Perhaps some one can enlighten me.

If the poster had provided a link it would have been helpful.

I was under the impression that when you elected to take SS benefits that the SSA would give you the highest benefit available to you, be it off of your own earnings or that of your spouse. Can you really pick and choose?

 

In addition, I was under the assumption that if one elected to receive SS benefits early, that the penalty for such would remain with you for the rest of your life.

 

I am also confused by the poster comment in his PS about the 0% rate. Is this 0% if you do not elect to take benefits?

 

Finally, the posters 2^nd post about the strategy only working if you take the Spousal benefit at your full retirement age brings me back to my first impression.

What is the benefit of this?

 

Here are a few things I do know from experience.

I took SS early at the age of 62 and got whacked with a 20% or so reduction.

My lovely wife waited till her full retirement age (FRA) to get her Spousal benefit.

She got 50% of what I would have got at FRA, not 50% of what I was getting.

 

Now for a brain teaser.

We all know that there are survivor benefits where the survivor gets the higher of his/her benefits or that of the deceased.

If I am so unfortunate to pass away before my loved one, will she get what I was receiving, or will she get what I would have been getting if I had not elected early benefits.

I have an answer, confusing at it may be, from the SSA.

 

In closing, why did George W Bush screw this system up so much?

 

Rossby

 

 

 

 

 

Here is a link, but it might expire tomorrow.

The Baby Boomer's Guide To Social Security

Ron

THe WSJ online is generally a subscription only kind of thing (sometimes - never figured that out). So here is the relevant text which hopefully will answer any questions.

 dave

 

The scenario: George, at his full retirement age of 66, expects a benefit of $2,000 a month. His wife, Martha, at her full retirement age of 66, expects a benefit of $1,000 a month.

The strategy: Martha files for a reduced benefit on her own at age 63, or $800 a month. George, at age 66, files for just a spousal benefit, based on Martha's earnings. He would get $500 a month as Martha's spouse. (Yes, Social Security allows George to get half of what Martha was projected to receive at her full retirement age.) Then, at age 70, George applies for benefits based on his earnings history. With the "delayed retirement credit" (the additional dollars one receives for waiting until age 70 to claim Social Security), George's benefit would be 32% higher, or $2,640 a month.

Social Security would stop George's spousal benefit of $500 a month because he's entitled to the $2,640, based on his own earnings, at age 70. Again, for this to work, George must wait until his full retirement age or later to file for a spousal benefit.

The nice part about this strategy is that George -- if he's trying to maximize his and Martha's combined benefits -- doesn't have to wait three or four years beyond his full retirement age for a paycheck; he can start collecting benefits at 66 based on Martha's earnings history -- and jump to a considerably bigger benefit at age 70. As far as the "break-even" point goes -- the age at which the accumulated value of benefits from this strategy will start to exceed the accumulated value from both spouses filing for full benefits at age 66 -- it's 79. Beyond that age, the 63-66 strategy yields a larger total return. (This example assumes George and Martha are the same age.)

Note: Some Social Security representatives we spoke with weren't aware of this strategy. If you try this at your local Social Security office -- and if the staff balks -- ask them to confirm the strategy with Social Security headquarters in Baltimore, which confirmed it for us.

Rossby:

 snip

I am also confused by the poster comment in his PS about the 0% rate. Is this 0% if you do not elect to take benefits?

snip

 

Rossby

 

All I was saying here is that every analysis of delaying SS benefits that I have seen assumes that you get nothing until age 70 (assuming you delay taking SS to maximize your income amount). I had never seen an analysis where you get something (instead of 0%) in the interim.

 

dave

Dave,

 

This strategy, to the best of my knowledge, has never been discussed on this or any other Morning* board. I personally find it intriguing.

 

I’m married and my wife started collecting SS at age 62 on her record. I have been planning on delaying my SS until age 70 to hedge longevity risk. But, quite frankly, I struggle with the decision every year because it reduces our current consumption. I would really rather have the money now, while we are still in good enough health to enjoy spending it, than waiting until we are in some nursing home being spoon fed oatmeal. Apparently, allthough I would like to think I am, I’m not immune to the siren song of instant gratification.

 

This new option may very well provide enough impetuous to enable me to do the right thing.

 

Steve

My recent paper was mentioned in the WSJ article. It appears that another option, which is noted above, is available too. This is great news. Note that the spouse that is delaying (George in this example) must wait until Full Retirement Age to file for spousal benefits. I do know that the retiree who files BEFORE FRA is deemed to have filed for both his own benefit and a spousal. This must not be the case, once FRA is reached.  

Steve, you have hit the nail on the head. Early in my retirement I have chosen to do as much and go as far as time allows. That has cost more than I spent in my last few years in the workforce and more than 4% of my portfolio. I have seen in others and fully expect as I age (hopefully), that my body and mind will not allow as much doing and going. So if you don't want to "leave it all to the kids" you need to get after it sooner rather than later.

I wonder if this strategy will be available long-term? It just sounds for all the world like it was unintentional.

From everything I can tell, at this point very few folks are aware of this strategy. I would think that there are a lot of people out there who have chosen to delay their SS to age 70. And I would think that every one of those folks who have made this choice, are at/past their SS retirement age,  and who have a spouse with non-trivial SS earnings are going to go running to the SS office to "sign up".

I just wonder how long this is going to be available once the world finds out.

dave

I think this page from Social Security's Program Operations Manual indicates it is doable.  But I can't decipher enough of the jargon and acronyms to be sure.

The key seems to be in section D.  You restrict the scope of your application for benefits to exclude your benefits as a worker.  You apply only for your benefits as the spouse of a worker.  However, paragraph D.2.b prevents you from doing this if you are under full retirement age.  Apparently, nothing prevents you from later filing an application for your benefits as a worker.

At least that is how I read it.  Your mileage may vary.

Ron

There you are right on the front of page R1 in the weekend edition of the WSJ. (I live about 40 miles south of you in Los Altos.) What is the title of your guide?