I would like some clarification on what benefits choosing the spousal option in SS will bring. I retired at my retirement age of 66. My wife is poised to apply for social security benefits at her full retirement age. I am not sure how to determine if she should get her own SS or if we should apply for spousal benefits. Can anyone offer suggestions? Thanks.
Iâm not an expert, but I think the way you determine it is to take the option that gives a higher benefit. If taking SS on her own record will give her $2000/mo and taking 50% of your SS benefit will give her $1800/mo, then you use her own record. In fact, I think Social Security determines this for when you apply for benefits and automatically chooses the better one. I think @aj485 might know a lot more about this.
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@MarkR got it correct. SS will determine whichever is the higher benefit (hers or 50% of yours) and will send her that benefit. She doesnât need to do anything other than apply for SS benefits, except that she will have to be sure that she tells them sheâs married to you when she applies.
AJ
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one additional question if I may⌠I am eligible to receive social security and I intend to take it at 70yol (I am 56yol now). If my wife has been a housewife and has not had an income, how much can she have on the account of my eligibility to s.s.?
Thanks,
tj
She would get as much as half of what your benefit would have been had you taken it at full retirement age. That number may be reduced a bit if she is less than her own full retirement age when she starts to collect.
The spousal benefit does not get boosted by delayed retirement credits. That said, should you pass away before her, she would get your full age 70 benefit from that point onwards.
Regards,
-Chuck
I have to wonder about the full age 70 benefit part. Wouldnât that depend on the OPâs age at death, and whether they had started taking SS? The OP said: (I am 56yol now).
The reduction is actually more than âa bitâ - if she claims at age 62 and her FRA is 67, it will be reduced by 35%, on top of the 50% it was already reduced because sheâs claiming on his record. So that would mean that she would get 32.5% of his FRA benefit.
I will also point out that this presumes that @thejusticier is still alive when she claims her benefit. Survivor benefits are a whole different calculation.
Thatâs not correct unless @thejusticier actually claims SS at age 70 before he dies. If he dies before he claims, the most his wife would be eligible for would be his benefit at his FRA (age 67 for him, since heâs 56 now), even if he dies after his FRA. That benefit would be reduced if she claims before her FRA.
AJ
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thanks for the reply.
how is the amount of this deduction determined? what is that deduction if claimed at 63, 64âŚ66yol?
Can she claim before I do?
tj
Itâs a confusing formula. From the SS website Benefits for Spouses
âA spousal benefit is reduced 25/36 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.â
No, she needs to wait until you claim your benefits to get spousal benefits.
For survivor benefits, she needs to wait until you die.
Edited to add: There is a small loophole in claiming before you claim your benefits. Assuming you have been married at least 10 years, she could get divorced from you, wait 2 years and then claim spousal benefits on your record before you claim your benefits,
AJ
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Yes, but the OP also said âI intend to take it at 70yolâ. I guess I should have referenced that part, too.
Regards,
-Chuck
Well, that was what the original post referenced⌠âI intend to take it at 70yolâ⌠I guess I should have quoted that part, tooâŚ
Regards,
-Chuck
Yeah, itâs the part about he has to live to 70 to actually claim thatâs the issue. Even if he intends to claim at 70, if he dies before claiming, say, when heâs 69, the spouse will get a benefit as if he had claimed at age 67. She will not get any additional benefit for him deferring for 2 years.
So if you plan to defer until age 70, but you get some bad health news after you reach your FRA, your spouse might be better off if you claim before reaching 70.
AJ
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What is the official definition of âclaimingâ? For example, if a healthy 69 year old who is planning on claiming at 70, has a terrible accident and is dying in the hospital, can they officially claim at that point in the days before they die of their injuries.
Once past your FRA, benefits can be claimed retroactively, so if the person is coherent enough to apply online Apply for Social Security Benefits | SSA they could ask for benefits starting up to 6 months prior, but no earlier than their FRA. They will get a lump sum for the retroactive benefits, and, if they live long enough to collect a monthly check, should start receiving that benefit.
AJ
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So youâre saying that just clicking âOKâ on that online form is sufficient to enter the status of âhaving claimedâ even a day or a few hours before death?
I donât know that it would work, but itâs the one option that might be available. If the application was submitted on the same day that the applicant died, I suspect it would be denied since the applicant wasnât alive for the entire day, and the SSA seems to be very focused on ensuring that timeframes are complete timeframes. If it was submitted a few days before the applicant died, I suspect there would be an investigation in order confirm that the applicant was actually the one who applied, and it wasnât some unauthorized person who applied for them.
You seem to be looking for a loophole to mitigate a risk that has a very small probability of occurring. And if it does occur, how likely is it to make a significant difference in the spouseâs future quality of life? If you are able to choose to wait until 70 to claim SS, you are probably well enough off that the spouse will be just fine with the FRA benefit rather than getting the higher deferred benefit. If you think it will make a difference in the spouseâs quality of life, then you should consider taking SS at or shortly after FRA. It will take a lot of months of higher benefits to offset the monthly benefits youâve claimed between FRA and age 70.
AJ
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It will take a lot of months of higher benefits to offset the monthly benefits youâve claimed between FRA and age 70.
I know - replying to myself. But I wanted to confirm this with my numbers.
I will point out that when I went to get my numbers, I found that the your account information on the SS website is not available 24/7 - there are specific windows each night when it is not available. So counting on being able to apply online after a bad accident may not be a good plan.
When I did run my numbers by taking my currently projected benefit at FRA, adding an annual inflation increase of 2%, projecting my age 70 benefit by adding 24% to the monthly benefit that I would be getting at that age had I claimed at FRA, and then adjusting that by 2% annually going forward, I found that it took 134 months (11 years, 2 months) before the higher benefit had a total collected that was higher than taking my benefit at FRA.
And that doesnât even account for being able to keep the rest of my portfolio invested, instead of making withdrawals equal to my SS benefit.
I will say - because my birth month is later in the year, if I claim exactly when I reach FRA, the inflation adjustment for the next year impacts my benefit amount sooner than it would for someone claiming early in the year. So YMMV, and you should run your own analysis based on your own numbers to determine if itâs better for you to claim at FRA or to defer, understanding that you are taking a risk that if you die before you claim, your spouse will be left with your FRA benefit anyway.
AJ
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Since the average life expectancy for a 67 year old is higher than 78 and 2 months, then the average person would definitely pass this breakeven point. This is further evidence that beginning at 70 is financially better than beginning at 67 ⌠if you can swing it, of course.
This would have to be accounted for to have all the numbers available to make the decision.
Hi @MarkR,
That is what I did when I chose to start benefits at 62 for myself. I used the âhistoricâ investment returns from 1982 to 2010 provided by our broker.
I calculated the SS benefit amounts using the numbers provided by SS on the annual statements they provided starting at age 50.
I used a 4% inflation rate but not use it as AJ did.
The SS estimates between the age 62, FRA and age 70 benefits are flat, no inflation adjustment which is perfect as they are for comparing benefit amounts since all will be adjusted equally no matter what the inflation is. The percentage between them will not change.
I used the inflation to reduce our portfolio growth. That changes the portfolio value vs the flat SS values for an apples to apples comparison.
I started mine at 62 based on that. There was no cross-over.
I had DW start a restricted, spousal benefit at her FRA and at 70, start her work record benefit. The difference between our projected benefit was within 2% so I chose simplicity.
Why?
I am an investor and DW is not. I can live on our portfolio and I do not have confidence in her ability to do it.
Her benefit plus her pension, which we setup as 100% to her and none for me, are more than enough to take care of her. She does not need to make any claims to SS except to provide my death notice to stop my payments.
Does that help you?
Gene
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I donât understand what this means. If an SS benefit at age 67 is $2000 nominal, is it really $2000 + 24% (3 x 8% increase each year) or exactly $2480 at age 70? Or is it the new inflation adjusted $2000 at age 70 plus 24%? In other words, does inflation adjustment only begin after beginning to take the benefit? Or does inflation adjustment happen all along, both before and after beginning to take benefits? Seems like it has to be the latter because otherwise the calculation to take at 62 versus 70 becomes MUCH more complicated, at age 62 you have to judge if we are entering an inflationary period or not.