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Today’s question comes from Dom:
“I am 59 years old, and my wife is 58. My estimated Social Security benefit at my full retirement age of 67 is $2,450 a month. My wife’s estimated benefit at her FRA is $1,050.
When the time comes and I decide to claim half of my spouse’s Social Security benefits — so I can let mine grow till I’m 70 years old — what happens to hers when it’s time for her to claim her own? In other words, will she still get the full amount, or will it be cut due to me having taken half of hers all that time?”
Picking up incorrect information
Dom, the Social Security claiming rules are complicated. Even Social Security agents are often confused about some of the more obscure rules.
So, it comes as no surprise to me that you seem to have picked up some wrong information about the claiming options facing you and your wife. The plan you describe in your question simply will not work out for you.
First, all people born after 1953 (including you and your wife) are affected by Social Security’s “deeming rules.” Under these rules, if you are eligible for multiple benefits (say, retirement and spousal benefits), you must claim them at the same time. (Note that different rules apply to widow’s benefits.)
Therefore, even if you were eligible for a spousal benefit (which you are not, as discussed below), you could not claim it and let your retirement benefit go untouched.
You also won’t qualify for any spousal benefits because your retirement benefit is too high in relation to your wife’s benefit. The maximum potential spousal benefit you might receive is one-half of your wife’s FRA retirement benefit, or $525. Since your FRA retirement benefit exceeds that amount, you qualify for no spousal supplement.
In contrast, your wife does qualify for a spousal supplement. Half of your FRA benefit is $1,225. Given her FRA benefit of $1,050, she can get $175 as a spousal supplement to boost her FRA total benefit to $1,225. Of course, all of these amounts are subject to early claiming penalties.
Since I just blew up Dom’s claiming plan, let me offer some suggestions for an alternative. I ran Dom’s information through my firm’s software, which is designed to find optimal claiming strategies.
For normal life expectancies (82 for Dom and 86 for his wife), our analysis indicates Dom’s optimal choice is to claim his retirement benefit at age 68.
As for Dom’s wife, based on our analysis, between the ages of 62 to 67, it does not matter when she claims. One year is essentially the same as another over that range. If she claims before Dom claims his benefit, then her spousal supplement is delayed until he claims and makes her eligible.
Clearly, Dom’s plans needed some inexpensive professional help.
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The questions I’m likeliest to answer are those that will interest other readers. So, it’s better not to ask for super-specific advice that applies only to you.
I hold a doctorate in economics from the University of Wisconsin and taught economics at the University of Delaware for many years.
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Disclaimer: We strive to provide accurate information with regard to the subject matter covered. It is offered with the understanding that we are not offering legal, accounting, investment or other professional advice or services, and that the SSA alone makes all final determinations on your eligibility for benefits and the benefit amounts. Our advice on claiming strategies does not comprise a comprehensive financial plan. You should consult with your financial adviser regarding your individual situation.