The fiscal deal cliff did not affect benefits. But we have other cliffs ahead of us. There are many possibilities that Congress and the White House are likely to consider in the months ahead. One is raising revenue by raising the payroll wage limit, currently at about $113,000. Another is changing the way that cost-of-living adjustments are adjusted--to reduce the rate of COLA growth. This is using what is known as the "chained" CPI rate. It is very controversial because some people believe it doesn't take into account the higher costs that seniors pay for health care. Stay tuned!
A lot to consider! Thanks, Susan
Our next question comes from BingV
Your spousal benefit would only be worth up to 50% of your husband's benefit if you take that benefit at full retirement age. By taking benefits early, you lose the option to restrict your benefit to a spousal benefit only, and you will never get quite half of his benefit because your own benefit is reduced. So in your case, switching to a spousal benefit would actually cut the amount of income you would receive -- which Social Security wouldn't do anyways. For those who take benefits early, Social Security automatically gives you the highest benefit you're entitled to.
Thanks, Rachel. A very helpful answer!
Alright, looks like we have just a couple questions left. This one's from Kathryn.
Also, you cannot get your own benefit and a spousal benefit. So, as Rachel said, you're in a better position now because your own benefit is larger than a spousal benefit would be.
If you claim before full retirement age, the survivor benefit will be reduced. If you can wait until your full retirement age, you'll get 100% of the survivor benefit. Unless you really need the money before then, it likely makes sense to wait.
Alright, we have one more question from Sue
And it will be reduced a lot--by more than 28%. If you expect to live a long time, you will be better off waiting. Those benefits also compound with cost of living adjustments.
Wow. Thanks, Susan. Definitely something to consider.
Also, Kathryn, if your own benefit will be higher, you can always take your survivor benefit early and then switch to your own later.
Alright, it looks like we’re out of time for today’s chat.
Thanks so much to everyone who joined us and asked questions. And a special thank you to Susan and Rachel for helping out!
Thanks to all of you for joining us!
Thanks for all the great questions!
We will be hosting our next live chat Thursday, Jan. 24th at 2pm ET with income investing expert Jeff Kosnett.
Also, stay on the lookout for more details about our annual Jump-Start Your Retirement Plan Days. Certified financial planners from NAPFA will be taking questions all day on Feb. 7 and Feb. 12. We hope to see you then!
