Author Topic: SS spousal benefits - 2 short questions  (Read 1541 times)

retired?

  • Pencil Stache
  • ****
  • Posts: 665
SS spousal benefits - 2 short questions
« on: February 09, 2017, 12:13:42 PM »
Hi.  What I read differs from what a recent retiree told me, so I thought I'd ask here.  I am far from receiving benefits, but want to plan.  The data below is from the calculator on the SSA website.

1) wife's stand-alone benefit is $500/month.  Mine is $2k.  I read that she can receive her benefit or 50% of my benefit level, whichever is higher.  In this case, she'd be able to receive $1k (50% of my benefit level).  Is that right?  Aside from any timing issues.

2) upon death of one of us, the remaining spouse would receive the higher of the two benefits.  So, whether it is my wife or me that passes first, the other would receive $2k. 

Thanks.

moof

  • Pencil Stache
  • ****
  • Posts: 809
  • Location: Beaver Town Orygun
Re: SS spousal benefits - 2 short questions
« Reply #1 on: February 09, 2017, 05:52:12 PM »
Mostly right, but with some nuance needed.

The lower earning spouse is capped at the greater of either their benefit, or 50% of the full retirement age benefit of the higher earner (benefit at 67).

The higher earner has an extra motivation to wait until 70, as when one person dies it will lock in this higher check for the survivor.

For example, my wife and I are the same age and her benefit is <50% of my benefit.  So while at 67 she can file and get say 15k/year at most and I have the option of filing at 67 and getting 30k/year or waiting till 70 and locking in about $38k/year under my name.  When the first of us dies it the survivor will still get the 38k/year benefit instead of being stuck at 30k.

There are a thousand variations that show up to maximize all this, so I would caution that without researching your exact situation it would be hard to give you a full answer.  ssa.gov has some fairly human readable explanations.
« Last Edit: February 09, 2017, 05:56:16 PM by moof »

BlueLesPaul

  • 5 O'Clock Shadow
  • *
  • Posts: 87
  • Location: Salt Lake
Re: SS spousal benefits - 2 short questions
« Reply #2 on: February 10, 2017, 10:00:17 AM »
Another thing to mention is that if you were born on or before January 1, 1954, you can apply for your spousal benefits and let your own benefit grow, a strategy known as restricted application.  For example, if your spouse has reached Full Retirement Age (FRA), spouse files for their benefit of $500 and you can collect spousal benefits of $250.  When you reach 70, you can switch to your benefit which will have increased to 132%, which means you will collect $2640 per month instead of $2000 per month and your spouse can switch to their spousal benefit of $1000.  Also, if you do that strategy, your survivor benefit for your spouse will be the higher $2640 instead of $2000.  The breakeven point will be around 85 years and since there are greater than 50% odds that one of you will live to be 90 or older, it is certainly something to consider.

Best of luck!

retired?

  • Pencil Stache
  • ****
  • Posts: 665
Re: SS spousal benefits - 2 short questions
« Reply #3 on: February 15, 2017, 06:07:54 PM »
Another thing to mention is that if you were born on or before January 1, 1954, you can apply for your spousal benefits and let your own benefit grow, a strategy known as restricted application.  For example, if your spouse has reached Full Retirement Age (FRA), spouse files for their benefit of $500 and you can collect spousal benefits of $250.  When you reach 70, you can switch to your benefit which will have increased to 132%, which means you will collect $2640 per month instead of $2000 per month and your spouse can switch to their spousal benefit of $1000.  Also, if you do that strategy, your survivor benefit for your spouse will be the higher $2640 instead of $2000.  The breakeven point will be around 85 years and since there are greater than 50% odds that one of you will live to be 90 or older, it is certainly something to consider.

Best of luck!

thanks.  This is different than the "file and suspend" strategy that was recently disallowed, right?

retired?

  • Pencil Stache
  • ****
  • Posts: 665
Re: SS spousal benefits - 2 short questions
« Reply #4 on: February 15, 2017, 06:10:06 PM »
Mostly right, but with some nuance needed.

The lower earning spouse is capped at the greater of either their benefit, or 50% of the full retirement age benefit of the higher earner (benefit at 67).

The higher earner has an extra motivation to wait until 70, as when one person dies it will lock in this higher check for the survivor.

For example, my wife and I are the same age and her benefit is <50% of my benefit.  So while at 67 she can file and get say 15k/year at most and I have the option of filing at 67 and getting 30k/year or waiting till 70 and locking in about $38k/year under my name.  When the first of us dies it the survivor will still get the 38k/year benefit instead of being stuck at 30k.

There are a thousand variations that show up to maximize all this, so I would caution that without researching your exact situation it would be hard to give you a full answer.  ssa.gov has some fairly human readable explanations.

Thanks.  You've confirmed what I thought.  Yah, I understand their are a variety of ways to adjust things which I will definitely need to review as I get closer.  But, for now, I mainly wanted to make sure I understood the 50% rule.

 

Wow, a phone plan for fifteen bucks!