Medicare also is scary. We sent in H’s paperwork and waited in vain for months to get his card. Meanwhile his insurance claims were bouncing because they assumed he had Medicare.
We finally went to SS and stood in a long line for hours to ask where H’s card was. The agent said his filing was not approved or processed as it had been done incorrectly. He claimed H was notified (we never received anything). He gave us back the improper paperwork. H returned the very next day (with NO line because it was a state but not fed holiday) and spoke to a much nicer and more helpful agent who processed the paperwork on the spot. It was THE EXACT SAME DOCS!
The only good things were we got it fixed just before H would have been penalized permanently for not applying within 8 months after retiring over age 65 AND we saved those months of premiums for the faulty refusal to process his application sooner.
Regarding capturing the spousal benefit “loophole,” which we all think I can do, based on my and DH’s ages –
I called the SSA this AM to file and suspend, since everything I’ve read says I have to do so within the next six months. The very nice person I spoke to told me I can’t file and suspend this far in advance of when DH wants to start taking the spousal benefit. I told her that under the New Deal I need to file and suspend within the next six months. She has not yet heard of this new rule and suggested that I call back every two weeks or so to see if/when the agents have been advised of the New Deal.
Frustrating. I’ve marked my calendar and will be calling every two weeks until I can file and suspend as I want to, and as I think I’m allowed.
Call once a week!
The Washington Post had an article on this in today’s paper.
@cap, can you post a link?
I have heard two instances in the past of social security representatives giving “attitude” to people who are filing and suspending. One was referred to by a poster on the Bogleheads message board, and another was related to me by a friend. Both of them apparently applied in person and got feedback that amounted to “you rich people are stealing from this system that the rest of us need and paid into”.
In any case, that very nice person is completely wrong. Under existing rules, which do not change until April 30th, anyone who is full retirement age (FRA) can file and suspend…EVEN people who don’t have spouses!!I Its not possible that they aren’t fielding dozens of calls a day about these changes, plus the existing law has been in place since 2000.
If you miss your deadline, she’ll be able to be very specific about that.
Here’s a link to a Bogleheads thread from earlier this year about filing and suspending using the online options. I think most people do it in person. Other Boglehead board threads on filing indicate more than a little bit of incompetence or malfeasance at social security. Good luck.
“Someone who waits until age 70 to start collecting Social Security retirement benefits would need to live at least until age 80 to come out ahead and have more money in total than if he or she had started receiving reduced benefits at age 62.”
Wow. If that is true then I would think more people would start receiving benefits at 62. A lot can happen in those 18 years…
Thanks, @dadx.
Almost half of people start collecting at age 62.
Only 6% of people wait until later than FRA to start taking benefits.
Very few people (around 3%) wait until 70 to start taking benefits.
I can think of several reasons why people don’t want to wait until 70 to collect - they can’t afford to wait because they need the money now to survive, they have health issues and don’t believe they will live that long, they want to delay spending their own assets for as long as possible so they can possibly leave more to their heirs, they are afraid the govt is going to change the benefits so they want to collect before the rules change and they possibly wind up with less or nothing.
If I only look at how much money I can get from the government I would need to live to 77 to justify taking SS at FRA instead of 62 and I would have to live to 81 to justify taking SS at 70 comparing to taking it at FRA. And I started working in the US late so my yearly SS payout increase is more than 8% between FRA and 70. This situation can be even worse for a person who will have 35 years of employment by FRA.
But if you treat SS as an insurance against inability to work in the old age then this math goes out of the window. And there is also a spousal benefit that may change these calculations.
For those that will not make the 62 year old deadline it will be much more enticing to take early.
If you look at a break even chart it starts to become a bit clearer. Now add to that not using your own assets and allowing them to grow. Also the fact that many people will have required minimum withdrawls at age 70. If you get a large SS chunk at 70 you will probably be in a higher tax bracket. If the govt also decides to reduce SS for higher income people by then you will lose even more money.
Its tricky and not as cut and dried as it seems. Lots of risk either way.
Here is a really good breakdown of the factors to look at when deciding
the beginning figures are for one person so are the most helpful.
Well I plan to be very much alive at age 77!
Anyone who is still working or has income from other sources is not going to get much money between age 62 and FRA (66 for those of us who are just barely under 62). That’s because the government takes back $1 for every $2 earned over ~$15K. I haven’t even bothered to do the math on that-- it’s pretty obvious to me that I’d give back whatever I took, and I’d like to keep on earning.
Similar issues come into play down the line: if a person has plenty of money saved up for retirement and plenty of assets, then maybe it does make more sense to take the money as soon as it becomes available. But if (like me) you are worried about how you would make ends meet at, say, age 85— then it does make sense to want to maximize the benefit … assuming you are able to support yourself off of current income.
So I don’t think it’s a matter of looking at the total value of the benefit; you have to factor in need. If you are wealthy enough that the only question is how to maximize the dollar value of all the benefits – you are very fortunate. But the whole point of Social Security for most of us is to provide for our basic needs when we get to the point where we are no longer capable of working to earn an income.
And in those situations I think the math is obvious: we take the benefit when we need it, but not before we need it.
We also need to figure in inflation. At age 70, the additional dollars may not buy as much as today. But it can beat being 70, having collected for several years at a lower rate, still getting that lower amount and dealing with inflation. (The COLA amount in each intervening year is not great. IF there are adjustments.)
My 90-year-old dad is frustrated because there is not going to be any COLA increase the coming year. He says that the reason is because the government factors in cost of gas in COLA, and the cost of gas is way down… but he pointed out that people his age don’t do much driving, but still need to pay for groceries.
CalGranddad sounds sharp, calmom. Gas prices do seem to be part of the Consumer Price Index.
The cost of energy is down, but-- does calgranddad live somewhere that requires home heating?
Naw, calgranddad lives in Texas. Air conditioning is a big expense during the summer… but heating, no problem.
And yes, he’s really sharp. We only managed to persuade him to retire and give up his law practice within the past 2 years.
Which is why I think that there’s a pretty good chance that I’m also going to need my social security well beyond age 77 or 81. My mom died young – in her late 40’s – but both my grandmothers lived to their early 90’s.
Keep in mind that according to the Social Security Administration’s actuarial tables, the average 70 year old male will live to 84, and the average 70 year old female will live to 86. So waiting until age 70 to collect Social Security retirement benefits doesn’t seem like such a bad gamble. If you live to an average life expectancy, you’ll come out ahead. If you live longer than average, you’ll come out way ahead. But of course, that strategy doesn’t work if you really need the Social Security income before age 70, or if you have risk factors that reduce your individual life expectancy (smoker, cardiovascular disease, cancer, etc).
I’m 63 and planning to wait until 70 to collect Social Security. I don’t need the additional Social Security income now, and I have a healthy enough income that most of what I got would be taxed away anyway. I’m planning to work full-time another 3 years which will put me at my FRA, but then my employer will allow me to go on phased retirement, working, e.g., 3/4 or 1/2 time and receiving pro rata salary but continuing to collect full benefits, including full funding of my retirement accounts as if I was working full-time. So my personal retirement assets will continue to grow during that period, while I’m still building up toward a bigger SS check when I fully retire at 70. And at 70 1/2, mandatory minimum distributions on my retirement accounts also kick in, so between that and the maximum SS retirement benefit, I should be in pretty good shape financially by the time I fully retire. DW is 5 years younger and has great longevity genes; her mother is still living at 98, and her maternal grandmother lived to 97, so I figure even if I don’t make it to 80, there’s a good chance DW will be around for many years after that, and when I pass she can take over my SS benefit which will be much larger than hers because I’ve been the primary breadwinner and paying the max in FICA taxes for many years now.
The statement quoted above—“Someone who waits until age 70 to start collecting Social Security retirement benefits would need to live at least until age 80 to come out ahead and have more money in total than if he or she had started receiving reduced benefits at age 62”—may be technically true, but it’s also highly misleading. Most people who live to 70 will also live to 80. You also need to consider how much of your Social Security benefits will be taxed away if you have substantial earned income when you start to draw them. And many of us need to consider not only the benefits we may receive as individuals, but also the consequences for potential surviving spouses. I’ve run this through several Social Security benefit calculators and they all come out with the same result: the strategy I described is the one that’s likely to maximize our joint lifetime benefits, and it’s certainly the one that maximizes DW’s benefits after I’m gone if she survives me, which is the likeliest outcome. .
Social Security is weird.
When I called the other day, to file and suspend, I spent 20 or so minutes on the phone with “Tina,” who took all my information and then told me I couldn’t do what I wanted to do. I referenced this in Post #61.
This morning I called again and spoke to “Kelly.” She told me I needed to have an appointment in order to do what I want to do. My local SS office will be calling me on Monday at our appointment time. Hopefully they won’t then tell me I can’t do what I want to do.
I plan to simply keep repeating, “I want to file and suspend,” until they let me do what I want to do. When/If they ask why, I will simply say, “Because I want to.”