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Periodic Contributor

Social security and spouse health.

My wife and I are 66 and planning to work until we are 68.  We both will then have the option to work part time  - 40-50% - of our current workload and salary.   We had/ have no specific plans when to start SS.  Six months ago my wife was diagnosed with metastatic beast cancer.  Life has been a whirlwind. Her current health is good but even the best prognosis points to a shortened life span. We are planning to stick to our original plan of working full time until 68 and then part time.  I need some advice about her SS.  I do not want to come across and morbid or uncaring, but I am thinking we should start her SS ASAP.  Any comments or suggestions?

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Bronze Conversationalist

I'm sorry to hear about your wife's condition.

As for your questions, the main thing I see about starting your wife's Social Security payments would be to provide that much more income to your household budget, while it would lock in the amount for life, plus any increase from continuing to work and put into the SSI program. COLAs, if any, would also increase that along the way. At this age, the Social Security payments would not be decreased by her work income.

This leaves the questions only you two can answer: Do you need the extra income from Social Security to help pay off bills and debts? Do you have desires or plans (vacations, special purchases, or ?) that would require the extra income? Do you worry about not getting enough back from SS from what you have contributed over the years?

I wish you both luck in making the decisions that work best for you.

 

Stay well.

Lynn

Periodic Contributor

Thank you for your reply.  Our budget analysis shows that we will have sufficient income while working part time.  We do not need the extra SS income for debts. Her SS income would be extra money for vacations or to provide financial assistance to our children. I do not worry but would like to get something back for the years of contributions. If we wait long enough we could get nothing for her years of contributions. 

Bronze Conversationalist

Social Security is one of the biggest gambles in our lives. Many don't live long enough to recover any of the money we have put in. Others might start getting some, but don't ever get that much out. Still others live long enough to exceed what they put in.
The increase in potential monthly payments has been figured in because the longer you wait to collect, the less time SS will have to pay you. The charts are based on life expectancy at each certain age and are designed to pay you back the same amount, total, over the years. The only way to get more than you put in is to outlive their expectations.

If you are concerned about your wife being able to collect SS, then I can see no reason why she'd need to wait. It certainly wouldn't be affected by your income. At your age, that time has passed.
If she started to collect now, you could set some or all of it aside and use it only when you need it. You could use it to maximize your IRA and invest it in ETFs for growth. You could just set it aside in a savings account and use it to afford better vacations than you might have otherwise planned - perhaps cruises instead of road trips, Europe or the Mediterranean instead of the Blue Ridge Mountains, Hawaii instead of Virginia Beach. So many possibilities.

Stay well and enjoy!

Lynn

Silver Conversationalist

@MichaelC287014 

 

hi Michael, I am so sorry to hear of your wife's condition and how that must have such an awful effect your lives at this time. I find the situation very poignant and for me the questions are more personal and a question of values rather than dollars. But I certainly know that dollars help lubricate life, don't they?

 

I'm not certain of what your wife's condition implies. I know that some women have mastectomies and go on to live a long fruitful life. But the metastasis sounds ominous. 

 

For your question here, it all depends on what you want your combined Social Security benefits to do. Do you want to maximize your monthly benefits? Do you want to maximize your total lifetime payout from SS? Do either one of you care about maximizing survivor's benefit for a surviving spouse? To me are the big three questions that come up with SS and "when" to take benefits...and there are plenty of posts here about "should I take SS at 62 or 66?", etc.

 

I think I can make a brief comment on each of those 3 "big" questions I mention. First question: If wanting to maximize total monthly benefits then you'd need to wait until age 70 to draw (earning the Delayed Retirement Credits at 8% per year). This question does interact with the Second one: No one really knows when their time is going to be up so it's strictly a gamble trying to maximize total lifetime payout from SS. Some people look at how old they would be before the total payouts from taking at, say, 62 versus their FRA, or even delaying until 70, and then consider how long they expect to live. But in your wife's case she may have a shorter expected lifespan now than otherwise. So delaying may not be worthwhile. Third question: I don't know anything of your careers and finances, but as you're both working now, and planned to continue until 70, I assume you are both in some rewarding professional type of work, maybe physicians, lawyers, architects, etc., rather than working at the mill in a bone-breaking job. So the concern of taking care of your survivor, for each of you, probably is not an issue.

 

Just a word as to my own plan: I retired (stopped working) one month after my FRA of 66. I'd planned to work years longer but the work no longer was satisfying to me. My wife is 11 years younger than me and has no SS work history in the US (she immigrated from Canada). Due to her younger age I wanted to maximize her potential survivor's benefit so I am waiting to collect my SS until age 70 (one more year to go).

 

If I was in your shoes this would come down to a question of what I valued in life: more time together with my spouse? the satisfaction of working at my career? The pleasure of getting more money? I think these are the sorts of questions that you and your wife may want to consider. You've been given sort of a wake-up call or a golden opportunity to reconsider your life paths.

 

I guess I wax philosophical here. And for me this situation is more about philosophy than about money. I assume that you two are not hurting for money, I might change some of my views if that was the case. But I would not change my view that you two have been given the wake up call that life is limited and precious.

 

Best wishes and good luck.

Periodic Contributor

Thank you for your reply.  My wife and I work for university's in the North East. We both have been at the same job for 40+ years. I have a pension and 401K she has a 403B.  Our retirement planning has been all talk and no action.  As stated previously we plan full time until 68 and then part time probably to at least 70.  She has committed to a 2 year position the expires July 2022. Our thinking was to max out both SS benefits while working part time  before starting distribution. Longevity will control the lifetime income and if my wife were to pre decease me  I will then take my own SS.  Out part time income would be sufficient to live on. We would not need her SS money.  Her SS money would be extra income while she is alive.  I do feel like she /we should get something for her years of contributions.   As for your question about life values : Her diagnosis was mid Covid.  Since then we have been able to work from home and I have spent every hour of every day with her.  That has been the best part about Covid.  We are both less satisfied at work and ready to cut back and transition to retirement. We will never live long enough to spend all of our retirement savings. We have gotten a huge wakeup call.  But I keep asking myself - shouldn't I do something?  

Silver Conversationalist

@MichaelC287014 

 

hi Michael,

 

Several comments:

 

• You mention "...and if my wife were to pre decease me I will then take my own SS". I suppose you are saying that your wife will be taking her SS benefit but you will continue to delay yours, and that sounds good to me. I was afraid you were thinking of the "file and suspend" technique discussed earlier in this thread, where one could collect spousal benefits while letting your own benefit gain the delayed retirement credits (DRCs), but this can no longer be done.

 

• You have concern about your wife not collecting on a benefit she's paid into for many years. And that's fair enough. Even though that money is not needed for current consumption she could begin collecting now and simply stockpile that away for later needs. It's not mandatory that it be spent now. That would certainly help build up a large fund for future needs and wants.

 

• One of the arguments given for taking SS retirement benefit early, at 62, is that they will invest that money and then come out ahead. That's a strong argument with some validity. But it ignores what happens to ones survivor (widow/er), they will have a greatly reduced benefit. But if there is no survivor, or the survivor has sufficient SS benefit of their own, then this point is immaterial. This bullet point may have some consideration in your thinking. You are only thinking of taking it "earlier" than otherwise planned, but she would be taking it at her FRA or so.

 

• tsk tsk about your retirement planning! well, that happens. I understand. I am sort of the opposite and planning is a bit of a hobby with me (I understand this is "typical engineer").

 

• for Social Security planning I recommend the Open Social Security (OSS) calculator, available for free on the web (https://opensocialsecurity.com/). It is really a bullet-proof application, and the author (not me) is not going to try to sell you anything. I also recommend the Maximize My Social Security (MMSS) calculator by renowned Boston U professor Larry Kotlikoff, I have used this as well (https://maximizemysocialsecurity.com/). Except that MMSS costs $40 for a year (there's no real need to use it for longer than that) and I find the OSS to be just as good, and friendlier, than MMSS.

 

    I quickly ran a sample problem in the OSS, assuming a couple (spouse "A" and spouse "B"), same birth date, same PIA (the basic SS benefit number), working for another 2 years beyond FRA, etc, and using the SS actuarial tables and ran again using an assumed age at death of spouse B. The results were consistent (results being the recommended "claiming" ages and type): for both spouses using the actuarial tables one claims at their FRA and the other delays until 70. When I specified the age at death of spouse B the results were B claims now at FRA and A claims at a later date (probably age 70).

 

    A tricky part of the OSS analysis with specified age at death is the recommend SS claiming age for spouse A will vary with the age at death of B ...but these claiming ages are ~10 years prior to the assumed death of B, whose actual date of death cannot be known at the prescribed claiming date! This is not a flaw in the program but results from the mathematical optimization to determine the claiming ages that produce the maximum lifetime benefit amounts. So ignore and just assume you'll claim at 70. Still it's an interesting artifact to investigate.

 

• some great software for the financial part of retirement is the free https://i-orp.com/Plans/extended.html. This produces a plan for "spending down" all saved funds, along with social security. Kotlikoff has something similar at https://economicsecurityplanning.com/ but it is pricy. Both are highly sophisticated mathematically to optimize spending across all years of retirement.

 

 

Hopefully these bullet points will provide some clarity for you and give you something concrete to work with. My gut feeling is have your wife draw now at her FRA and you wait...until 70 or whenever, plans may change.

 

And, most importantly, enjoy the time that you have together.

 

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Periodic Contributor

Thank you again, this has been very helpful.  I believe your bullet point comments and interpretation of my situation to be right on. 

As for retirement planning, I have done a lot of reading and talking with coworkers but have taken no action.  I have taken a very conservative approach.  Twenty years ago my employer changed our 401K to a fidelity managed account. With that change we were given the ability to play with the account assets and self manage.  I watched multiple coworkers manage their account poorly losing most of their accumulated value.  I did nothing, which worked out very well for me. I am also an engineer but understand my limitations.

I will look into the OSS calculator.

My own assessment of the SS question pointed towards starting my wife's SS ASAP and delaying mine until 70+.  So it is encouraging for me that your OSS calculator model gave the same result. My hope with this question was to seek a second opinion. I think we have a plan and now need to take action. Our #1 goal is to enjoy the time we have together.

 

Thanks again!

 

Silver Conversationalist

@MichaelC287014 

 

Just want to add, will you or spouse be affected by such things as the Government Pension Offset to Social Security, or the windfall elimination provision? These may apply if there were any pensions from jobs not covered under Social Security. Possible in the academic world.

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Periodic Contributor

Hi fffred, thanks again for your comments.  The pension was generated through my employer who has always taken out SS . I do not have a government pension.   So I do not believe that either would apply.

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Trusted Contributor

She can start to draw on your's when she retires, then switch to hers when you retire.  Delay starting yours as long as you can afford to, to maximize the amount you get.

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@TomD857140 

 

It sounds like you're describing the "file and suspend" technique? Spouse draws spousal benefits, letting their own get delayed retirement credits, while the "other spouse" is not yet collecting benefits (they "filed, but suspended"). That's what I gather from your description.

 

But this method is no longer viable except for persons born before January 2, 1954. Such a person is now 67 and 5 months (or so). So I don't think it applies to the original poster.

 

Borrowing from an AARP article https://www.aarp.org/retirement/social-security/questions-answers/ss-couples-file-and-suspend.html they describe this as:

 

"Under “deemed filing” rules, married people filing for Social Security at any age are automatically claiming both their retirement and their spousal benefit.

[This] change does not apply to people born before Jan. 2, 1954. They can still file what is called a “restricted application” for just spousal benefits, but only if they are full retirement age or older."

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Trusted Contributor

Thanks for straightening it out for me.  I answered in a hurry and did not do a good explanation.

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