I believe the timing and decision to claim is very particular to the person/couple involved. In our case, my wife claimed her social security at her full retirement age. I am still three years away from my FRA. Initially my thought was to claim at 70 but after running the numbers I am leaning towards my FRA (I am the higher earning spouse). The flip to me is that at my FRA, my wife will earn $1,250 and I will be earning $4,200 per month. So she will receive an extra $950/mth and I can start collecting. The delta between collecting at FRA and waiting until 70 (with 5% earnings on the brokerage money that I am not spending is $212k that needs to be made up with longevity. This threshold for us is when I am 84 and my wife is 87 (assuming annual 5% investment returns and 3% cola on SS). A WAG, but close enough for me. Another point that changed my outlook is that the spousal benefit does not increase if the higher spouse waits until 70 to claim, as it is based on the PIA at age 67. It does not receive the benefit of the 24% bump that the higher wage earner will get at 70. I agree with Winston below that control and knowing and investing and inheritance all come at a not too difficult price. We lose longevity insurance, but roll the dice on this (and other than health care we will have a declining real budget in later years). John
Hi Kim,
That is correct. If the lower earning spouse claims before their full retirement age, their spousal benefit will be reduced. At 62, that could be reduced to as little as 32.5% of the higher spouse's PIA.
Comments:
Hi Brad, FYI that the 8% increase is not compounded each year, but rather a 24% total of investment credits from your original PIA.
Post: Don’t Delay
Link to comment from April 21, 2024
I believe the timing and decision to claim is very particular to the person/couple involved. In our case, my wife claimed her social security at her full retirement age. I am still three years away from my FRA. Initially my thought was to claim at 70 but after running the numbers I am leaning towards my FRA (I am the higher earning spouse). The flip to me is that at my FRA, my wife will earn $1,250 and I will be earning $4,200 per month. So she will receive an extra $950/mth and I can start collecting. The delta between collecting at FRA and waiting until 70 (with 5% earnings on the brokerage money that I am not spending is $212k that needs to be made up with longevity. This threshold for us is when I am 84 and my wife is 87 (assuming annual 5% investment returns and 3% cola on SS). A WAG, but close enough for me. Another point that changed my outlook is that the spousal benefit does not increase if the higher spouse waits until 70 to claim, as it is based on the PIA at age 67. It does not receive the benefit of the 24% bump that the higher wage earner will get at 70. I agree with Winston below that control and knowing and investing and inheritance all come at a not too difficult price. We lose longevity insurance, but roll the dice on this (and other than health care we will have a declining real budget in later years). John
Post: Don’t Delay
Link to comment from April 21, 2024
Hi Kim, That is correct. If the lower earning spouse claims before their full retirement age, their spousal benefit will be reduced. At 62, that could be reduced to as little as 32.5% of the higher spouse's PIA.
Post: Don’t Delay
Link to comment from April 21, 2024