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Social Security question

Discussion in 'TUG Lounge' started by easyrider, Jun 6, 2019.

  1. easyrider

    easyrider TUG Review Crew: Expert TUG Member

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    I am getting different answers to this question about spouse social security benefit.

    My spouse is older than me. I think she has the option to base her benefit off her own reported earnings or off my reported earnings. At 62 she can have a benefit of full retirement minus 27%. I think at 62 she could also choose 50% of my benefit minus the 27% which would be higher than her benefit.

    I called social security and it sounds like she gets her benefit and a portion of my benefit.

    Does anyone know how this works. I'm just getting the ducks in a row for later.

    Thanks

    Bill
     
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  2. PamMo

    PamMo Tug Review Crew: Rookie TUG Member

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    She can't claim half of your social security benefit until you claim yours. When you retire and file for SS, she can switch from her benefit to half of yours. (Technically, it's her benefit plus enough to equal half of yours.)
     
    Last edited: Jun 6, 2019
  3. geekette

    geekette Guest

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    I believe this is accurate.

    Think of it like, your benefit is locked to her until you unlock it for yourself.
     
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  4. easyrider

    easyrider TUG Review Crew: Expert TUG Member

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    Thanks.

    So she can claim her benefit at 62, then claim half of my benefit the next year when I claim at 62 ? Is there a penalty if she claims hers before I claim mine ?

    Bill
     
  5. bluehende

    bluehende TUG Review Crew: Veteran TUG Member

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    We ran the numbers for this at the SS administration. There was some reduction. For us it was around 15 percent for collecting for 4 1/2 yrs before I claim at FRA. And her benefit does not move up if you delay. The only thing I do not know is if I wait until 70 could she move up to 1/2 at my FRA even if I did not claim.
     
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  6. PamMo

    PamMo Tug Review Crew: Rookie TUG Member

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  7. VacationForever

    VacationForever Tug Review Crew: Rookie TUG Member

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    The penalty that she claim hers at 62 and then switching to half or yours is that she will get reduced benefits because she claimed early.
     
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  8. easyrider

    easyrider TUG Review Crew: Expert TUG Member

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  9. easyrider

    easyrider TUG Review Crew: Expert TUG Member

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    Is the percentage of penalty based on how much she collects from her turning 62 until I turn 62 ? She is 18 months older than me so she would collect off hers for 18 months and then switch half of mine. It might be better for her to just collect off hers claim but it looks like she could collect more each month if she collects off mine.

    Bill
     
  10. easyrider

    easyrider TUG Review Crew: Expert TUG Member

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    This sounds right. I was going to wait until fra but Dave Ramsey talked me out of it. I did the math and it looks like the break even point is around 79 for us.

    Bill
     
  11. VacationForever

    VacationForever Tug Review Crew: Rookie TUG Member

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    You need to get the PIA (Primary Insurance Amount) calculation for each of you. PIA is the amount of SS benefit at Full Retirement Age. You can either go to an office to have them calculate the amount or you may want to use a SS retirement calculator off the SS website to calculate. It is called "AnyPIA" app but you will need to manually enter each year's contribution from your statements. It is very accuate. Each year they will revise the app to include the new COLA amount and you will need to download again. I have the app on my laptop. If her PIA is more than 1/2 of your PIA, then she cannot benefit from claiming off 1/2 of yours since hers is higher.

    When one collects early, the penalty applies to both the person's PIA as well as half of the spouse's PIA. It is called "deemed filing" on both.
     
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  12. bluehende

    bluehende TUG Review Crew: Veteran TUG Member

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    I came out at about 82 for straight cash. For us our tax rate will be higher after I collect and the fact we can grow her ss checks as we do not need it made it so that we would never be better off not taking the money now. Using a 5% growth number which is conservative we would earn much more on it when I am 66 1/2 than the reduction is. Also the income generated will be at capital gain rates instead of the expected 85% taxable at straight income.
     
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  13. jules54

    jules54 TUG Member

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    I crushed a lot of numbers on this before retiring at age 62. The break even or catch up point is 12 years for people born in 1954. I'm no math whiz or financial wizard. My choice had a bit of emotion involved. I worked on a factory floor for 43 years several of my very close friends didn't live to be 62 let alone 74. I retired with a double pension and medical for both myself and my spouse. We've been retired for 3 years. I just didn't want to take the chance I wouldn't live to collect any of the ss benefits I worked so hard to get. Just my opinion.
     
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  14. jules54

    jules54 TUG Member

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    What's the saying: You can find a way to get more money, there is no way to buy more time. Illness sees no income bracket.
     
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  15. kwelty

    kwelty TUG Member

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    You may want to use one of the Social Security Retirement Calculators below, I believe they are both free.
    The best plan for us was for my wife to start SS at 65 and for me to receive half of her SS until I turned 70. At that time, I will start my SS and she will switch over to half of my benefits.
    https://www.consumerfinance.gov/abo...explore-our-new-planning-for-retirement-tool/
    http://www.socialsecuritysolutions.com/
     
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  16. mpumilia

    mpumilia TUG Review Crew: Veteran TUG Member

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    But that option now has been eliminated I believe.
     
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  17. easyrider

    easyrider TUG Review Crew: Expert TUG Member

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    I did go to the Social Security office in Washington State yesterday and after waiting a couple of hours we did talk to a person that said my wife would get her benefit at 62. When I claim my benefit my wife can then claim a percentage of mine but would still claim hers. I wasn't understanding the percentages involved so I called Social Security and think the people were explaining the same thing in different ways. Reading the guide that Pam posted over and over it is starting to make sense.

    Am I right thinking that my wife can't claim off my benefit until I take that benefit ?

    Thanks
    Bill
     
  18. rapmarks

    rapmarks TUG Review Crew: Elite TUG Member

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    I just received a corrected 1099r from SSA. I hope I guessed correctly because they never sent me 1099 and I couldn’t get into the site.

    Corrected smount$768 for the year
     
    Last edited: Jun 6, 2019
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  19. kwelty

    kwelty TUG Member

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    But that option now has been eliminated I believe.

    I think you are thinking of the old "File and Suspend" technique- I hated to see that go away. Neither one of us is suspending benefits, I am changing mine at 70. We just started collecting SS in March.
     
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  20. PamMo

    PamMo Tug Review Crew: Rookie TUG Member

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    You're correct, Bill. She can't claim any extra from your benefit until you retire. (They stopped the "file & suspend" strategy a couple of years ago.)

    Once you retire, she will continue to receive her benefit, but can get an additional amount so that her total benefit will equal half your SS amount.
     
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  21. bogey21

    bogey21 TUG Member

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    That's kind of the way I looked at it. I didn't analyze anything figuring I had no idea how long I was going to live. I just started collecting at age 65. It seems to have worked out OK. So far I have received just South of $400,000 and continue to get paid the 3rd Wednesday of every month...
     
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  22. GT75

    GT75 Moderator

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    File and Suspend option has been eliminated but the option stated is still available for those born before Jan 2, 1954 (I am pretty sure that date is correct). I am using that option now.
     
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  23. silentg

    silentg TUG Review Crew: Expert TUG Member

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    We just went to SS Office last week. I had been getting my SS since I turned 62. DH is getting his now age 66 .I will receive mine and a part of his to equal half of his SS.
    This is how they do it now. We will go on Part B Medicare later this year when he retires.
    Silentg
     
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  24. GetawaysRus

    GetawaysRus TUG Member

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    Social Security is a government program. Therefore, it is complex and confusing as can be.

    Let's say your wife claims at 62. She will begin receiving her benefit, but it will be reduced compared to what she would get if she waited until her Full Retirement Age (FRA). And yes, the comment above that the "break even" point in terms of absolute dollars paid out is around 79 or 80 is correct.

    You are also correct that your wife cannot claim on your benefit until you file for your own benefit. So if you later file for your benefit, your wife then has a choice. She can continue to receive her benefit OR she can claim half of your benefit, whichever is greater. She cannot receive BOTH her benefit and half of your benefit (that is, she can only receive one benefit).

    Your benefit would have to be very large compared to hers in order for it to be worthwhile for her to switch to half of your benefit. Is that really the case? I earned much more during my working life than my wife, but because SS is a progressive program, my benefit is only somewhat higher than my wife's. As a result, her full benefit is still greater than half of my benefit.

    Please understand that I am being very simplistic here. It is much more complex than this. Another extremely important factor for married couples to consider is the life expectancy of each spouse. I tend to think of Social Security as longevity insurance. We all hope for a long and healthy life, but God doesn't clue us in on what's to become of us. As an example, if my wife were to outlive me (possibly by many years), I would want her to have the maximum payout from SS over the remainder of her life. So a big part of our SS planning is how to maximize the benefit for the surviving spouse should one of us predecease the other. A widow/widower can only have one benefit, either their own or their spouse's. To say this another way: it's not just about how much money you're going to receive from SS now. It's also important to consider what you might receive from SS in the future and what your future financial needs might be.
     
    Last edited: Jun 6, 2019
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  25. VacationForever

    VacationForever Tug Review Crew: Rookie TUG Member

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    It is called deemed filing. It is part of the changes that were put in 2 years ago.

    When your wife starts SS at 65, she is also deemed to have filed against both hers and yours, unless you have not reached FRA yet. Similarly for you. If you file for half of hers you are also considered to have filed against yours. Yours won't continue to grow. They will pay you based on whichever amount is higher when you file.
     
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