# Social Security question



## jlf58 (Apr 28, 2013)

When I started on TUG, I was one of the young ones, how sad 

Anyway, I am 55 this year and my wife will also be 55 but is 6 months older. I know the basics IE retire at 62, wait till 68 etc. 

My plan is to work until I am 68, my wife does not work. I am not a big fan of "wait till you are both 70, get more money" . My Dad died 6 months after retirement so I want to enjoy mine. Anyway, I am thinking of starting to let my wife takes hers at 62, at that point I will actually take that money and add the equal amount in my 401K to give it a great 5 years of cash. Her SS amount is not as good as 1/2 of mine so how does the timing work ?

can she take hers at 62, 6 months later, I file and suspend and she than goes up to 1/2 of mine ?

Without lecturing please, this is my plan, what's the best way to implement it ?
Would she get just 1/2 of my 62 amount ?
at 68 can she get 1/2 of that amount or she stays at the lower one ?

1/2 of my 62 amount is about $900
1/2 of my 68 amount is about $1300





Thanks in advance


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## Kal (Apr 28, 2013)

What's the current and projected health status for both of you?  What's the family history on both sides in longevity?  In short, figure out how long both of you will live and the selection process will be easy!  Piece of cake!


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## DeniseM (Apr 28, 2013)

Where do you go for accurate and knowledgeable social security advice?


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## jlf58 (Apr 28, 2013)

good question . I was planning on getting hit by a car in 2024 but changed my mind 

no glaring issues but again, not waiting on 70 just in case 



Kal said:


> What's the current and projected health status for both of you?  What's the family history on both sides in longevity?  In short, figure out how long both of you will live and the selection process will be easy!  Piece of cake!


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## jlf58 (Apr 28, 2013)

I figured this would be an easy question since tuggers are a bit older and a smart bunch. I know we will get a few experts today 



DeniseM said:


> Where do you go for accurate and knowledgeable social security advice?


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## csxjohn (Apr 28, 2013)

You can do all the figuring you want but none of us know when we'll take our last breath.

Your specific questions can be answered by the SS administration.  Have you looked at thier web site to try to find these answers?  Talking to one of their reps could also help.

http://www.ssa.gov/

One thing you may consider is that if you opt to start benefits early, when you reach Full Retirement Age, you can give them back what you have collected and get the higher amount at that time.

With our kind of luck we would give them back the money expecting to live a long time and end up checking out the next day.

Keep in mind that when you reach your FRA you can earn as much as you want and not have your benefits reduced.  So there is no reason for you not to start collecting when you reach that age.  Yes if you keep working past that age your benefits will increase but why not take the free money when you can?


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## csxjohn (Apr 28, 2013)

A quick look at the web sites reminded me that she cannot collect on your benefits until you are eligible to collect.  So if she never worked and is not eligible for her own benefits you won't have this decision to make.


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## jlf58 (Apr 28, 2013)

She is eligible on her own, its just less. That's why I was wondering if she can do 6 months of her own than switch to me 



csxjohn said:


> A quick look at the web sites reminded me that she cannot collect on your benefits until you are eligible to collect.  So if she never worked and is not eligible for her own benefits you won't have this decision to make.


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## Kal (Apr 28, 2013)

Another factor to consider - What is the future of Social Security????

Granted, it's not going away but who knows what the mental midgets in congress will try to pull off.  Might want to review some of the ayn rand quotes to get a feel for things.


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## csxjohn (Apr 28, 2013)

csxjohn said:


> ...One thing you may consider is that if you opt to start benefits early, when you reach Full Retirement Age, you can give them back what you have collected and get the higher amount at that time.
> 
> ...?



This may also no longer be accurate, more reading tells me than you can do this up to 12 months after you first apply so a call to SS is the best bet.


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## x3 skier (Apr 28, 2013)

SSA can give you all the data but not advice. 

In our case, my wife took hers as soon as she was eligible and I waited till full age. She got her "Grandkids splurges" money early since we could afford to wait for mine.

Each case depends on your personal circumstances so there is clearly no "right" answer. Statiscally it's better to wait but you know what Mark Twain said about statistics, "There are three kinds of lies: lies, damned lies, and statistics." 

Cheers


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## IngridN (Apr 28, 2013)

csxjohn said:


> ......
> One thing you may consider is that if you opt to start benefits early, when you reach Full Retirement Age, you can give them back what you have collected and get the higher amount at that time....



No you can't...this loophole was closed a couple of years ago. I believe you do have the option within the first year only.

There are a couple of sites (I believe socialsecuritysolutions.com is one of them), where for a small fee they will calculate various scenarios for you. As DH and I are approaching this point, I have done some research. One of the things to be very careful about is taking benefits before FRA (full retirement age). Once you do this, the reduced payments are set. There is more flexibility wrt to 'file and suspend' at your FRA. Please go the the SS site and read, read, read.

Ingrid


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## vacationhopeful (Apr 28, 2013)

As I learned, you might have worked all those years and your plan is based on BOTH husband and wife collecting their age 66 MAX ... either of you can file WHEN you want.

My mom did this to my father without consulting him or telling him. She felt that it was HER money (she worked 10 years after us kids were in school) and told him, she was retired (of course, on his earnings record).

Just be sure, HER plan is in agreement with YOUR plan.


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## rickandcindy23 (Apr 28, 2013)

If one has an ongoing income after retirement, I understand a person cannot collect SS.  You can only earn so much money before SS payments are reduced or denied completely.  

Isn't that true?  

We have a small timeshare rental business, and we claim that income and pay taxes.  I don't plan to stop making money because I am getting older (I am pretty old now, as Rick and I just celebrated our 40th anniversary).  I don't think I will be able to draw a thing from SS.  Rick's retirement is through the fire department, and he retires in two years.  He won't take SS either, even though he has some coming from our chimney cleaning business and his jobs as a young man.  I believe his fire department retirement income will exclude him from eligibility.  

These are questions I have about SS.  I cannot help anyone figure it out, because I don't understand any of it.  But it's okay if we don't qualify.....


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## vacationhopeful (Apr 28, 2013)

rickandcindy23 said:


> ..These are questions I have about SS.  I cannot help anyone figure it out, because I don't understand any of it.  But it's okay if we don't qualify.....



Cindy go sign on and SEE your Social Security account online. CSXJohn's earlier post has the web site. You need your SS number, full name and date of birth.

Easier than TUG!


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## DeniseM (Apr 28, 2013)

I just did and it was easy.


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## SmithOp (Apr 28, 2013)

I'm 60 this year so we have been investigating too.  The way I've been advised is higher earner files and suspends at 62, the other then takes spousal benefit.  At FRA they both claim their own.  We are going to see a financial planner to run the scenarios for us.


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## short (Apr 28, 2013)

*Highest of the two.*

I have two recent retirees who have been told that SS admin will give you the higher of the two benefits no matter.  Spousal or your own.  You do not have a the option to pick.

At 62 you will get 75 percent of your spousal benefits(50 percent of your spouse) or 75 per of your own.

Short


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## timeos2 (Apr 28, 2013)

In broad terms I have found that taking any benefit earned as soon as possible works out better in the long run. No one can accurately predict what will happen to them, the economy or institutions. Money in hand is worth more than promises in the future. In each case I've taken the maximum amount possible as soon as possible. Then I've invested, insured or otherwise made provisions to use it not for day to day expenses (those I have covered from "normal" sources) but as back up pots of money when needed. 

It hasn't let me down. Despite some very unforeseen circumstances that changed my life (and my families) the plan has been adaptable and has served us well. Long term we aren't losing any income we would have been guaranteed to get while short term we've had emergency money when required and can maintain our preferred lifestyle indefinitely.  I retired at 52 from a government / corporate job life, ran my own business for over 20+ years and have no regrets. Now despite setbacks I can rest assured my family is taken care of by financial decisions made when I had no limitations (that I wouldn't have the ability to get now).  

Taking what I had coming as soon as I had access has served me well and I urge everyone to at least consider it. It's not the right answer in every case as no one choice ever is. But it has been a great way for us to go and we do recommend it. You need to be disciplined to make it work. If you aren't then take a path that helps force you to be.


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## PStreet1 (Apr 28, 2013)

The Social Security Administration has some on-line calculators which you may find helpful:  http://www.socialsecurity.gov/retire2/near.htm

If you think you aren't eligible for Social Security, you may want to check that oout carefully.  It is true that other pension income reduces the amount of Social Security you can collect; but it is also true that if you are collecting on your own account (not as a wife--as a wife, other income can reduce Social Security to Zero), there is a limit it cannot go below.

In my case, what I get on my own account, which is a very tiny amount because of other pension income, is enough to pay for Medicare benefits.  If I were to draw on my husband's account, I would get nothing.

You definitely need to do a lot of research before forming your conclusions about Social Security/Medicare.


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## jeepie (Apr 28, 2013)

I used a service available at socialsecuritychoices.com. I think it cost $29.95 and they ran through every scenario of my timing and my spouse's timing. Very helpful. Cheers.


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## DeniseM (Apr 28, 2013)

jeepie said:


> I used a service available at socialsecuritychoices.com. I think it cost $29.95 and they ran through every scenario of my timing and my spouse's timing. Very helpful. Cheers.



I just got this report - it is $39.99.


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## VivianLynne (Apr 28, 2013)

DeniseM said:


> I just got this report - it is $39.99.



And your RATING for the report???? 

Worth the $40? Good the closer you are to retirement?

Thank you for the opinion.


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## x3 skier (Apr 28, 2013)

rickandcindy23 said:


> If one has an ongoing income after retirement, I understand a person cannot collect SS.  You can only earn so much money before SS payments are reduced or denied completely.
> 
> Isn't that true?



At the full age, you can earn as much as you want without any penalty. If you take the early version, your payments are reduced by $1 for every $3 you earn, IIRC. *Check SSA for an accurate numbers*. One of the  reasons I delayed taking the early option was I have a small consulting income that was as good as the minor SS payment I had earned so it was a no brainer for me to wait and avoid any reductions.

BTW, I am amazed that people find this complex. Using the SSA web site gives you accurate info on how much you will get depending when you elect to start to receive benefits. The folks at our local SSA office are also very helpful. What SSA won't do is make the choice for you. Either source is free so paying someone, while is a choice, I would get as much of the free info as I could and then decide if it is worth it to pay some third party.

Cheers


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## DeniseM (Apr 28, 2013)

VivianLynne said:


> And your RATING for the report????
> 
> Worth the $40? Good the closer you are to retirement?
> 
> Thank you for the opinion.



I literally just printed it out - not ready to rate it yet.  (It is 14 pages long.)


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## Fern Modena (Apr 28, 2013)

I'm a widow and I began collecting at age 61 when Jerry died.  I've continued to collect survivors' benefits because at age 62 it is about the same whether I collect on his account as a survivor or on mine.  The longer I wait at this point (assuming I live that long) the more it will pay me.  Right now the difference at full retirement age is about $300.  If I wait to age 70, it will be close to $1000. difference.  Since I am already collecting and can live on what I have right now, I will probably choose to wait.  If things should change, I could always decide to collect somewhere between ages 66 and 70.

Make sure you understand how survivors' benefits work if it applies to you.

Fern


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## rickandcindy23 (Apr 28, 2013)

DeniseM said:


> I literally just printed it out - not ready to rate it yet.  (It is 14 pages long.)



Ah, reading material on the flight: California > Orlando........in a few weeks.  

We just flew back from Williamburg to Denver, via an Atlanta stop on Thursday night.  I found it exhausting.  Lordy.  

What a time for my Kindle to lose battery power.  I was reading SkyMall most of the second leg of that trip.  I never realized how many new things I need to buy.  :rofl:


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## csxjohn (Apr 28, 2013)

rickandcindy23 said:


> If one has an ongoing income after retirement, I understand a person cannot collect SS.  You can only earn so much money before SS payments are reduced or denied completely.
> 
> Isn't that true?
> 
> ...



I have to say that I really was into this 6 years ago when I retired and had to add all the nuances that the Railroad Retirement System had on top of the SS rules.

Many of this changes frequently and remember, it can change again with the stroke of the pen in congress.

I also decided to take as much as I could as early as I could.

Sure, if you wait for a while your benefits will be higher but if you start now you will be getting them for a longer time.

I always looked at it as a life line.  X-----------------Y-----------------Z

X is when I was born, Y is now and Z is when I die and none of us know then this will take place.

The longer you work, the closer you get to Z and the less time you will have from retirement to Z.

My wife worked at our church which was a large church, and so many times older couples would work longer than they had to talking about what they would do when they'd get enough money and finally retire.

Way too often one or the other got seriously ill or passed before their dreams came true.

I was eligible for full benefits at 60 and my wife went at 62.  She may live longer than the break even point on the early benefits but what if she doesn't?


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## isisdave (Apr 28, 2013)

SmithOp said:


> I'm 60 this year so we have been investigating too.  The way I've been advised is higher earner files and suspends at 62, the other then takes spousal benefit.  At FRA they both claim their own.  We are going to see a financial planner to run the scenarios for us.



You can file anytime after 62, but you can't suspend until Full Retirement Age. However, if you earn twice as much as your benefit would be, you can essentially shut the benefits off under the "reduce $1 for every $2 earned" rule. This money is not lost; they'll recalculate your benefit when you do start to get benefits. However, if you file before FRA, I am not sure you can suspend when you do reach FRA.

If you are forced to get benefits earlier than you want, you can invest them rather than spend them. But the effective rate of return on waiting for SS is over 8% and that's pretty hard to get via investment and without risk. There are of course unpleasant tax consequences if you have other income.


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## PStreet1 (Apr 28, 2013)

Remember, if you are collecting on your own account, there is a figure they can't reduce below (even with another pension, as I have)--as I said, in my case, it's enough to pay the Medicare premium and contribute a bit to paying some income tax automatically.  If I were collecting on my husband's account, they could, indeed, reduce it to zero; but if it's your own account, it can't be reduced to zero.  

"The maximum amount may be overstated. The WEP [windfall elimination provision] reduction is limited to one-half of your pension from non-covered employment."  http://www.socialsecurity.gov/retire2/wep-chart.htm


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## DeniseM (Apr 28, 2013)

Quick summary:  The report will create 3 scenarios for you - any combination of these options - selected by you.

wife:  short - average - long life
husband:  short -average - long life

Then it uses your ages, and your "full retirement age benefits" (which you have to provide from the SS webage) to create the "best" scenarios for your situation with 3 charts, and walk-throughs for when to apply, etc.  This is the first 6 pages of the report.

The remaining pages discuss the info. in detail, present it in graph form, and discuss some of the finer points and theory.

It was helpful for me, because we have just started looking at retirement, so this is new to me.  It might be too elementary for people who have more experience.


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## ilene13 (Apr 28, 2013)

I am a high school principal in NYS.  I am 62.5.  If I retire this year I will get about 73% of the average of my top 3 years salaries.  I will not pay NYS income tax on the money.  If I wait until I am 66 to collect my full SS it will take me until I am in my 80's to make up the difference.  So, when I retire I will wait until the new calendar year and I will begin taking my SS.  

My SS is comparable to my husbands.  I have always been very close to the annual max and as a self employed physician he pays self employment tax which is actually higher than SS.


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## nightnurse613 (Apr 28, 2013)

Remember, the $2 for $1 reduction is based on EARNED income.


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## IngridN (Apr 28, 2013)

SmithOp said:


> I'm 60 this year so we have been investigating too.  The way I've been advised is higher earner files and suspends at 62, the other then takes spousal benefit.  At FRA they both claim their own.  We are going to see a financial planner to run the scenarios for us.



Be very, very careful about this. DH is 7 years older than I am and I planned on having him file and suspend at his FRA or later and I take spousal benefits at 62, changing to mine at 66. I learned that if I take any benefits before my FRA, they are locked and I will get the larger of benefits on my record or the spousal benefits. I plan on spending the few dollars for a report from 'socialsecutysolutions as well as doing much more research on the SS site as things may change in the next few years. My Fidelity AE also strongly suggested the 'socialsecuritysolutions' site.

Ingrid


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## IngridN (Apr 28, 2013)

short said:


> I have two recent retirees who have been told that SS admin will give you the higher of the two benefits no matter.  Spousal or your own.  You do not have a the option to pick.
> 
> At 62 you will get 75 percent of your spousal benefits(50 percent of your spouse) or 75 per of your own.
> 
> Short



I believe this is only correct if you file before your full FRA. After FRA, you have more options.

Ingrid


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## DeniseM (Apr 28, 2013)

This was the recommendation for a "normal" life expectancy for both spouses - I am 6 years younger than my husband.  Also - he will get far my $$$ than I will, because I am barely vested in SS, because most of my years of employment have been in Education, and in CA, teachers pay into STRS, instead of SS.



> 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.
> 
> ...


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## vacationhopeful (Apr 28, 2013)

My one sister whose husband just died 6 months ago and was years younger than her, was retired on a disability. She gets to collect his FULL SOCIAL SECURITY benefit at age 60. Because she is a widow - and was 3 months 10 days short of being married 10 years Which if she had divoriced him, she get nothing as married less thant 10 years).

So she gets more at age 60 than if she waited til 67 to collect her full retirement. Now she will collect his and switch to her benefit after it grows to her age 70.  At least, this is WHAT I understood as she explained it to me.


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## VacationForever (Apr 28, 2013)

Another scenario that I was told that works: Wife has less SS benefits of her own than her husband's and she is expected to outlive her husband.  Wife should draw SS benefits using her own at 62.  Husband draws SS at his full retirement - 66 or 67..., when / if he dies, she then switches to widow's SS benefits which is 100% of husband.  

Any problem with this advice?


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## patty5ia (Apr 28, 2013)

Your wife cannot take benefits at age 62 and then have a new claim when you retire.


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## ilene13 (Apr 28, 2013)

DeniseM said:


> This was the recommendation for a "normal" life expectancy for both spouses - I am 6 years younger than my husband.  Also - he will get far my $$$ than I will, because I am barely vested in SS, because most of my years of employment have been in Education, and in CA, teachers pay into STRS, instead of SS.



In NYS educators pay into NYSTRS and SS, so we get both!


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## Luanne (Apr 28, 2013)

We talked to our financial advisors.  They were able to lay it all out for us.  They didn't tell us what to do, just gave us the figures and some suggestions.  I started taking SS as soon as I retired at age 62 1/2.  Dh waited until he retired also, and took it at age 67.  He was debating on waiting until he reached 70 as he could have collected 1/2 of mine until then, but then decided he'd rather have the money now.


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## radmoo (Apr 28, 2013)

sptung said:


> Another scenario that I was told that works: Wife has less SS benefits of her own than her husband's and she is expected to outlive her husband.  Wife should draw SS benefits using her own at 62.  Husband draws SS at his full retirement - 66 or 67..., when / if he dies, she then switches to widow's SS benefits which is 100% of husband.
> 
> Any problem with this advice?



I believe this is correct.  DH is 14 yrs my senior, retitred and collecting full benefit.  I will probably begin collecting prior to FRA  as logic dictates that I will survive him.  As ling as I reach my FRA, I would become eligible to collect full widow benefits.  And if he should outlive me, he still has full benefit.


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## IngridN (Apr 28, 2013)

sptung said:


> Another scenario that I was told that works: Wife has less SS benefits of her own than her husband's and she is expected to outlive her husband.  Wife should draw SS benefits using her own at 62.  Husband draws SS at his full retirement - 66 or 67..., when / if he dies, she then switches to widow's SS benefits which is 100% of husband.
> 
> Any problem with this advice?



This works.


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## JudyH (Apr 28, 2013)

Vacation hopeful, that is the same scenario as my sister.  She was younger than her husband, but collected his full social security.  When she remarried after age 60, she still keeps husband's number one SS.  She can switch to hers when she reaches FRA.


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## pjrose (Apr 29, 2013)

*My Brain Hurts*

The closer I get to filing and the more I think about the assorted options, the more brain cells I lose.


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## Sandi_Roger (Apr 29, 2013)

The OP stated that he would still be working while his wife collected. 
With any decent income the SS becomes 85% taxable. If she collects $900 at 62, then the net could be $600 depending on state tax. This very important consideration is often omitted when calculating a break-even age.

There is a page in the 1040 manual for calculating the taxable percent.


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## Gramma5 (Apr 29, 2013)

Anyone have a thought on this one? My sister is 65, she took her SS at age 62. It wasn't much because she only worked bait after kids were grown. Something like $300+ month. Her new husband of 4yrs. Is now just 62. He is going to take early SS in May. SS told them( in person) that she will get hers increased to 1/2 of his when he starts collecting. As I read SS that can't happen unless he is at FRA. Any thots on this scenario??


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## "Roger" (Apr 29, 2013)

This is a long shot, but if I don't mention it, it becomes a no shot...

My county (and I think it is fairly common throughout the state) has an employee whose job is to provide financial counseling for near retirees and retirees.  

In my case, she was excellent.  (Of course, then again, I am only 39 - yeah right!) She gives frequent presentations on what you need to do when as retirement approaches. More importantly, she schedules individual appointments to deal with specific circumstances.  She helps not only with Social Security, but medical benefits questions.

Bottom line.  While I suspect I am in an unusual situation, it wouldn't hurt to ask if there is anything of this sort available in your area.


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## csxjohn (Apr 29, 2013)

Gramma5 said:


> Anyone have a thought on this one? My sister is 65, she took her SS at age 62. It wasn't much because she only worked bait after kids were grown. Something like $300+ month. Her new husband of 4yrs. Is now just 62. He is going to take early SS in May. SS told them( in person) that she will get hers increased to 1/2 of his when he starts collecting. As I read SS that can't happen unless he is at FRA. Any thots on this scenario??



This sounds correct.  When he is eligible, she can collect on his account even if he decides to wait for his.

This wasn't always the case.  It used to be that a person could not collect spousal benefits until the spouse started collecting.  Many vindictive people kept working to keep a divorced spouse from collecting.  Now, once the spouses is eligible to collect you can collect.


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## susieq (Apr 29, 2013)

Gramma5 said:


> Anyone have a thought on this one? My sister is 65, she took her SS at age 62. It wasn't much because she only worked bait after kids were grown. Something like $300+ month. Her new husband of 4yrs. Is now just 62. He is going to take early SS in May. SS told them( in person) that she will get hers increased to 1/2 of his when he starts collecting. As I read SS that can't happen unless he is at FRA. Any thots on this scenario??



I was told, (by SS office) that when I reach FRA I can collect spousal benefits ~ the hitch comes that since he started collecting at 62, I wouldn't get 50% ~ slightly less, (there's a calculator on their website). Also, since she's collecting, she would only get the higher of the two amounts, not both. This is what I understood anyway...........


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## csxjohn (Apr 29, 2013)

The thing to keep in mind is that everything is subject to change with the stroke of a pen.  What was true last year may be different now.

In the railroad retirement system if both spouses were vested before Jan 1, 1975 each person can collect their own benefit and approx. 50% of the spouses.  

This resulted in a couple getting the equivalent of 3 pensions. 

A lot changed that year.  The PBGC was created, also companies could no longer fire people near retirement and keep their company pension benefits.
Vesting rules had to be set and stuck to, but this is getting off the subject of SS.

There was also a change for those who were vested in SS and Railroad Retirement at that date but I had just started at the railroad at that time and can't remember the implications.  It was something about dual benefits.


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## singlemalt_18 (Apr 29, 2013)

Fletch – Sorry to throw a wet blanket on the party here, and at the risk of lecturing against your wishes…

EVERYONE here means well and has the best of intentions, but *this is the LAST place you should be seeking this type of advice*.  Judging from the pace of, and content in the responses in this thread, you are probably not any closer to getting what you need.  Please put away the online rolodex and resources for this matter and instead find some references for a good accountant and financial planner.

Make a list of successful people you and your wife know personally and professionally, whom you trust and respect, and ask them who they use for their accounting and financial planning needs.  If you begin there, I’m sure you will find a great resource and make all the right moves, or at least understand the implications of whatever choices and decisions you make.

I spent 10 years in private practice as fully credentialed financial planner, and I focused a great deal on tax planning.  Technically, only accountants and attorneys are permitted to give tax "advice" and anyone else doing so is guilty of the unauthorized practice of law.  Although I was free to discuss strategies and options, and identify actions with consequences, even I was not permitted to give “specific” tax advice.

In the end I always gave my clients the same instruction in this area – *do not try this at home and work with a good accountant*. (Not just a tax preparer!)  I have always followed my own advice.  My accountant and I work together closely on strategies, but I rely on him for all final council and calculations.

*Everybody’s situation is different, and what may be right for one set of circumstances can be completely inappropriate for another.*

Good Luck!


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## DeniseM (Apr 29, 2013)

TAX ADVICE???


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## Blues (Apr 29, 2013)

This is a good discussion on Social Security.  We're going through the same type of planning process now, in anticipation of retirement in 3-4 years.  Thanks everyone.

I agree that the SSA web site is a wealth of information.  Still, there are some details that don't seem to be explicitly covered.  Or if so, I can't find them.  I found some areas that imply some answers, but are not explicit.

So, I have a couple of questions, if anybody knows the answer.  They have to do with the increased benefits you get from delayed retirement.

1. If the older spouse delays his/her retirement to age 69 or 70 for increased benefits, and the younger spouse (at FRA) decides to draw 1/2 the older spouse's benefit, is it:
1a.  1/2 the increased benefit, or
1b.  1/2 the older spouse's base (FRA) benefit.

I've seen something on the site that implies 1b, but I'm not sure.  Anybody know?

2. Similarly, if I delay drawing SS retirement until age 70 to get the increased benefit, and I subsequently die, I know my spouse can claim my benefit amount rather than her own.  Again, is it:
2a. my increased benefit due to delayed retirement, or
2b. my base (FRA) benefit.

Thanks,
Bob


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## singlemalt_18 (Apr 29, 2013)

DeniseM said:


> TAX ADVICE???



Actually, yes.

There are basically *two variables* you need to consider regarding social security benefits.  The first is *the timing of when you choose to begin* those benefits.  The most obvious issue with timing is in determining the amount of the benefit you receive; the longer you wait the greater the amount you receive.  The other variable, (and I would argue the more important issue to fully understand in cases where at least one spouse will continue to work full time), is *the tax consequences*.

Under the current federal tax code, up to 85% of a person’s benefit could be taxable, and it could be taxed at rates up to 39.6%.  In this scenario, a $1,000 per month benefit would be reduced to only $663 net of taxes.  Depending on the total of ALL sources of household income, it can often make sense to postpone taking any early social security benefits until the working spouse retires or at least reduces to part-time.  At such time the benefit will be both larger from the delayed start date, and have a reduced rate of taxation yielding an even greater net percentage left in your pocket.  Why start a reduced benefit early if only to be eaten up by taxes?  The longer a working spouse plans on doing so, the more important it is to get it right.  The opportunity costs may dictate waiting as *that larger benefit is yours for life*.

You only have ONE chance to choose when to take your benefit; there are no do-overs and it is best to examine all options thoroughly.  *In the end, its not how much you make, but rather how much you keep.*


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## geekette (Apr 29, 2013)

Actually, I believe there are do-overs.  However, you have to pay everything back to go back to "I never did this".  



singlemalt_18 said:


> Actually, yes.
> 
> There are basically *two variables* you need to consider regarding social security benefits.  The first is *the timing of when you choose to begin* those benefits.  The most obvious issue with timing is in determining the amount of the benefit you receive; the longer you wait the greater the amount you receive.  The other variable, (and I would argue the more important issue to fully understand in cases where at least one spouse will continue to work full time), is *the tax consequences*.
> 
> ...


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## IngridN (Apr 29, 2013)

geekette said:


> Actually, I believe there are do-overs.  However, you have to pay everything back to go back to "I never did this".



Nope, this loophole was closed a couple of years ago. I do believe the only option currently available for a do-over is within one year of beginning withdrawals.

Ingrid


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## EileenL (Apr 29, 2013)

Many articles I had saved - some may have their version to the answers you seek

http://www.businessweek.com/stories...siness-news-stock-market-and-financial-advice

http://www.socialsecuritychoices.com/info/social_security_as_investment.php

http://money.cnn.com/2007/06/06/pf/retirement/social_security_early/
http://www.smartmoney.com/retirement/planning/when-should-you-take-social-security-1299171485337/

Maximum Social Security retirement benefit http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/5/~/maximum-social-security-retirement-benefit

** Best answers are at SSA.gov site and using the phone - the rest are outline or guidelines to know what to ask

General info Medicare Part D http://en.wikipedia.org/wiki/Medicare_Part_D

Medicare site - if you call and have the site open - they will walk your through everything, answers your questions and help you understand what is there. They will NOT make a decision for you http://www.medicare.gov/


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## PStreet1 (Apr 29, 2013)

The Windfall Profits Act covers pensions, not earned income.  Earned income is a separate provision.  Use the Social Security website calculators; they are easy to use, and the information is clearly (and obviously, correctly) stated.

The windfall elimination provision (WEP) reduces the Social Security benefits of 
workers who also have *pension benefits *from employment not covered by Social 
Security. Its purpose is to remove an advantage these workers would otherwise receive because of Social Security’s benefit formula that favors workers with smaller amounts of Social Security-covered career earnings. 

Your Social Security retirement or disability benefits may be reduced
If you work for an employer who does not withhold Social Security taxes from your salary, such as a government agency or an employer in another country, the pension you get based on that work may reduce your Social Security benefits.

The Windfall Elimination Provision affects how the amount of your retirement or disability benefits is calculated if you receive a pension from work where Social Security taxes were not taken out of your pay. A modified formula is used to calculate your benefit amount, resulting in a lower Social Security benefit than you would otherwise receive.

When your benefits may be affected
The Windfall Elimination Provision primarily affects you if you earned a pension in any job where you did not pay Social Security taxes and you also worked in other jobs long enough to qualify for a Social Security retirement or disability benefit.

For example, this provision affects Social Security *benefits when any part of a person’s federal service after 1956 is covered under the Civil Service Retirement System (CSRS). However, federal service where Social Security taxes are withheld (Federal Employees’ Retirement System) will not reduce your Social Security benefit amounts....

*Some exceptions...*
The Windfall Elimination Provision does not apply  if:

You are a federal worker first hired after December 31, 1983;
You were employed on December 31, 1983, by a nonprofit organization that did not withhold Social Security taxes from your pay at first, but then began withholding Social Security taxes from your pay;
Your only pension is based on railroad employment;
The only work you did where you did not pay Social Security taxes was before 1957; or
You have 30 or more years of substantial earnings under Social Security.
The Windfall Elimination Provision does not apply to survivors benefits. However, benefits may be reduced for widows or widowers because of another provision of the law.


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## Conan (Apr 29, 2013)

A quick summary of points to consider.  For simplicity we'll assume Husband has the better earnings record, but Wife has a record of her own. Neither is disabled

1. Husband, unless he is quitting working, risks forfeiture of benefits if he starts taking benefits earlier than full age (currently age 66).  I'm not talking about the 8%/year reduction for benefits taken early; the forfeiture is the further reduction if earned income exceeds about $18,000/year.

2. So unless Husband is quitting work at a younger age, his choice is whether to collect starting at age 66 or at some later age.  On paper it's better to defer collecting to age 70 but the counter-arguments to start collecting at age 66 are (i) if the money taken early can be invested at a high rate of return, one can out-earn the loss of the 8%/year incentive to defer, and (ii) future changes in the law are impossible to predict, so collecting at age 66 is the bird-in-the-hand.

3.  Whether the Husband actually collects at age 66 or simply "files and suspends" at age 66, the wife can start collecting 1/2 of Husband's age 66 benefit when she attains age 66 herself without impairing her own future benefits.  {If Wife is younger than Husband he can still file and suspend, but there's no benefit to it until she reaches age 66 so he should wait until then since it will be 50% of a larger figure.)

4. When wife reaches age 70, if her own age 70 benefit (1.32 times her age 66 benefit) is better than the 1/2 of Husband's benefit that she collected from her age 66 to age 70, she can file for her own benefits at that point (in place of the 1/2 of Husband's benefit).

5. While both spouses are alive, they continue to collect - - the Husband gets the benefit he originally started collecting (at age, 66, 70 or in between) and the wife gets the benefit that she ended up collecting (the greater of her own age 70 benefit or half her husband's age 66 benefit (assuming he either started collecting at age 66 or filed and suspended at age 66).

6.  When one of them dies, the survivor takes the greater of her own benefit at that point or the decedent's own full benefit.


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## Blues (Apr 29, 2013)

Conan said:


> 6.  When one of them dies, the survivor takes the greater of her own benefit at that point or the decedent's own *full benefit*.



I see that terminology on the SS website too -- "full benefit".  How is that defined?  Is it the benefit calculated at FRA, even if one decides to delay retirement to age 70 in order to increase his/her benefit by 32%?

I'm still waiting for someone to answer my 2 questions in post #54 above.  But because of the terminology *full benefit,* I surmise that the answers are 1b and 2b.

This really impacts the decision on when to claim SS benefits, especially for those of us who have 401Ks/IRAs, and can afford to spend those while waiting for increased benefits.  E.g., I was the higher wager earner, so my benefit is larger than my wife's.  Part of the incentive for me to wait for age 70 is to make sure my wife gets a higher monthly benefit after I'm gone.  But if she's gonna get the same amount whether I file at age 66 or age 70, well that's one less incentive to wait.

Anybody know the answer to my questions?  Thanks.

-Bob


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## Conan (Apr 29, 2013)

Blues said:


> I see that terminology on the SS website too -- "full benefit".  How is that defined?  Is it the benefit calculated at FRA, even if one decides to delay retirement to age 70 in order to increase his/her benefit by 32%?
> 
> I'm still waiting for someone to answer my 2 questions in post #54 above.  But because of the terminology *full benefit,* I surmise that the answers are 1b and 2b.
> 
> -Bob



If you die before your wife, your check (if it was more than her check) will become hers. So the benefit of your waiting to age 70 is that will be what she gets for all her years as your widow.


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## DeniseM (Apr 29, 2013)

If you go to the website that I referenced above, you can get reports for 3 scenarios, and one of them can be:  wife - long life, husband - short life.  They will give you a strategy.


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## Conan (Apr 29, 2013)

IngridN said:


> Be very, very careful about this. DH is 7 years older than I am and I planned on having him file and suspend at his FRA or later and I take spousal benefits at 62, changing to mine at 66. I learned that if I take any benefits before my FRA, they are locked and I will get the larger of benefits on my record or the spousal benefits. I plan on spending the few dollars for a report from 'socialsecutysolutions as well as doing much more research on the SS site as things may change in the next few years. My Fidelity AE also strongly suggested the 'socialsecuritysolutions' site.
> 
> Ingrid


You should double-check whether you can start taking 50% of his benefit when you're only 62.  That wasn't possible for us, but maybe the reason is that wife is still working (subject to partial forfeiture under the earnings test). So if you're no longer an earner I may be wrong in saying that the spouse must always be age 66 before she can start getting the 50%.


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## IngridN (Apr 29, 2013)

Conan said:


> You should double-check whether you can start taking 50% of his benefit when you're only 62.  That wasn't possible for us, but maybe the reason is that wife is still working (subject to partial forfeiture under the earnings test). So if you're no longer an earner I may be wrong in saying that the spouse must always be age 66 before she can start getting the 50%.



I retired 1.5 years ago, so definitely not a worker. If I elect to start receiving benefits at 62, IIRC, I have the option of receiving 1/2 of DH's on his earnings record or mine at 62, thereby permanently reducing my benefit. I don't want to do that as I will receive just shy of the maximum amount on my earnings record. I had planned to do this in order to allow my benefits to continue growing. I do have the option of doing this at my FRA, but not at 62. At 66, I have the option to collect 50% on DH's earnings record, switching to mine at 70. 

But these rules could change again before I'm 62!

Ingrid


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## Conan (May 1, 2013)

Thanks Ingrid - - that explains it.


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## singlemalt_18 (May 2, 2013)

Ripley's... Sixty year old man handed tab to repay money incorrectly paid to his now dead Mother over 40 years ago.  Believe it or not. 

Posted without comment:

http://www.firstcoastnews.com/news/local/article/311594/3/SSA-comes-after-man-for-895-overpayment-they-made-to-his-mom


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