Retirement Planning/Social Security

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QUESTION: Scenario: Wife is 65 and on Social Security with benefit amount based on her working history. Husband is now 62 and wants to collect Social Security based on wife's benefit - waiting until he's 70 to collect on his working history. Husband received around 1/2 of wife's benefit until he 'switches' to his working history benefit at 70.

I just heard about this option - wanting to verify.

It's a great option if the husband is still generating income and wants to maximize SS benefit at 70, but also receive income from SS until that happens.

Thanks.

ANSWER: Hi Ray,

Yes, this is possible and in the right circumstance can be a good move. However, since your wife started collecting SS before full retirement age, it may not make sense. It would also depend on the difference between your benefit rate and hers. Since you would like to collect before full retirement age and she is also collecting before full retirement age, the spousal benefit you would receive would be greatly reduced. Probably somewhere around 37% of hers. There is also the possibility that if your benefit is higher than what your spousal benefit would be, that they may make you take the higher amount.

Here are a couple of link that may provide more info:

http://www.socialsecurity.gov/retirement/1943.html

http://moneyover55.about.com/od/socialsecuritybenefits/a/socialsecurityspouseben

Please keep in mind that I am not an expert on Social Security so contact your local SS office to get a more definitive answer before you make a decision. I hope this was helpful. Best of luck!

Dave

---------- FOLLOW-UP ----------

QUESTION: Actually, it's not about my situation, it's some friends - the wife went on at 65 and the husband is now 66 (full retirement) - he's going on as her spouse and will apparently receive 1/2 of her benefit. Here's the kicker - he plans to 'convert' to his generated benefit at 70 - 120%. Therefore, even though he's generating spousal SS benefits, there appears to be no 'penalty' or impact at 70 - a great deal if one is healthy.

So, when I heard about this - I'm took SS at 68, my wife took her SS at 62 based on her earnings. Based on the scenario above, perhaps she should have signed up for 1/2 of my full retirement amount until 70 and 'converted' to her 120% at 70?

Your input would be appreciated.

Answer
Yes, depending on the difference between your earnings, you may have been better of doing as you suggest but you can't change that now.

I do not believe your friend will get 1/2 of his wife's benefit because his wife didn't wait until full retirement age. I suggest you have him call SS before he does anything.

Dave  

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David M Iannopollo

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