Four Months Early

[te1271]

I may be forced to take my Social Security just 4 months before I'm 66. Other than the approximately $60. reduction per month what other things are going to hurt me?

[RitchieH510373]

The reduction would be permanent - so $60 per month (adjusted by inflation) for the rest of your life.

The other impact would be on survivor benefits, which would also be permanently reduced. If you die before your spouse and your benefit is larger than what your spouse is collecting, they would receive between 71.5% to 100% of the benefit you were collecting when you died (which would have been permanently reduced because of early election of benefits), depending on their age

[te1271]

My wife is 1 year younger than me. She worked as a Nurse for 40 years so her social security would be much more than 50% of mine if I die or pretty much equal to my full benefit

[RitchieH510373]

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@te1271 wrote:

My wife is 1 year younger than me. She worked as a Nurse for 40 years so her social security would be much more than 50% of mine if I die or pretty much equal to my full benefit

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Since it sounds like you both have similar levels of benefits and are about the same age, the survivor benefit doesn't look to be much of a factor, which would have been one of my biggest concerns. If she were quite a bit younger and/or had a much lower benefit based on her own record, the spousal benefit isn't affected by you taking benefits early, but the survivor benefit definitely would since she would be entitled to your benefit level if you passed away before her (more details here if you are interested: Supplementary Benefits and How do couples optimize their combined Social Security benefits?).

[te1271]

So lets say I start collecting now and my Wife waits until she is 66. If we are both collecting and I die before her she still gets survivor benefits on top of her own social security?

[RitchieH510373]

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@te1271 wrote:

So lets say I start collecting now and my Wife waits until she is 66. If we are both collecting and I die before her she still gets survivor benefits on top of her own social security?

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The survivor benefit will top-up her benefit only if what you were collecting is higher than what she was already collecting. She would not collect the survivor benefit in addition to her own retirement benefit, only the higher of the two amounts.

Let's say you were collecting $1,300 a month and she was collecting $1,100 a month when you passed away. If she was older than 66 at the time of your passing, regardless of when she started collecting benefits, she would be entitled to 100% of your benefit in place of her own (lower percentages if she was less than 66 at the time you passed away). That is, she would then start collecting $1,300 a month.

If you were only collecting $1,000 a month and she was collecting $1,100 a month, no survivor benefit would apply since you were collecting less than she was.

Hopefully that all makes sense. Doesn't seem to be a factor in your situation because there isn't a big gap in your ages or benefits based on your own work records. I just wanted to point out the issue just in case it was important to your situation.

[GailL1]

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@te1271 wrote:

So lets say I start collecting now and my Wife waits until she is 66. If we are both collecting and I die before her she still gets survivor benefits on top of her own social security?

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NO! NOT on top of her own SS benefit.

As a survivor who has reached full retirement age, She would get the higher of the two benefits - her own OR as your survivor - your benefit.

I repeat, the Survivor only gets one benefit.  It is sad when this is not realized and one of the spouses dies' leaving a big gap in the household income if SS makes up a good portion of the income for the elderly couple.

[te1271]

That's how I thought it worked. It is too bad really since that money has been paid into social security for more than 45 years. If you die your spouse doesn't get any of it if she has her own equal benefit. It's just gone. The effect is that social security is actually the beneficiary of that policy.

[GailL1]

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@te1271 wrote:

That's how I thought it worked. It is too bad really since that money has been paid into social security for more than 45 years. If you die your spouse doesn't get any of it if she has her own equal benefit. It's just gone. The effect is that social security is actually the beneficiary of that policy.

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 SS is an insurance program not an investment.  It covers disability, survivors as well as an old age benefit based your lifetime of work.  Consider your payroll contributions as premiums paid for the insurance.

The Survivors Benefit is far reaching - If you and your wife had a dependent child, the survivors benefit would be increased until the child reached 18.  If the child or young adult has a handicap, the Survivors benefit would continue during their lifetime.  If you had a divorced spouse, married for at least (10) years, this spouse could also make a claim on your survivors benefit.    Dependent parents may also qualify.

SSA - Survivors Benefits

If you and your neighbor both have the same type of homeowners insurance, each paying their own premium.   A tornado passes by and completely takes out your neighbors home but left yours intact - your neighbor would be getting a newly constructed house - you, not so much.