Is this because the rule is that you get the higher of your own or half of your spouse’s? And, then when one spouse passes, the remaining spouse gets the higher of their own OR their spouse’s? (And, yes, I technically know it’s your own amount plus a, “spousal benefit.”)
We are still a few years away, but I always feel as though this stuff is so confusing. And, I don’t think I’m dumb.
One issue that hit me: After retiring I continued consulting (which is still ongoing). If I am remembering correctly once you hit “full retirement age” you can draw from social security and not have a negative consequence from still having additional earned income. This was a strong incentive for me to postpone drawing from social security until after hitting full retirement age.
Another issue to think about: If a retired couple both die relatively young, then running out of money might be less likely. If a couple both live for a very long time, then it is at least a bit more plausible that money could run short. Thus you could think of “when do you draw social security” as sort of like a gamble, or longevity insurance as suggested above. If you die young you don’t need to optimize the outcome. If you live a long time, then it might make more sense to optimize the outcome. This also encouraged me to wait until hitting full retirement age (but for me the first issue was more important).
Another issue is that the demand for money will be different at different times in a person’s retirement. For parents who have children late, it is possible to reach retirement age while you still have kids in university, or even before your youngest starts university. Similarly, once you hit a certain age (I think that it is the year after you turn 72) you need to withdraw a minimum amount from any IRA / 401k / 403b that you have. When these chunks of money show up and when these chunks of money are needed can vary from one family to the next.
Has he had genetic testing? To me this sounds like a strong justification for it.
I took as to mean you have a choice. You take yours, or you can take 50%of your spouses, whichever is higher.
Good point about working! I don’t have a career anymore, but do have a hobby as a reseller where I’m making about $12-$15k a year. I need to look into this issue. My full retirement age is 66 and 10 months, basically 2 years from now. I’d be receiving over $400 per month if I wait.
I think I might go to a SS office, too.
Edit: that comes into play is I earn over $24k before full retirement. So, I’m good.
I retired at 60 yr old and took SS at 62 to help with expenses, while not taking from my savings which are actively invested. I was concerned it would not be there later because of the politics of the time.
H took it at 67 at full retirement age at the same time.
When to take SS depends on how long you need it to last and how significantly it figures into your retirement income stream. DH and I took it at 65/64 on the advice of both our FP and CPA. We didn’t figure it into our retirement planning, so it’s all gravy. Taking it “early” means drawing less than 2% from our portfolio. It can go away and we’ll still be fine.
Same for DH. Our CPA handles the clawback, but I was surprised that he still gets to keep some.
Same here. This is just gravy. So I can’t figure out why I should wait for $400 more a month fir 2 years until full retirement. It would offset our super expensive Medicare expense now. DH won’t be taking his until the end…I think 70?
I am assuming that Social Security will be unavailable when I am of an age to start collecting benefits. My wife and I have planned our retirement accordingly.
I retired at 60 and started collecting SS at 62. Because I’m subject to the offset and windfall provisions, my SS premium was reduced by 2/3. So…from 62-65, I collected about $175 a month (without the reductions, it would have been about $600 a month. I worked in SS states a while ago). I decided that my SS was only ever going to cover my Medicare premium payment so I would enjoy that $175 a month for 3 years.
My CFP agreed. For me, there was very little point in waiting.
Both H and I started drawing SS at age “almost 64” at the advice of our financial planner. Except for the two of us, our FP is the ONLY person who knows our entire financial situation. That is why someone else’s decision made no difference to us.
You get UP to 50% as spousal benefit–if you take SS before YOUR full retirement age the spousal benefit can be much less–and will stay there.
This conversation is making my head spin. My DH is 65 is and still working. I am 60 and recently lost my job and currently decided to not go find another one for now. (except part time work). Overall my SS benefits will be a bit higher than my spouse, as while i worked I made a higher income for many years. Other thoughts is that my spouses health is worse than mine, and likely would pass before me. Right now DH plans on retiring and starting to take SS when he hits 67 (I wont be 62 yet though). At that point I might decide to go back to work full time (if nothing else for health benefits).
i feel like I need a degree in Rocket Science to understand this all.
We used a couple of calculators back when I was deciding this issue several years ago. I was retiring but my DH is still working so I am still on his insurance.
I had passed FRA and we were surprised that some calculators said take it now. We really didn’t need to worry about it in our overall retirement/financial planning, and for me, psychologically, I decided that I wanted the spending money now (its not a ton, but its enough that its more than just play money) since I was so used to an income, even when I had gone part time and it was low. I have no regrets. Good luck!
Depending on the portfolio size and the balance of pre-tax vs. Roth, this strategy can create an unintended problem, a big, unanticipated tax hit once RMDs trigger. It’s worth modeling in a tool like New Retirement.
If it will be a problem, the solution is to take the opposite approach and delay SS, spending down the portfolio to reduce RMDs.
Now I’m really confused. Do you mean if he’s dead?
Let’s say I take mine now at 65 before full retirement. $2,500.
Let’s say he works and then takes his at 70, say $4,500.
Together we have $7,000 per month. If he dies, I’ll get his $4,500.
Where does this 50% come into play in this scenario?
At your full retirement age, you can take 50% of his full retirement age amount or all of yours, whichever is highest. If you take sooner than your full retirement age, numbers will be reduced. In your scenario, yours is higher than what 50% of his would be, so you would keep yours.
The 50% doesn’t apply to you because you make over half of what his SS is. You’d just keep your SS since it is higher. But if you wait until 70 then your own SS would be a higher amount.
Since FP’s get paid based on assets, the greater $$ in your portfolio, the more they make. (Not saying that their recommendation was not correct, but just that they are conflicted. If all of thier clients waited until 70, by living off of their portfolio, the FP’s woudl be making a whole lot less money.)
All modeling/considerations were done/taken into account. We have 20 years with our FP and 15 with our CPA, both concurred with taking early. We also have a tax attorney. We’re good.
I was pretty confident that you’d done that. It was really just an expansion on individualization. 