meyerr:

Using Dave's numbers for George and Martha

Martha gets $800 - her reduced benefit

George collects the 1k until 70 the jumps to $2640.

What happens to Martha?  Does she stay at $800 or is she now able to get the spousal benefit and collect $1320?

 I know the formulas are mind numbing for most, but they are the rules of social security. It is also important to realize that benefits are age dependent.  This example depends on knowing that Martha and George were born in the same month 63 years ago.  Also, George will get $500 a month as a spouse at age 66, not $1000 (the reason to be seen later).

The answer is that Martha stays at $800 when she and George hit 70 and he begins benefits, but that is only because this example was based on the benefit amounts at full retirement age of $1000 and $2000 and the same month of birth.

To understand why, go back to what would happen if she never took her own benefit, but was just a spouse.  Her spousal benefit at HER full retirement age is 1/2 of his retirement benefit at HIS full retirement age.  If she waits until 66 or later to take the spousal benefit, she will get half of what he would get as a retirement benefit if he had started at 66 (whether he actually starts early or late).  Rossby pointed out that this is what happened to him and his wife: "She got 50% of what I would have got at FRA, not 50% of what I was getting."  So Martha would get $1000 (half of George's $2000) as a spouse at 66.  Looking at George as a spouse the same rules apply.  At age 66, George will get half of what Martha would get as retirement at FRA; he will get $500, half of the $1000 Martha would have received as a retirement benefit if she had waited until 66.

Note that if George waits until 70 to boost his benefit to $2640, Martha still will get only $1000 as a spousal benefit at age 70 since there is no delayed spousal benefit for her waiting past 66.

Since Martha started her own retirement benefit at 63, she is getting $800.  When she subsequently starts spousal benefits on George's record, she will get a boost.  How much of a boost?  The rules say to look at the difference between her full spouse's benefit ($1000) and her own full benefit ($1000).  This is zero is this example.  The boost she will get is zero;  Martha will stay at $800.  (In cases where the spouse starts before age 66, this difference is reduced for starting early before being added on.)

The assumptions in this example are next to impossible.  His  Primary Insurance Amount might be $2013.27 and hers $998.76, but she won't be exactly half of her husband.  So what happens to George and Martha if his full benefit is $2020 and hers is $1000? 

Her own benefit at FRA = $1000

Her reduced benefit = $800

Her full spousal benefit = $1010 (half of $2020)

The difference between her full spousal benefit and her full retirement benefit
= $10.

Martha's total benefit starting retirement at 63 and spousal benefits after age 66
= $800 + $10 = $810.
(This is why people say the $200 Martha lost for taking her retirement benefits early are lost forever.) 

If Martha had started spousal benefits before 66, the boost would have been reduced for the early start to less than $10.  Also, if the spouse's full retirement benefit is more than 1/2 her husband's full retirement benefit, (i.e., her unreduced retirement is more than her unreduced spousal benefit) there is never any boost.
 
Al
 

Hi Dave and welcome back. Thanks for the alert on this interesting but little known SS option.

Paul 

If you start at 63, you get 80% of your PIA.  If you stop at 66 and wait until 69 to start again, you get back a 24% increase, or a final benefit of (0.80)(1.24) = 0.992 of your full PIA, almost as much as you would have gotten by waiting until 66.

I asked the following question to the SS office and they siad no to me..

" I am age 60, Early retirement... If I take SS at age 62 and then stop at age 66 and then take it again by age 70, won't I get more $ from there on fwd..."

Why might want to do this?

I will be inheriting More Money at age 66 and won't need SS...

Hi, Al -  Thanks for the info.  You wrote,

Someone gave you some bad information.

Don't think so (though the way I conveyed it in my previous post may have been a bit confusing).  Actually, I checked this whole thing out several times carefully - including (the final time) with a regional administrator (in her 60's) who has been working with Social Security for over thirty years and is (apparently) one of the few employees, at least in our region, who actually understands most of the intricacies of the system.  (One thing she told me, a kind of offhand remark,  was that she thought there might be possibly less than a dozen or so people left in the whole department of Social Security nationwide who really understood all of the formulas that go into computing Social Security benefits - kind of a scary thought in and of itself, when you think about it).

In one sense we are both saying the same thing.  However, please remember that if I delay drawing until 66, my unreduced PIA will be considerably higher than it would be at age 63.  My spouse's benefit will than convert from a check based on her PIA alone to one based on either her PIA or 50% of my PIA, whichever is larger - even thought the benefit she receives is technically being paid first from her work history and the remainder from spousal benefit. Either way, that will be higher that the benefit she would receive if I begin at 63.  (Yea, I know it's complicated :-)

Your idea of stopping and starting again was one I had considered.  However, given that (as I also found out) there are no additional credits for survivor (as opposed to spousal) benefits after full retirement age in the case of a spouse already drawing, my calculations indicated it would probably not be in our interest to do so.

Actually, Al, FWIW my personal decision may be made based as much on market and political factors as Social Security law.  If we end up with a significant cyclical bear market any time between now and when I turn 66 - and the odds certainly favor it IMO - I will probably start drawing (and having my spoue's benefit increased) at that time soas to be able to draw down less from our portfolio at a time when asset prices are (hopefully temporarily :-) depressed.  Also, if after this election the talk we hear about possible means testing of future benefits gains any more traction, that too might give me an incentive to draw earlier so we can receive as much as possible before any such testing is instituted. 

Of course, if reforms make it look that means testing is unlikely and if we also subsequently experience a huge bull move, I might consider that OTHER obscure strategy of paying everything back and recomputing benefits starting at 66 - or even older.  But you know somthing, Al?  I'm guessing that by that time I'm just not going to want to go through the hassle or the risk involved.  We'll see.

How did we come up with this Rube Goldberg contraption anyway ? (What a great argument for converting this whole thing to TSP-style personal accounts IMO  But that's better discussed on the Politics Forum :-)

Cheers.

MWL

Hi back MWL:

 I think we were working off a different set of assumptions, both based on our own situations.  I am going to be 62 early next year. I have already stopped working.  My PIA will be based on my best 35 years of adjusted earnings.  My PIA will not change over the next eight years.  I am excluding any cost of living adjustments, since they apply equally to the PIA and to benefits which are always percentages of the PIA.  It sounds as if you are still working, so there are two versions of the question:

1) stop work at 63 and then compare taking benefits at 63 vs waiting to take benefits at 66.  This is similar to my situation, but I don't think it is yours.

2) start benefits as soon as you stop work.  Compare stopping at 63 versus stopping at 66.  In this case, working to 66 adds three more years of work that probably will make your top 35 years.  This would increase your PIA.  My guess this is what your local administrator was talking about.

You are obviously better off financially working from 63 to 66, more so because of your three years of earnings than from the increased social security benefits. 

"There are no additional credits for survivor (as opposed to spousal) benefits after full retirement age in the case of a spouse already drawing,"

 I am not sure about this.  Whose full retirement age are you talking about?  My understanding is that if the worker delays taking benefits until after age 66, to 70 for example, the increased worker benefits will in turn benefit the survivor after the worker dies.  Here is a quote from POMS.

DRC is delayed retirement credit, NH is number holder (the worker), RIB is retirement insurance benefit, and MBA is monthly benefit amount.  The widower gets the delayed retirement credits added if the worker was already receiving a monthly benefit increased by the DRC or if he was age 68 and would have been entitled if he had not died.

Widow's benefits are reduced if the widow is under 66 when benefits begin, but there is no reduction that I can find for previously taking spousal benefits.  If the spouse is previously taking her own retirement benefits, then the dual entitlement rules come into play.  For someone entitled to both retirement benefits on her own record and survivor benefits based on her husband's record, the rule is

Method B - Both benefits calculated and reduced independently; small MBA paid plus excess of larger MBA.
NOTE: If larger MBA is a RIB or DIB just pay the RIB or DIB.

In other words, you calculate her retirement benefit (reduced if she started before FRA) and her widow's benefit (including and delayed retirement credits on her husband's record) independently.  If the widow's benefit is larger, they pay her own (small) retirement benefit plus the difference between the (larger) widow's benefit and the RIB.  For example, if the reduced RIB is $400 and the Widow's benefit is $1200, they pay $400 plus the excess of $800, a total of $1200.  There is no loss for her starting retirement benefits early since the computations are done independently and the total benefit equals the larger benefit. 

There are lots of details in the law and regulations, but I think a lot of people need more education.  I too often read "the spouse will get 50% of the worker's benefit" as if it applies no matter what the ages of the people involved and when they start benefits.

Good luck with whatever you decide!

Al
 

Again, good info Al.  And actually I HAVE stopped working, so we are in a similar boat (with the exception that my spouse is older.)

Our only point of contention seems to be the survivor benefit for the spouse if the worker continues working after FRA.  Frankly, I shared your opinion based (and frankly, STILL think you have a point.)  However, I've stopped being overly concerned about it since I have pretty much concluded I will start drawing my SS retirement benefit no later than my FRA (age 66).  As I said, my wife is already drawing based on her work history (a small amount) and of course she cannot draw a spousal benefit until I begin drawing.

Thanks again.  As I mentioned in my previous post, it may be earlier depending on conditions - I have at at least two years from this month to see what develops.  Good luck to you also.

MWL

This is indeed interesting.  I intend to wait for age 70 before taking SS ( with spouse already taking SS at age 63).  This strategy seems to be a good fit for me.  However, has someone actually done this who can explain what to expect when I go to the SS office.  I will be applying for and suspending benefits in Jan. 08 when I reach FRA.

Don