Social Security break even planning. With or Without COLA's ?

[LostDollar]

The Spouse receives the Full Benefit if they are at full retirement age. Meaning they get the full amount the higher earning spouse was receiving.

For the benefit of others that might read this in the future and not have carefully followed preceding discussions, note that this applies to survivor benefit but not to spousal retirement benefit.

The Spouse receives the Full Benefit if they are at full retirement age. Meaning they get the full amount the higher earning spouse was receiving.

Its a sliding scale if they are under age 66. The social security website should show it to you.

Keep in mind full retirement age has increased from 66 to 67.

COLAs are an unknown. There is no right answer. Right now, I use 3%.

Prior to the past 3 years, the yearly average was less then 2% for the 2000s.

Thanks for that and the table you provided. It's been a bit since I did the computations I wanted to do, but I think I played around with both 2 and 3 percent.

If neither spouse is working, Usually, taking it as early as possible makes the most sense. Especially with a large age gap.

You have to consider lost opportunity cost of waiting. That is money that could be working for you earning money each year, and its going to end anyway eventually and step-up to the higher amount. So we are talking a shorter time frame vs. all of retirement (for the younger spouse).

Take the money and run in that scenario. jmo from a general perspective.

If neither spouse is working, it might be that the money would be necessary for living rather than saving.

(Assuming both spouses are still living and the older spouse's record will provide a higher survivor benefit than the younger spouse's retirement benefit) For the younger spouse, the degree of age difference and when step up to the higher amount will occur are the questions. That involves some depressing date of death guesses.

I was able to get PIA's (primary insurance amounts) using a calculator on the SS website.
I found a free breakeven calculator that I used to do some breakeven review. Even with calculations that would be open to some question, the overall result seemed to support your "from the hip" idea that taking the early benefit would be appropriate.

If the younger spouse is still working and is below FRA, earnings offsets become an issue. In trying to understand earnings offsets and how earnings data would be reported and the adjustment computations would be made, I stumbled on to a number of horror stories of SSA clawbacks of miscomputed benefit payments. With that information, I am totally dropping any consideration of filing for benefits while younger spouse is working.

 

[LostDollar]

yes, but had they taken check at 62, the check would have been around $2500 (plus COLA) I believe, not $4,800 . Around 36% of the check is from earnings during working years & 64% due to the delay in starting & COLA

I don't know how to evaluate COLA increases included in the payment amount.

My point was that many people waiting until age 70 to collect, even with those age based increases, are not going to see a $4,800 check. As your COLA comments soak in, I could agree that some might get there, over a period of time, but it won't happen immediately.

 

[LostDollar]

But taking early also locks your surviving spouse permanently into a lower amount. Each year delayed bumps SS check for worker & surviving spouse by 8%. Where else can you get an 8% guaranteed return with no cost. Instead of most people taking SS at full retirement or early while at same time delaying qualified plan distribution until require to take RMD at 70/72/74 on a fund with little or no guarantee & many times with fees/costs, why not delay SS & take distributions from qualified plans. Fof manh taxpayers they will also benefit tax wise over the long haul

But taking early also locks your surviving spouse permanently into a lower amount.

I don't believe this applies to survivor benefits if they are not applied for until after applicants full retirement age. There is no benefit to waiting to take survivor benefits beyond your FRA.

scagent was responding to my questions focused on a younger spouse who will eventually switch from a retirement benefit to a survivor benefit. In that scenario the early filing may provide the younger spouse with money that would otherwise never be collected.

As I indicated to scagent, I have abandoned that line of thought and inquiry after discovering the possibility of SSA clawback procedures being applied 10-20 years down the road if some errors are discovered.

 

[Allen Trent]

rying to understand earnings offsets and how earnings data would be reported and the adjustment computations would be made,

I dont believe a younger spouse earnings from wages/employment have any impact on their spouses actual benefit check. Sure, it plays into how much of household SS checks are added to taxable income, but I dont believe a spouses wages impact check size. The earnings limitation prior to FRA is directly tied to a persons own check & their own wages/earnings. I believe it is $21k for 2023

 

[LostDollar]

I dont believe a younger spouse earnings from wages/employment have any impact on their spouses actual benefit check. Sure, it plays into how much of household SS checks are added to taxable income, but I dont believe a spouses wages impact check size. The earnings limitation prior to FRA is directly tied to a persons own check & their own wages/earnings. I believe it is $21k for 2023

The younger spouse (with adequate working record) can apply for benefits while still working anytime between 62 and their full retirement age. The benefit they obtain will have an earnings offset. Younger spouse working and taking early SS to obtain SS benefit they would otherwise never receive was the central point of my original post questions.

 

[Lloyds of Lubbock]

It is not just a money decision.
It is possible due to health reasons you could have done more with that money at 62 than you could with the greater amount at an older age.
I am 70 I took my benefit at 66.
My knees are a lot worse now than they were 4 years ago.
Take your money when you can enjoy it the most.
Could I have waited sure but every year I used some of that money to take my granddaughters on an excursion.
They have memories they will never forget.....what do you think the ROR is on that.