose eggs in there pulling down the average.

I took an early retirement at 58 because I had 40yrs uninterrupted career counting my military service.  I'm in no hurry to file for SS, counting our blessings we can do that because of savings and pensions, we always lived below our means and saved.


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## Conan (Nov 17, 2013)

SmithOp said:


> Make sure you get 35 years paying in to SS before you take early retirement, even if you wait until 70 to collect benefits.  SS amount is based on average of 35 yrs, so you don't want any goose eggs in there pulling down the average.



That's a good point you don't usually hear about!


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## SmithOp (Nov 17, 2013)

artringwald said:


> I took a social security class and was surprised to find out about a strategy that applies when you can afford to delay and one spouse earned much more than the other. Here's how it works.
> 
> 1) The high earning spouse waits until 66 (or full retirement age) and does a file and suspend.
> 2) The high earning spouse waits until 70 to start drawing benefits, gaining 8% per year in monthly benefits.
> ...



Interesting, I got a different approach for that scenario when we discussed this site in the past.  I saved it.

1. The wife files for and begins to receive retirement benefits at age 62.

2. Provided the husband has reached full retirement age (age 66 and 0 months), the husband files for a spousal benefit on the wife’s record as soon as possible after the wife files for her own retirement benefits. The husband should be careful to apply for the spousal benefit only, and not for his own retirement benefits at this time.

3. The husband files for and begins to receive retirement benefits at age 70.

4. As soon as the husband claims retirement benefits, the wife is eligible for a spousal benefit that will supplement the retirement benefit she is already collecting. She can claim it immediately, or she can delay the claim until full retirement age. Each month that claiming is delayed, up to full retirement age, those benefits increase. For this analysis, we assume she claims them immediately.

When a spouse dies, family benefits usually decline to equal the higher of the two retirement benefits.



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## MULTIZ321 (Nov 17, 2013)

csxjohn said:


> Richard, part A is free.  Check to see what is being deducted.





Conan said:


> You're paying the full Medicare B premium, for most people that's $104.90 per month, to secure coverage for the 20% portion that your employer-provided insurance doesn't cover.  Nothing wrong with that, if the numbers justify it.
> Medicare 2013 & 2014 costs at a glance
> http://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html



Hi John,  

I wish it were free. I just checked my pay-stub statement and yes Medicare is being deducted as I thought it was.

Hi Conan,

For me, yes the numbers did justify it.  I had a hospital stay last year and had an $11,000 medical bill. BC & Medicare payed most of the bill and I only had to pay $30 out-of-pocket.  Very much worth it for me to have both.


Best regards,

Richard


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## Blues (Nov 17, 2013)

Lots of interesting comments.  And there's truly no one-size-fits-all answer for when to claim SS.  I *do* agree 100% with Conan when he says that you must carefully separate the two questions: (1) when you decide to stop working, and (2) when to claim SS benefits.  If you have other retirement assets, such as a 401K, you can afford to decide to live on that for a while, while accruing the Delayed Retirement Credit from SS.

If you know you have short longevity genes, as one poster stated, then of course you should claim early.  But for most of us, especially those with the resources to spend 401K money while waiting for SS, it's usually a no-brainer to do delayed retirement.  *Especially* if you can do the file and suspend trick that several here have referenced.  As the article states, delayed filing can be the equivalent of an annuity paying upwards of 7%, with inflation riders and survivor benefits.  What it doesn't say is that studies have shown that, depending on relative ages and incomes of a couple, file and suspend in conjunction with delayed filing can in some cases be equivalent to an annuity paying upwards of 30%!  I've run the numbers for my wife and I, and it comes out to better than 11%.  For sure I'm gonna take that.

There are online services that, for a small fee (about $30) can run scenarios for you and suggest an optimal strategy.  I believe AARP has such a service.

Another good read is Social Security's Real Retirement Age is 70.  Be sure to click on the link for the full report.  It made me rethink my position that the best solution to the SS funding problem is to just raise the retirement age.



SmithOp said:


> Make sure you get 35 years paying in to SS before you take early retirement, even if you wait until 70 to collect benefits.  SS amount is based on average of 35 yrs, so you don't want any goose eggs in there pulling down the average.



Yes and no.  For sure, working a full 35 years will give you a bigger benefit.  Is it enough bigger to endure working longer, possibly at a job you don't like?  Maybe and maybe not.

The retirement benefit calculation is a bit complex, but not too hard to understand.  It goes through your earnings history, indexing each year for inflation, and eventually comes up with something the government likes to call your Average Indexed Monthly Earnings (AIME).  Once you have that, the formula becomes interesting.  It's like Tax Rate Tables, but in reverse.  For the first $791 of your AIME, you get 90% of that benefit (2013 numbers).  For the next increment up to $4768, you get 32%.  And after that?  You get only 15% of your earnings.

I'd claim that once your AIME is above $4768 (averaging in your zero years as appropriate), you should make your retirement decisions on other factors, not its effect on SS benefits.

You can find the formula at the end of this publication.

-Bob


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## puppymommo (Nov 17, 2013)

This is sure one thing that is not one size fits all.  In our case, DH is on SS Disability, which I think switches to regular Social Security at his FRA which is 66 years 10 months. I don't know if/how the file and suspend thing and the taking of the spouse's benefit comes into play in this situation.

I am the higher earner in our case but I don't think DH can change his amount in any way as long as he is on disability (probably will never be able to return to work).  I think his disability benefit is based on what he would be getting for Social Security.

One of these days I am going to have to make an appointment with the folks at Social Security and get the real scoop.

Anyway, if anyone has any insight into this type of situation, your comments would be greatly appreciated.


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## pacodemountainside (Nov 17, 2013)

MULTIZ321 said:


> Hi John,
> 
> I wish it were free. I just checked my pay-stub statement and yes Medicare is being deducted as I thought it was.
> 
> ...



Think confusion is there is  1.45%   Medicare Part A  "tax" levied on all  salaries  and wages and matched by employer!

Does not apply to  most other types of income from  investments, rents,  pensions, royalties,  gambling, lottery, alimony,   etc.


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## dmharris (Nov 17, 2013)

Conan said:


> The main point when there's a spouse involved is the benefit of having two horses in the race.  Even if the bigger earner ("John") dies young, the surviving spouse ("Mary") will take over John's full benefit (in place of her own) for the balance of her life.  That's a good argument for John to defer taking his benefit to age 70.
> 
> If Mary does not have a significant earnings record of her own, then once Mary is age 66 (I'm assuming she's younger than John), Mary can start collecting half of John's benefit whether or not John is waiting for age 70 (if John wants to wait to age 70, he 'files and suspends' so Mary can start collecting.)
> 
> ...



I called Social Security this week as I was unclear about all this.  My husband is 66 and I'm not.   If he dies, I get 100% of his benefit or mine, whichever is higher.  Even if he waits to age 70 to take his SS benefit, which by then will be 132% benefit, then dies, I will only be given 100% of his benefit as his widow.  Shame, huh?  But if my SS benefit is higher, I take mine.  They take your top 35 years of wage earnings, and if you continue to work past 66, they continue to track and average it in each year.  

The net conclusion:  get out your calculator and figure out some scenarios.  Start here:  http://www.ssa.gov/estimator/


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## Blues (Nov 17, 2013)

dmharris said:


> I called Social Security this week as I was unclear about all this.  My husband is 66 and I'm not.   If he dies, I get 100% of his benefit or mine, whichever is higher.  Even if he waits to age 70 to take his SS benefit, which by then will be 132% benefit, then dies, I will only be given 100% of his benefit as his widow.  Shame, huh?  But if my SS benefit is higher, I take mine.



I've asked this question of two different employees at two different SSA offices, as well as asking a financial planner.  Because you're right, that's a significant factor to take into account when deciding whether to delay taking retirement benefits.

The upshot?  The two SSA offices gave different answers.  The financial planner agreed with the one that said that you'd get the higher (132%) benefit.  I'd sure like a *definitive* answer to this question.  But right now, I'm assuming my wife will get my increased (age 70, 132%) benefit when I die, assuming I make it past 70 and claim then.

Call a different office and ask again.  I'd be very curious to hear the answer.

-Bob

ETA - If you go through the AARP estimator for SSA benefits here, and go through the end to the section on "when to claim", there's a little note at the bottom that says "Waiting is particularly important for husbands.  Find out why."  If you click that "Find out why" link, they take your estimated numbers and show how the surviving spouse gets higher benefits, by 132%, if the husband waits until age 70.  So AARP apparently agrees with the answer that the survivor benefits track the 132% benefit for delayed retirement.  I think I trust their answer more than any of the other 3 that I've gotten (2 from SSA offices, one from a financial planner).  As I said above, call another office and see whether you get a different answer.


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## MULTIZ321 (Nov 17, 2013)

pacodemountainside said:


> Think confusion is there is  1.45%   Medicare Part A  "tax" levied on all  salaries  and wages and matched by employer!
> 
> Does not apply to  most other types of income from  investments, rents,  pensions, royalties,  gambling, lottery, alimony,   etc.



Paco,

Thanks for clarifying this - the Medicare Part A so-called "tax" is what is being deducted from my paycheck.

For those interested in more info about this see - http://en.wikipedia.org/wiki/Federal_Insurance_Contributions_Act_tax


Richard


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## SmithOp (Nov 17, 2013)

Thanks for the additional info Bob, it looks like a person would have to meet or exceed the max contribution amount for all 35 years combined?  I just took a quick glance, I'll have to study it.  Would raising the max contribution amount help SS financially, I see what you mean about extending the age because we are just living too darn long...

I agree with 132% because "your benefit" is determined when you file, not FRA.


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## Carol C (Nov 17, 2013)

What if the next President is Republican and if both houses of Congress have a GOP majority? Then there might be a push to privatize the SS system and/or to raise the official retirement age to 70. What is it they say about "the best laid plans of mice and men..."???


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## dmharris (Nov 17, 2013)

Bob, I found this not from the gov, so it could be wrong or incomplete:

Typically, both spouses begin taking benefits at full retirement age (66 for those born between 1943 and 1954). After the first spouse dies, the survivor can then collect 100 percent of the deceased spouse's benefit as long as she is also at full retirement age. The surviving spouse will not continue to receive the benefits she had previously received. Only one benefit amount will be paid, resulting in a reduction of benefits paid into the household after the death of the first spouse.  from here: http://www.cbsnews.com/8301-505146_162-57588525/


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## Conan (Nov 17, 2013)

dmharris said:


> I called Social Security this week as I was unclear about all this.  My husband is 66 and I'm not.   If he dies, I get 100% of his benefit or mine, whichever is higher.  Even if he waits to age 70 to take his SS benefit, which by then will be 132% benefit, then dies, I will only be given 100% of his benefit as his widow.  Shame, huh?  But if my SS benefit is higher, I take mine.  They take your top 35 years of wage earnings, and if you continue to work past 66, they continue to track and average it in each year.
> 
> The net conclusion:  get out your calculator and figure out some scenarios.  Start here:  http://www.ssa.gov/estimator/



The Social Security payment that he was getting at his death will continue to be paid to you, unreduced, and will become your benefit (unless you at that time were getting a Social Security payment of your own that was more than that). So you'll get the better of his check or your check.

(If you've attained your normal retirement age at the time of his death.  You have to be at least age 60 to start collecting as survivor, and there's a reduction if you haven't reached your own normal retirement age.  http://www.ssa.gov/survivorplan/survivorchartred.htm )


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## SMHarman (Nov 17, 2013)

SmithOp said:


> Make sure you get 35 years paying in to SS before you take early retirement, even if you wait until 70 to collect benefits.  SS amount is based on average of 35 yrs, so you don't want any goose eggs in there pulling down the average.
> 
> I took an early retirement at 58 because I had 40yrs uninterrupted career counting my military service.  I'm in no hurry to file for SS, counting our blessings we can do that because of savings and pensions, we always lived below our means and saved.
> 
> ...



I thought SS contributions was based on points. As someone that moved here at 35 I'm clearly not going to get 35 years of contribution into the system but my points count is high. 

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## Blues (Nov 17, 2013)

SMHarman said:


> I thought SS contributions was based on points. As someone that moved here at 35 I'm clearly not going to get 35 years of contribution into the system but my points count is high.



Nope.  The *amount* of retirement benefit is based on lifetime earnings.  Read the link I previously posted for the gory details of exactly how they're calculated.

What you're probably thinking of is *whether* you qualify for retirement benefits *at all* depends on whether you have enough quarters of eligibility.  You need 40 quarters, or typically 10 years, of contributions to qualify at all.  This is sometimes stated in terms of points, because (being the government an all) quarters are not really quarters.  You get a "quarter" by earning and paying FICA on enough income.  It doesn't require a lot, so you can easily earn 4 "quarters" in a few months of a year.  But you can only earn 4 "quarters" in any calendar year, hence the term.

-Bob


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## Talent312 (Nov 17, 2013)

Ordinarily, I'd agree that it be smart to draw first on other retirement funds and wait on a payout that is gaining 8%.
But again, do you want to roll the dice that you'll make it past the break-even point?
From the grave or where ever you are, you may find yourself saying, "Why did I wait?


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## rapmarks (Nov 17, 2013)

MULTIZ321 said:


> Hi John,
> 
> I wish it were free. I just checked my pay-stub statement and yes Medicare is being deducted as I thought it was.
> 
> ...


 
 Richard the charge for Medicare is for Part B, which you are getting.


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## Conan (Nov 17, 2013)

puppymommo said:


> This is sure one thing that is not one size fits all.  In our case, DH is on SS Disability, which I think switches to regular Social Security at his FRA which is 66 years 10 months. I don't know if/how the file and suspend thing and the taking of the spouse's benefit comes into play in this situation.
> 
> I am the higher earner in our case but I don't think DH can change his amount in any way as long as he is on disability (probably will never be able to return to work).  I think his disability benefit is based on what he would be getting for Social Security.
> 
> ...



I found this but I'm not sure how to interpret it.  It says (correctly) that while he's living, you can start getting a portion of his benefits paid to you as early as age 60. But it also says that if you are eligible for retirement benefits on your own record, they will always pay that amount first.
http://www.ssa.gov/dibplan/dfamily2.htm#sb=3

This makes it sound like you can't defer your own benefits while collecting a portion of his.  But I don't think that's correct.


----------



## Beaglemom3 (Nov 17, 2013)

Talent312 said:


> Ordinarily, I'd agree that it be smart to draw first on other retirement funds and wait on a payout that is gaining 8%.
> But again, do you want to roll the dice that you'll make it past the break-even point?
> From the grave or where ever you are, you may find yourself saying, "Why did I wait?
> 
> ...




  This is the tack that I am taking. I plan to start taking SS next year at 62. Will do some consulting, but will not exceed the $$ limit allowed. Will draw off of my IRAs/ 401ks and rental incomes. More travel and volunteering. Less work, more timesharing.-


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## Conan (Nov 17, 2013)

Talent312 said:


> Ordinarily, I'd agree that it be smart to draw first on other retirement funds and wait on a payout that is gaining 8%.
> But again, do you want to roll the dice that you'll make it past the break-even point?
> From the grave or where ever you are, you may find yourself saying, "Why did I wait?



If you died leaving a surviving spouse, your consolation is that your full check continues to be paid to her.


----------



## SmithOp (Nov 17, 2013)

Talent312 said:


> Ordinarily, I'd agree that it be smart to draw first on other retirement funds and wait on a payout that is gaining 8%.
> But again, do you want to roll the dice that you'll make it past the break-even point?
> From the grave or where ever you are, you may find yourself saying, "Why did I wait?
> 
> ...



As my financial advisor told the wife, if you outlive him you will be a rich widow.


Sent from my iPad Gen 4 using Tapatalk HD


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## Blues (Nov 17, 2013)

SmithOp said:


> Thanks for the additional info Bob, it looks like a person would have to meet or exceed the max contribution amount for all 35 years combined?  I just took a quick glance, I'll have to study it.



Not sure what you're asking.  But I did a quick spreadsheet, and I calculate that you can exceed that last bracket amount of $4768 if you had earned the max contribution amount for just the last 19 years.



SmithOp said:


> Would raising the max contribution amount help SS financially, I see what you mean about extending the age because we are just living too darn long...



I'd love to see an analysis.  My guess is that it would help some, but not as much as some people think.  Raising the max earnings would also result in high earners getting a bigger benefit when they retire, due to the formula used to calculate benefits.

The objection to raising the FRA doesn't have to do with increased life expectancies.  It's the fact that "raising the retirement age" isn't really just "raising the retirement age".  It's a _de facto_ benefit cut by another name; largely because you then don't get the delayed retirement credit.  You really should read the first article I linked.  It was an eye opener for me.



Carol C said:


> What if the next President is Republican and if both houses of Congress have a GOP majority? Then there might be a push to privatize the SS system and/or to raise the official retirement age to 70. What is it they say about "the best laid plans of mice and men..."???



The GOP's proposals of that nature always allowed for us old folk to stay with the current plan.  It was mainly aimed at the younger segment, who haven't yet paid in a large amount.



Talent312 said:


> Ordinarily, I'd agree that it be smart to draw first on other retirement funds and wait on a payout that is gaining 8%.
> But again, do you want to roll the dice that you'll make it past the break-even point?
> From the grave or where ever you are, you may find yourself saying, "Why did I wait?



I dunno, Talent.  Do you find yourself berating yourself for picking the losing lottery number?  The decision on retirement age is, like all of life, a risk.  But I look at it like this.  If you die before you needed the money, too bad.  But at least you never ran out.

The risk that *I* really want to guard against is running out of money before I run out of life.  And I think that taking delayed SSA is one of the better moves you can take to mitigate that risk.

-Bob


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## Fern Modena (Nov 17, 2013)

If you leave a widow, she is eligible to collect a survivor's pension (eual to the amount you were collecting) at age 60.  If, at any later time her own pension then becomes worth more, she can switch to that one instead.  She can't, of course, collect both.

Fern


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## Blues (Nov 17, 2013)

Conan said:


> I found this but I'm not sure how to interpret it.  It says (correctly) that while he's living, you can start getting a portion of his benefits paid to you as early as age 60. But it also says that if you are eligible for retirement benefits on your own record, they will always pay that amount first.
> http://www.ssa.gov/dibplan/dfamily2.htm#sb=3
> 
> This makes it sound like you can't defer your own benefits while collecting a portion of his.  But I don't think that's correct.



I don't know much about disability benefits, so take this with a handful of salt.  But that wording sounds just like the wording for spousal retirement benefits.  It's true that you can take spousal benefits before FRA - as early as age 62.  But if you're younger than FRA, it *always* comes first from your own benefit, and only the excess comes from the spousal benefit.  In the case of retirement benefits, yes, this precludes deferring your own benefits if you take spousal benefits before FRA.  This effectively precludes the "file and suspend" tricks until the spouse hits 66, or whatever his/her FRA actually is.  I strongly suspect the same is true for disability; but I really don't know.

-Bob


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## dmharris (Nov 17, 2013)

Just so everyone knows, at age 70 the benefits tap out at the 132% and don't raise anymore so if you're going to take them in your lifetime, there is no point in delaying past age 70.


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## MULTIZ321 (Nov 17, 2013)

rapmarks said:


> Richard the charge for Medicare is for Part B, which you are getting.



Not quite accurate. I am paying "taxes" on Part A as explained earlier in the thread.


Richard


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## rapmarks (Nov 18, 2013)

MULTIZ321 said:


> Not quite accurate. I am paying "taxes" on Part A as explained earlier in the thread.
> 
> 
> Richard


I looked back but couldn't find.  I don't quite understand.

 But my sister should be doing what you are doing, she is still working at age 67 and she pays the 20 percent her insurance plan at work doesn't pay , she should be using medicare a a secondary.


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## pacodemountainside (Nov 18, 2013)

rapmarks said:


> I looked back but couldn't find.  I don't quite  understand.



Check post 26!


----------



## geekette (Nov 18, 2013)

csxjohn said:


> I totally agree with talent on this.  By waiting the only thing for sure is that you will work longer.



Not necessarily.  I can dump the day job before age 70 and use other savings to float until taking SS.  I do not HAVE to work, it is not at all For Sure.

This is in fact my plan and I continue to save like mad to make it reality.  

While working I can still contribute to retirement plans and increase what I will get from SS just from the earliest work years of peanut pay being replaced by grown-up pay.


----------



## geekette (Nov 18, 2013)

Carol C said:


> What if the next President is Republican and if both houses of Congress have a GOP majority? Then there might be a push to privatize the SS system and/or to raise the official retirement age to 70. What is it they say about "the best laid plans of mice and men..."???



doubt it.  this stuff has been talked about for much longer than before our last GOP Pres took office the first time.  everyone is scared to touch it.

I do expect the FRAs to continue to increase, as they should, but it is not reasonable to expect laborers to continue to labor to age 70.  We need to maintain an 'early collection' age.  Maybe it becomes 63, but it does need to stay in the lower 60s. 

If we raise the amount of wages that ss 'tax' applies to, we would have to raise max benefit also.  I am in favor of that, actually.  I am not in favor of means testing as some will have ways to hide their income.  I'd prefer the Quite Wealthy to instead just never claim the benefits and leave it in the system.


----------



## geekette (Nov 18, 2013)

Talent312 said:


> Ordinarily, I'd agree that it be smart to draw first on other retirement funds and wait on a payout that is gaining 8%.
> But again, do you want to roll the dice that you'll make it past the break-even point?
> From the grave or where ever you are, you may find yourself saying, "Why did I wait?
> 
> ...



I am more concerned about outliving my money than break-even.  I have many relatives that lived well into their 90s.  I will expect same for me and if it doesn't go that way, Oh Well.  

It's really not about extracting every possible dime back from Uncle Sam for me, it's about making sure that I set myself up for best shot of not being destitute at Age 101.


----------



## funtime (Nov 18, 2013)

I checked on my earnings and surprise, surprise I had a lot of very low earning years 35years ago.  I have decided to continue to earn and replace those years with very high earnings that I can make in the next few years to bump up my average.  I am turning 65 next year but as a single woman I want to max the social security benefit the best I can within reason.  I don't plan to work till I am 70, but 67 is totally doable.


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## csxjohn (Nov 18, 2013)

MULTIZ321 said:


> Paco,
> 
> Thanks for clarifying this - the Medicare Part A so-called "tax" is what is being deducted from my paycheck.
> 
> ...



I'm glad Paco clarified this.  Collecting the Part A benefits cost nothing additonal but of course we paid into it our whole working career.


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## geekette (Nov 18, 2013)

dmharris said:


> Just so everyone knows, at age 70 the benefits tap out at the 132% and don't raise anymore so if you're going to take them in your lifetime, there is no point in delaying past age 70.



70.5 is magic number for forced withdrawals from traditional IRAs.


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## geekette (Nov 18, 2013)

funtime said:


> I checked on my earnings and surprise, surprise I had a lot of very low earning years 35years ago.  I have decided to continue to earn and replace those years with very high earnings that I can make in the next few years to bump up my average.  I am turning 65 next year but as a single woman I want to max the social security benefit the best I can within reason.  I don't plan to work till I am 70, but 67 is totally doable.



Yep, those early dismal earnings sure do make me appreciate how far I've come, and, like you, I am single, and looking forward to those early low-earning years coming off the 35 highest to boost my payout.  Smart way to go.


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## csxjohn (Nov 18, 2013)

geekette said:


> Yep, those early dismal earnings sure do make me appreciate how far I've come, and, like you, I am single, and looking forward to those early low-earning years coming off the 35 highest to boost my payout.  Smart way to go.



If you get a print out of your expected benefits I'm pretty sure you'll find out that those early years are averaged up to reflect average earnings today.

I can't remember exactly how it works, I retired 6 yrs ago and I cleared my mental cache of most of that stuff, but at the time my early yrs were not what I actually earned but a higher figure.  So those early years don't hurt as much as you think they might.

I did find this and gives a brief description of what I just wrote.

http://www.ssa.gov/pubs/EN-05-10070.pdf


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## VacationForever (Nov 18, 2013)

SSA simply factors in inflation/COLA for every year.  Making 35k a year 30 years ago is not the same as making 35k a year now.


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## csxjohn (Nov 18, 2013)

dmharris said:


> Just so everyone knows, at age 70 the benefits tap out at the 132% and don't raise anymore so if you're going to take them in your lifetime, there is no point in delaying past age 70.



And don't forget that once you reach you Full Retirement Age you can earn as much as you want with no deductions to your SS benefits.

I think it gets a little tricky the year you actually reach that age and in the months before it you are limited to 1/12th the annual limit each month, but from the month you reach FRA there is no longer a limit.


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## geekette (Nov 18, 2013)

csxjohn said:


> If you get a print out of your expected benefits I'm pretty sure you'll find out that those early years are averaged up to reflect average earnings today.
> 
> I can't remember exactly how it works, I retired 6 yrs ago and I cleared my mental cache of most of that stuff, but at the time my early yrs were not what I actually earned but a higher figure.  So those early years don't hurt as much as you think they might.
> 
> ...



I dunno, I think I actually did only earn $800 when I was 15.  My guess is that "today's dollars" is figured in the calc as otherwise they would have to revise the 'what you earned' every single year to turn it into Today Dollars.  I think they report wages as IRS has them for the year in which they were earned.  the years when they were sending statements every year, old wages did not change.

I would say the early years don't hurt me near as much as those that didn't work at all until after college and later took time off to have kids.  Not everyone will have a 35 year work record, so having more than 35 does allow me to improve it a great deal.


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## FL Guy (Nov 18, 2013)

geekette said:


> I dunno, I think I actually did only earn $800 when I was 15.  My guess is that "today's dollars" is figured in the calc as otherwise they would have to revise the 'what you earned' every single year to turn it into Today Dollars.  I think they report wages as IRS has them for the year in which they were earned.  the years when they were sending statements every year, old wages did not change.
> 
> I would say the early years don't hurt me near as much as those that didn't work at all until after college and later took time off to have kids.  Not everyone will have a 35 year work record, so having more than 35 does allow me to improve it a great deal.



Depending upon your average monthly indexed wage over the 35 years, your future earnings being higher might not have as much of a positive impact as you might think.  Once the 35 year average monthly indexed wage exceeds $4,768, the FRA monthly SS benefit only increases by 15% of the excess.  Once the 35 year average monthly indexed wage exceeds $4,768, future wage increases don't move the SS benefit amount needle much.  (Not that I'll be turning down any pay raise I'm offered!!)


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## SMHarman (Nov 18, 2013)

FL Guy said:


> Depending upon your average monthly indexed wage over the 35 years, your future earnings being higher might not have as much of a positive impact as you might think.  Once the 35 year average monthly indexed wage exceeds $4,768, the FRA monthly SS benefit only increases by 15% of the excess.  Once the 35 year average monthly indexed wage exceeds $4,768, future wage increases don't move the SS benefit amount needle much.  (Not that I'll be turning down any pay raise I'm offered!!)



But once the raise takes you over $217k it is ignored altogether?

Sent from my LT26i using Tapatalk


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## FL Guy (Nov 18, 2013)

SMHarman said:


> But once the raise takes you over $217k it is ignored altogether?
> 
> Sent from my LT26i using Tapatalk



Dunno.  I didn't see a cap after the $4,768 monthly amount, but didn't really look.  Unfortunately I'm quite a ways away from $217k and highly unlikely to get there in my remaining working career.


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## Conan (Nov 18, 2013)

You can download PIA and Benefits calculators here, entering the annual earnings that Social Security sent you:
http://www.ssa.gov/OACT/anypia/download.html


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## SMHarman (Nov 18, 2013)

FL Guy said:


> Dunno.  I didn't see a cap after the $4,768 monthly amount, but didn't really look.  Unfortunately I'm quite a ways away from $217k and highly unlikely to get there in my remaining working career.



http://en.wikipedia.org/wiki/Social_Security_Wage_Base

I'm thinking of the $106,800 cap.  Must be another benefit with a higher cap.


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## cgeidl (Nov 19, 2013)

*Computer program*

This is a very complex problem and a computer program letting people put in their own best guess age of death and other known variables
might be useful.
It used to be you could put in at age 62, invest the proceeds ,and then at age 70 contact Social Security and fill out a form where you could return all the dollars received with no interest or penalty.Was that way 11 years ago when I started receiving social security .maybe someone who is a current expert could relate to the board if this loophole is still on the books. Social Security is so complicated that a telephone answer to a question is often wrong.Always ask what section of data you can check and read yourself and do it. It is just like asking IRS a question. They have no liability for an incorrect response.


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## Passepartout (Nov 19, 2013)

cgeidl said:


> It used to be you could put in at age 62, invest the proceeds ,and then at age 70 contact Social Security and fill out a form where you could return all the dollars received with no interest or penalty.



They did away with the 'apply, then pay back and re-apply' provision a few years ago. Now iirc, one can do it in the first calendar year after they apply, but then they are committed to keep their status henceforth.

About the only thing close that can occur now would be to apply early (say age 62ish) then suspend benefit payments if one has no need of the money. Then re-apply later on at the higher rate that comes with the later application. Handy, I guess if one gets a windfall inheritance or lottery jackpot. I keep hoping.

Jim


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## FL Guy (Nov 19, 2013)

SMHarman said:


> http://en.wikipedia.org/wiki/Social_Security_Wage_Base
> 
> I'm thinking of the $106,800 cap.  Must be another benefit with a higher cap.



That's just the cap on when they stop taxing wages for social security taxes.  It's unrelated (at least directly) to the SS benefit payout calculation.  For 2012 & 2013 it is $110,100.  I haven't seen anything about whether it will increase in 2014.  I doubt it since 401k maximum contribution limits are the same in 2014 as they are in 2013, since both are controlled by the government and inflation-related.  Although there have been legistlation-related discussions about raising the maximum taxed amount as a method to shore up the SS fund more.


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## geekette (Nov 19, 2013)

FL Guy said:


> That's just the cap on when they stop taxing wages for social security taxes.  It's unrelated (at least directly) to the SS benefit payout calculation.  For 2012 & 2013 it is $110,100.  I haven't seen anything about whether it will increase in 2014.  I doubt it since 401k maximum contribution limits are the same in 2014 as they are in 2013, since both are controlled by the government and inflation-related.  Although there have been legistlation-related discussions about raising the maximum taxed amount as a method to shore up the SS fund more.



Which would require us to raise max benefit as well.


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## VacationForever (Nov 19, 2013)

2013 - $113,700; 2014 - $117,000.


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## geekette (Nov 19, 2013)

FL Guy said:


> Depending upon your average monthly indexed wage over the 35 years, your future earnings being higher might not have as much of a positive impact as you might think.  Once the 35 year average monthly indexed wage exceeds $4,768, the FRA monthly SS benefit only increases by 15% of the excess.  Once the 35 year average monthly indexed wage exceeds $4,768, future wage increases don't move the SS benefit amount needle much.  (Not that I'll be turning down any pay raise I'm offered!!)



Oh, it will make a SIGNIFICANT difference in replacing the $800 and $10,000 years.  I plan to work a long time, regardless, because I enjoy it.  But I also began work younger than most, as soon as allowed, age 15, and always worked.  Having my 35 in by age 50 is a huge advantage.  

I lucked into a reasonably lucrative field which certainly helps on the enjoyment front.  It's simply a side-benefit that knocking off those way too many < 20k years will benefit me.  I don't care what the index says, I did a lot of time barely squeaking by, inflation alone ain't gonna cover.

I truly am aiming for the very highest amount I can get, but no real hope of The Max and no plans to marry a rich guy to get it.


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## geekette (Nov 19, 2013)

SMHarman said:


> But once the raise takes you over $217k it is ignored altogether?
> 
> Sent from my LT26i using Tapatalk



I believe this is correct.  I mean, you pay fed, state, local taxes, just not into SS any longer.  Keeping more of what you earn.


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## dmharris (Nov 19, 2013)

As an aside, I have always felt the government had it backwards with SS and should start the scale of payroll withholdings at the top of the income earners and trickle down so those making the least pay nothing, those making the most carry the bulk of the cost.  But then, they didn't ask me.  Again.


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## dmharris (Nov 19, 2013)

geekette said:


> Oh, it will make a SIGNIFICANT difference in replacing the $800 and $10,000 years.  I plan to work a long time, regardless, because I enjoy it.



I enjoy my work as well and being a consultant in a home office has not made work commuting a daily drudge.  Also, in the Bible no one retired.  Interesting, huh?


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## Icc5 (Nov 19, 2013)

*My take*

Each person has to decide what is best under their conditions.  For me it was to take early retirement at 62 after working the same job for 42 years.  The job I had gives me a nice pension plus the reduced SS and we also saved all our lives for this time.  Because of savings, house paid off, etc. this is working out great for me and my wife will also retire in a few years at 62 with no worries.
Bart


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## dmharris (Nov 19, 2013)

Icc5 said:


> Each person has to decide what is best under their conditions.  For me it was to take early retirement at 62 after working the same job for 42 years.  The job I had gives me a nice pension plus the reduced SS and we also saved all our lives for this time.  Because of savings, house paid off, etc. this is working out great for me and my wife will also retire in a few years at 62 with no worries.
> Bart



Let's celebrate that we have choices in this country!


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## glypnirsgirl (Nov 19, 2013)

Work, work, work. When I calculated life expectancy 2 years ago, it computed to 103!!! 

The normal financial planners use a life expectancy at retirement of 25 years in order to build in a cushion. I am terrified of being 95 and poor. 

Being scared has affected all of my financial decisions. We live in a house valued at 1X our annual income. We have a car payment now for the first time in 20 years ... it is for a Honda Fit because I won't spend too much on transportation.

Traveling is our big splurge. 

I guess there is nothing like being a bankruptcy attorney to make one scared of financial mistakes.

elaine


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## chriskre (Nov 19, 2013)

So can you outlive your SS benefits?
I am only 49 right now but you guys are scaring me. 

Sent from my Kindle Fire using Tapatalk 2


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## Passepartout (Nov 19, 2013)

glypnirsgirl said:


> I guess there is nothing like being a bankruptcy attorney to make one scared of financial mistakes.



Not so much the fact that you passed the Bar, but that you see the mistakes of others. It also reinforces the fact that for a huge number of even very smart and savvy people, one medical crisis is enough to tip them over financially.

Jim


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## csxjohn (Nov 19, 2013)

I know more than a few couples who decided not to retire when they could first start taking benefits, saying they'll wait a few years to get some more cash out of the system.

Well that didn't work out for them because one or both of them ended up with medical problems and are now not able to travel like they had planned.

You can do all the calculating you want on your own life expectancy but how do you factor in accidental death or debilitating sickness or injury?

This isn't really just a financial decision you're trying to make.  At the younger age you will be able to do more and enjoy more than when you start to decline in later years.

I like one of the jokes in another current thread.  Ideally you should plan to run out of money the same day you die.  If I die next Thursday I will have accomplished that.


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## x3 skier (Nov 19, 2013)

chriskre said:


> So can you outlive your SS benefits?
> I am only 49 right now but you guys are scaring me.
> 
> Sent from my Kindle Fire using Tapatalk 2



It is inevitable there will be changes in SS since the ratio of collectors to workers in continually increasing. Eventually, unless something is changed, payouts or taxes or both, Medicare and SS will be unsustainable. Fortunately, I and my DW will be long gone by then. 

My wife took hers when she was eligible and since we didn't really need mine, I waited till full retirement age. 

Cheers


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## Conan (Nov 19, 2013)

Passepartout said:


> ...for a huge number of even very smart and savvy people, one medical crisis is enough to tip them over financially.


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## Passepartout (Nov 19, 2013)

chriskre said:


> So can you outlive your SS benefits?
> I am only 49 right now but you guys are scaring me.
> 
> Sent from my Kindle Fire using Tapatalk 2



Even the worst case scenarios, we are told that full benefits will be paid for the next 27 years, then drop back to 75%. With some tweaking- like raising the age one can collect gradually to 70, and/or not exempting earnings above (is it 104,000?) From FICA taxes that pay into SS, payouts will continue at full levels way beyond when all of us achieve ambient temp.

Jim


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## radmoo (Nov 19, 2013)

Blues said:


> I've asked this question of two different employees at two different SSA offices, as well as asking a financial planner.  Because you're right, that's a significant factor to take into account when deciding whether to delay taking retirement benefits.
> 
> The upshot?  The two SSA offices gave different answers.  The financial planner agreed with the one that said that you'd get the higher (132%) benefit.  I'd sure like a *definitive* answer to this question.  But right now, I'm assuming my wife will get my increased (age 70, 132%) benefit when I die, assuming I make it past 70 and claim then.
> 
> ...





that is correct - you can receive 100% benefit MAX BUT you must also reach your MAX retirement age.  I have similar issue.  I am 61 and hubby is 75.  He began collecting full benefit at 65 and I was not eligible for widow pension which thankfully I haven't needed until I reached 60, no matter what.  Now I would receive widow benefit but that is not FULL payment.  I can only collect FULL payment when I reach MY full retirement age at 66.  

I am thinking of collecting early.  Anyone know if I can file for spousal benefit now and then switch to my benefit which is DEFINITELY HIGHER than maximum 50% of hubby's?


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## VacationForever (Nov 19, 2013)

radmoo said:


> that is correct - you can receive 100% benefit MAX BUT you must also reach your MAX retirement age.  I have similar issue.  I am 61 and hubby is 75.  He began collecting full benefit at 65 and I was not eligible for widow pension which thankfully I haven't needed until I reached 60, no matter what.  Now I would receive widow benefit but that is not FULL payment.  I can only collect FULL payment when I reach MY full retirement age at 66.
> 
> I am thinking of collecting early.  Anyone know if I can file for spousal benefit now and then switch to my benefit which is DEFINITELY HIGHER than maximum 50% of hubby's?



Based on your ages, You may want to collect yours at 62.  When/If your husband subsequently passes away after you have reached your full retirement then you switch to widow's benefit.  My FIL and MIL did that and my husband and I are planning on doing the same.


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## geekette (Nov 19, 2013)

chriskre said:


> So can you outlive your SS benefits?
> I am only 49 right now but you guys are scaring me.


no, it's for life.  

but no one should expect SS to pay much, there should be other income/assets to support oneself.  Even at max ss benefit, it's not a lot of money.


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## geekette (Nov 19, 2013)

csxjohn said:


> I know more than a few couples who decided not to retire when they could first start taking benefits, saying they'll wait a few years to get some more cash out of the system.
> 
> Well that didn't work out for them because one or both of them ended up with medical problems and are now not able to travel like they had planned.
> 
> ...



It's all balance.  Work hard, play hard suits me.  I get vacation time and use it.  Boss is having to use vacation or lose it because there is only so much he can carry over to next year!

I don't wait to live life, I just try to balance everything.  I nuture my nest egg and steer a token few bucks towards vacation.   I save up to fix the house vs taking huge loan out to do radical transform.  My future very frail and elderly self would be very angry with my current self if I gave in to temptations and splurged on senseless luxuries while she struggles to pay for heat.


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## geekette (Nov 19, 2013)

dmharris said:


> Let's celebrate that we have choices in this country!


Yes, it's good to have choices, and in many cases, be able to change your mind if circumstances warrant.

None of us know how long we have, live as you see fit.


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## SMHarman (Nov 19, 2013)

glypnirsgirl said:


> Being scared has affected all of my financial decisions. We live in a house valued at 1X our annual income. We have a car payment now for the first time in 20 years ... it is for a Honda Fit because I won't spend too much on transportation.
> 
> I guess there is nothing like being a bankruptcy attorney to make one scared of financial mistakes.
> 
> elaine


Taking this a little off topic, sorry...

Over the long term, and not treating it like a cash dispenser having a decent sized mortgage in a housing market with appreciation is a good financial decision.

It is one of the few opportunities the average person gets to leverage return.

The reason hedge funds make outsize returns (or blow up) is that the investors pour in say $20m of funds and they then borrow another $80m of money so they can invest $100m.  Now if the $100m goes up to $105m they give back the $80m they borrowed (plus interest) and keep the say $24m.  Thats a 4m return on 20m.  Nice.

Similarly with property, and especially when comparing the interaction and timing of other investments you should be making, it is usually a better financial decision to keep the mortgage and max out the 401k each year rather than pay of the mortgage and then invest in the 401k.

The money you have borrowed can be paid off later with the return on the 401k and the 401k will have a better return due to the magic of compounded returns.  You are not compounding the interest on the mortgage but paying it monthly so there is not escalating debt on the other side of the equation.

A lot of words to say that your fiscal ultraconservatism may be hindering you in saving enough to live to 102.  Borrowing on the home and investing that money into retirement funds should accellerate your nest egg.


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## glypnirsgirl (Nov 19, 2013)

SMHarman said:


> Taking this a little off topic, sorry...
> 
> Over the long term, and not treating it like a cash dispenser having a decent sized mortgage in a housing market with appreciation is a good financial decision.
> 
> ...



I believe that the leverage a mortgage provides is an important tool for the average person. I do not think that I am smart to be spending so little on our home, it just makes me feel more secure. Part of the reason that we have spent so little on our home is because my husband has a heart condition and earns 3X as much as I do. On my own, I couldn't make the payments on the house that we could "afford." We live in the house that I owned before our marriage. I know I can afford these house payments on my own.

We max out our 401(k) contribution through his employer, I max out the IRA that I am allowed. And then we save extra on top of that. I have to convince myself we are better off doing that than paying off the mortgage.

I am extremely conservative with money --- and like any one that is conservative with money, I know that I am missing returns in order to be secure. 

It was good of you to explain the benefits of leveraging return on investment.


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## Conan (Nov 19, 2013)

radmoo said:


> that is correct - you can receive 100% benefit MAX BUT you must also reach your MAX retirement age.  I have similar issue.  I am 61 and hubby is 75.  He began collecting full benefit at 65 and I was not eligible for widow pension which thankfully I haven't needed until I reached 60, no matter what.  Now I would receive widow benefit but that is not FULL payment.  I can only collect FULL payment when I reach MY full retirement age at 66.
> 
> I am thinking of collecting early.  Anyone know if I can file for spousal benefit now and then switch to my benefit which is DEFINITELY HIGHER than maximum 50% of hubby's?



While her husband is alive, a wife who claims spousal benefits before she attains age 66 loses two ways:  
--She will get less than the 50% of his benefit she could have had by waiting to age 66, and, 
--"If you are under full retirement age and qualify on your own record, we  will pay you that amount first. But if you also qualify for a higher  amount as a spouse, you'll get a combination of benefits that equals  that higher amount." 
http://www.ssa.gov/retire2/applying6.htm#a0=0
  That means they will treat her as having applied for her own benefit at that time, so there's no later date that she can claim a better benefit on her own record.
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If her husband dies, a widow who is at least age 66 (or if she defers collecting survivor benefits until she attains age 66) receives 100% of his benefit.  [Your question I think confuses the 50% spousal benefit with the 100% survivor benefit.]

A widow who starts collecting survivor benefits between age 60 and age 66 receives less than the full 100% because of the early commencement of benefits.
http://www.ssa.gov/survivorplan/ifyou5.htm

Either way, "If you receive benefits as a widow or widower or as a surviving  divorced spouse, you can switch to your own retirement benefit as early  as age 62. This assumes you are eligible for retirement benefits and  your retirement rate is higher than your rate as a widow, widower or  surviving divorced spouse.  In many cases, a widow or widower can begin receiving one benefit at a    reduced rate and then, at full retirement age, switch to the other  benefit at an unreduced rate."
http://www.ssa.gov/survivorplan/ifyou5.htm#a0=1


[I'm saying age 66 for convenience; actually it's her "full retirement age."]


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## geekette (Nov 19, 2013)

glypnirsgirl said:


> I believe that the leverage a mortgage provides is an important tool for the average person. I do not think that I am smart to be spending so little on our home, it just makes me feel more secure. Part of the reason that we have spent so little on our home is because my husband has a heart condition and earns 3X as much as I do. On my own, I couldn't make the payments on the house that we could "afford." We live in the house that I owned before our marriage. I know I can afford these house payments on my own.
> 
> We max out our 401(k) contribution through his employer, I max out the IRA that I am allowed. And then we save extra on top of that. I have to convince myself we are better off doing that than paying off the mortgage.
> 
> ...



I also fear being old and poor more than I fear anything else.  

I do hope that your investments (401k, IRA, etc.) are invested for the long haul vs ultra safe.  You might take a look at the bucket method so you can deploy your investments in a time-frame manner as that may help you to take a little risk yet sleep well at night.  Nothing wrong with safety nets, they just need to be able to expand over time.  Inflation has a nasty habit of nibbling away at returns over time.   Please also look at dividend stocks; utilities used to be called Widow Stocks.  Might fit your risk tolerance and timeframe.


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## VacationForever (Nov 19, 2013)

I have used a lot of calculators as to whether I could retire tomorrow but no matter what they tell me I just could not accept their answers.  Dissaving is frightening for me.  My ideal situation is to continue to work at 50% till I cannot work anymore.  The question for myself is what sort of career can I pursue that would allow me to work half time?  My father worked till his 80s before eminent domain took his business (location) away.  I have no issue working till I drop dead, as long as I get to relax and have enjoyment along the way.


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## glypnirsgirl (Nov 20, 2013)

sptung said:


> I have used a lot of calculators as to whether I could retire tomorrow but no matter what they tell me I just could not accept their answers.  Dissaving is frightening for me.  My ideal situation is to continue to work at 50% till I cannot work anymore.  The question for myself is what sort of career can I pursue that would allow me to work half time?  My father worked till his 80s before eminent domain took his business (location) away.  I have no issue working till I drop dead, as long as I get to relax and have enjoyment along the way.



I am fortunate to own my own business. And I have excellent employees. I can take off about 1/4 of the time if I want/need to --- it does affect the amount that I can pay myself, but at that rate I can still cover my overhead and have some left to pay me. Any more than 1/4 off and I can feel it in my wallet. 

When I was 26 and first started practicing, I was meeting with an insurance agent (still have the same agent --- he is great) regarding life and disability insurance. My first husband was a mid-level marketing executive. I was/am an attorney. My husband and I were in the same health condition. My disability premium was half of his. I asked our agent about it and he said, "the number crunchers know that attorneys will work well past half dead." And through the years, it has proven to be true. 

My best friend recently finally full time retired at 72. Her husband retired about 15 years ago. 

I have had friends that worked into their 80s. Most don't retire, they die. 

Like the term "dissaving."


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## radmoo (Nov 20, 2013)

Conan said:


> While her husband is alive, a wife who claims spousal benefits before she attains age 66 loses two ways:
> --She will get less than the 50% of his benefit she could have had by waiting to age 66, and,
> http://www.ssa.gov/retire2/applying6.htm#a0=0--"If you are under full retirement age and qualify on your own record, we  will pay you that amount first. But if you also qualify for a higher  amount as a spouse, you'll get a combination of benefits that equals  that higher amount."
> 
> ...



Thanks for the qualification.  It is as I thought.  I probably will start collecting prior to age 66, knowing that if I outlive hubby, I can switch to his higher benefit once I reach 66.  If I die first, it won't matter as he will keep his full benefit.  In the meantime, we'd have combined benefit, his VA disability and investment income.

_http://www.ssa.gov/retire2/applying6.htm#a0=0--"If you are under full retirement age and qualify on your own record, we  will pay you that amount first. But if you also qualify for a higher  amount as a spouse, you'll get a combination of benefits that equals  that higher amount." _[/I]


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## pacodemountainside (Mar 21, 2014)

A  couple pros  debate!.

http://online.wsj.com/news/articles...92832120521694.html?KEYWORDS=social++security


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