yes, Present Value. (sorry, I’m a finance guy.)
@bluebayou - thanks for that link. Interesting results for me and DH. Yet one more way to view retirement planning. I’m not sure maximizing SS payout works best for us with the rest of our resources and future cash flow. (Not sure I expressed that well, we have a pretty unusual setup that meshes pretty well with putting off SS payments.).
I’ve been beginning to appreciate that trying to get a handle on retirement planning is much like asking what an elephant feels like to three blindfolded people positioned at different parts of the animal. Lots of different things to consider- some interrelated, others not so much so. Again, thank you!
@TdoesCollege, I love the elephant analogy and agree wholeheartedly. At 62 years old, we are perhaps five years from retirement but I lurk here and on the other retirement thread just to try to get used to the terms and concepts.
@Chedva I’m not sure if this answers your question (#97) and I may be wrong as to my understanding of SS.
But as I understand it both spouses have own SS accts based on own work record. When it comes time to collecting SS (assuming FRA), each spouse is entitled to benefit based on own work record. But if one spouse has much lower SS benefit, this spouse is entitled to their full benefit or half the SS benefit of the other spouse whichever is greater. For example, if one spouse’s benefit is $2000, other’s is $1500, both would be entitled to full benefit at FRA based on their own work records, for a monthly total of $3500. But if at FRA one is $2000 and the other’s is $700, the $700 spouse could take their benefit of $700 based on their work record, or $1000 (half of $2000), for a monthly total of $3000. If 700 spouse takes 1000, SS does a bookkeeping trick and gives 700 spouse their full benefit based on their work record and adds 300 from 2000 spouse’s work record which then totals 1000. This bookkeeping trick does not alter the 2000 spouse’s benefit.
The problem with taking benefit now before FRA is one is penalized. So using above numbers let say 700 spouse would get 1000 at FRA, but at 64 may only get 85% of 1000 or $850. This $850 would be the SS benefit starting point for the 700 spouse and the only thing that would change in this amount is annual cost of living increases which have of late been quite low.
The other problem with taking SS before FRA is again using above numbers, let say when both reach FRA one gets 2000, the other gets 1000. But if the 1000 takes it early say 64 they only get 850. If both had waited to FRA and 2000 spouse then dies, the 1000 spouse could now step up and collect the full 2000 benefit of their deceased spouse’s work record. But if the 1000 spouse takes it early ($850) and then 2000 spouse dies, the $850 spouse could also step up but they would be penalized and only get 2x 850, or 1700, not 2x 1000 or 2000. This 1700 would be benefit starting point and the only thing that would change in this amount is annual cost of living increases…
"There seems is a stay-at-home-mom (or flex-time mom) penalty in this system. " - Well… perhaps. But a lot of moms I know in that boat end up going with half of husband’s benefit, similar to full time stay-at-home spouses. I opted to work full-time (and was fortunate it was in well paying field), so I will take my own benefit. But I do think is fair and right that part time and full time stay-at-home parents have spouse benefit option.
My local office ‘denied’ my widow benefit claim because I make over 17,00 a year. I was planning on taking my husband’s widow benefit and postpone my benefit (which is higher) at 70. I went home and researched carefully and then called Social Security to try and claim the benefit. They agreed I was eligible and then I had to schedule a phone appt which wasn’t available until 3 weeks later. All the guy did was fill out my app over the phone. For some reason you cannot claim widow benefits online.
But my question is this and hoping someone has experience to answer.
I made over 17,000 in 2018 but SS is still depositing the monthly check. My benefit is reduced $1 for every $2 earned over $17,000. How do they get the information and how do the recoup the money? I’ve looked online and there is nowhere to report income. I’m sure they have this information from my tax return but it’s now August and they have not notified me, have not lowered the benefit amount and have not stopped the payments. I’m getting close to the point where I’m going to owe them money back:)
Since I only received benefits for 6 months in 2018, I am probably OK in 2018. But I assumed that they would use the 2018 income to calculate my benefit in 2019.
I had to apply for widow benefits in person, had to show the marriage license, too. I cannot answer how they get the overpayment in your case, but I have heard of SS requesting return of overpayment, so I’d advise to keep those funds separate and available. I am lucky I was in a position to be able to wait until I stopped working to claim DHs benefits (and the amount increased each month until I claimed). I, too, will wait until 70 to claim my own, larger, amount.
I finally found an article about the income ceiling. It appears that I am supposed to go to a local office and report my income. In my case I am self employed and my income is significantly different each year and I have no idea what I am going to make in ‘earned income’ the remainder of the year. And, my local office is a nightmare. Hundreds (mostly homeless) waiting in the chairs trying to claim some kind of disability. Then they finally get their turn at the window and go on forever in a loud voice insisting they qualify for disability or their check got lost or something. I feel sorry for the agents.
Thanks, it does answer a lot of questions. And even though I’m looking to retire before FRA, I won’t claim benefits until I hit FRA. There is of course one more question (somehow there always is): My H would be the one, if appropriate, claiming spousal benefits. He hits his FRA before I hit mine. Does he have to wait until my FRA to claim the benefits based on my record, or can he claim them when he hits FRA?
You need to be collecting SS before your H can collect his spousal benefit on your record.
My H and I went in together to sign up for my full benefit and his spousal benefit. When he is 70 we will switch. He was the higher earner by far.
That is correct, but note, that once he files for spousal, he is also deemed to be filing for his own benefit. Thus, there will be no extra benefit for waiting until age 70. (applies to all born after Jan 1-54)
My H was at his full retirement age so his benefits will continue to increase.
I guess he filed a “restricted” application.
@coralbrook – I’d guess that if you don’t report, SS will catch up to you based on tax returns the following year. So I think you have to go with the plan of tracking things on your own and segregating extra dollars so you have what’s needed for the future. Your issue re self-employment is one reason why I won’t even consider taking my own SS before FRA – just too much of a pain to keep track of the interplay between SS benefits and income over the threshold. I realize your situation is different because you’ve filed for survivor’s benefits – if I were in your situation I’d file as well — but the point is that if you can protect yourself from an unpleasant surprise. There’s a calculator that might help here: https://www.ssa.gov/oact/cola/RTeffect.html
And I’m not suggesting that anyone should refrain from contacting social security directly when they know that income will exceed the threshold – I’m just very much aware of the way that both income and expenses for a self-employed person can fluctuate. It can be pretty hard to predict – even if you know for sure in July that you will end up over the threshold, it might be hard to project how much over you’ll be in December.
Can anyone weigh in on whether the last paragraph of the post by @Jugulator20 is correct? It’s water under the bridge for us, but I didn’t realize that the survivor benefit is reduced if the survivor had filed prior to FRA. I starting collecting SS at 64 and H is waiting until FRA. What I am currently receiving on my own record is only a few hundred less that what H will receive at FRA, but I assumed that if H dies first (assuming after his FRA), I would receive mine plus the difference for a total of what H will receive at FRA. Is that not correct?
That is correct.
@bluebayou
Thanks for the clarification!
You know, I have a bachelor’s degree, a master’s degree and a law degree. I’ve decided that I can never retire, because I can’t figure out all of this!
Well, if you just wait until FRA and take your own benefit, it’s pretty simple. You sign up, SS sends you money. It is the nuances of taking the benefit before FRA and spousal/survivor’s benefits that causes the confusion.
The SS scenarios are tough to analyze … and they have changed a bit over time (ie file/suspend option gone?). Based on retirement classes / consultations over the years, it is trickier for couples where one is taking spouse benefits. One planner explained he will take his later than he’d like because it’s likely his much younger wife will outlive him. He wants here half to be from a higher amount.