For those of you who are joining us for the first time, let me explain a little about how the live chat works: your questions will be submitted and held for moderation. Depending on the volume and complexity of reader comments, your question may not necessarily be approved right away. However, we will do our best to answer your question as quickly and thoroughly as possible!
Hi all...look forward to taking your questions on what has proven to be a hot topic for our publication.
Social Security is a very important issue for everyone. We hope we can help you.
It's really important to understand that the earlier you take benefits, the lower they will be--for life. If your full retirement age is 66 and you claim at 62, you're taking a permanent 25% cut. So unless you really need the money, try to hold off. But there are exceptions, of course, which we can get to later.
There are many advantages of waiting until full retirement age to claim benefits is one of the key things I've learned...more strategies open up for married couples in particular once one spouse has reached full retirement age.
Great. Looks like we have several questions about spousal benefits, so let's get started.
Our first question comes from Nancy.
Also note that for every year you delay beyond full retirement, you get an 8% in delayed retirement credits until you reach age 70.
It does make a difference how early....the permanent reduction will be less the closer you get to retirement age.
If you take a spousal benefit at your full retirement age, you'll get 50% of your husband's benefit. For each year you delay beyond 62, you'll get closer to 50%.
Also, if you take your benefit early, and later switch to a spousal benefit, not only will your own benefit be permanently reduced but your spousal benefit will also be permanently reduced when you switch.
Our next question about survivor benefits comes from Carol.
But one benefit that won't be reduced by claiming your own benefit or your spousal benefit early is your survivor benefit. If your husband dies before you,. you will get 100% of his benefit as a survivor benefit--even if you claimed a reduced spousal benefit or your own reduced benefit early.
Good to know, Susan. Thanks.
Carol, we are checking into your question...generally, widows and widowers can start taking a survivor benefit at 60, but it will be reduced if taken before full retirement age.
To maximize a couple's survivor benefits, it's really a good move for the higher-earning spouse to delay claiming his benefits as late as possible--70 if he can. That way he can get get 132% of his full-retirement-age benefit, plus cost-of-living adjustments. If he dies after, his wife can "step up" to the benefit he was getting when he died.
sorry about that, I sent before I was ready. ... his wife can "step up" to the benefit he was getting when he died.
Thanks, Rachel. Carol, we will post the answer to your question later on in the chat.
Our next question is from Jane.
If your husband is ineligible for Social Security benefits, there really doesn't seem like there's anything you can do until you're eligible for your own benefits. When you turn 62, however, you can apply for benefits, and he can apply for a spousal benefit.
Here's our next question from Mike C
Jane, another option is that you wait until full retirement age, then file for your benefit so your husband can get a spousal benefit. Then immediately suspend yours, and let your benefit grow until you turn 70.
Mike, Could you please clarify the question? If you claim at 62, your benefit is reduced by 25%. If you claim at 65, it's reduced by about 6% or 7%. You never really make it up. You'll always be slightly behind what you would have gotten if you waited until 66--even with cost-of-living adjustments.
We'll wait for Mike to clarify his question. In the mean time, let's take this one from Jeff.
It's usually around 78, but a lot depends on life expectancy. But you bring up an excellent strategy that many people don't know about. If you are the higher earner and you are full retirement age, you can choose to claim a spousal benefit. That's called restricting your application to a spousal benefit. So you turn 66 and claim a spousal benefit even though your own benefit would be higher. You're bringing extra income into the household until you turn 70 and then claim your benefit with delayed retirement credits. Then your wife can step up to her spousal benefit, which is based on what you would have received when you turned 66. It will be slightly less than 50% because she claimed her own benefit at 65.
And here's Mike's response. Thanks for clarifying!
Also, for couples, a big incentive for the higher earner to delay is to provide a higher survivor benefit for the lower earner if the higher earner dies first.
While Susan and Rachel are responding to Mike, we also have a follow-up from Jane.
Mike, if you're talking about a difference of a year, I would not focus on the break-even date. Social Security doesn't even use one anymore. Maybe it would mean the difference of two years.
I have had experts tell me not to worry too much about the break-even age and to delay as long as possible...Social Security is a lifetime annuity with inflation adjustments, and to buy a private annuity with similar inflation protection would be costly.
One year would not make that much of a difference, I agree.