Social Security Confusion

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date Social Security Confusion Pete 10-11-2007  Re: Social Security Confusion CIL 10-11-2007  Re: Social Security Confusion CD 10-13-2007  Re: Social Security Confusion Ron Rosenfeld 10-12-2007  Re: Social Security Confusion Elizabeth Richa... 10-12-2007  Re: Social Security Confusion Cal 10-12-2007  Re: Social Security Confusion Mark Freeland 10-12-2007  Re: Social Security Confusion Pete 10-17-2007
Posted by Pete on October 11, 2007, 12:24 pm The Oct 2007 issue of AARP Bulletin (page 22) says: ========================================================================== 1. If you can delay taking your benefit, you should. For each year you wait after your full retirement age, your starting check rises by 8 percent¡Xa splendid, guaranteed "return." If you die, you'll also leave a larger benefit for your spouse. After age 70, the initial benefit stops going up. 2. There's an exception for married people in good health when one of them has a small Social Security benefit. Typically, that's the wife. If she retires first, she should start her individual benefit at 62. When her husband retires, she'll switch to the spousal benefit. By using her own account first, she taps a benefit that otherwise would have gone to waste. [Full article at: http://tinyurl.com/3cyv6s] ========================================================================== Paragraph #2 implies that when the wife switches to the spousal benefit, she will get the bumped up amount due to the husband's deferral to age 70. Great deal if you can get it, but it seems to me this is not true. The SSA web site says: ========================================================================== Q: Can my spouse collect benefits at age 62 from her work and earnings and then receive a combined total up to 50 per cent from my account when I start receiving benefits at age 65? A: Your wife can start receiving reduced retirement benefits on her own record at age 62. If the amount she receives on her own record is less than what she would be entitled to as a spouse, she would receive a higher spouse's benefit when you start receiving benefits. However, because she began receiving Social Security before reaching full retirement age, she will receive a reduced benefit rate that is less than the full 50 percent amount for as long as she remains entitled to spouse's benefits. [Full article at: http://tinyurl.com/2mlu8u] ========================================================================== It seems that, if you do as AARP suggests, 8 years of a small "extra" income from the wife's account is offset by a 43% reduction in a higher spousal benefit starting at husband's age 70. You'd have to crank the numbers to be sure, but this strategy would surely lose money in most cases. Am I right that AARP's advice is bad, or have I missed the point somewhere? And why is the strategy recommended for "married people in good health"? Pete Posted by CIL on October 11, 2007, 5:20 pm Mr. Moderator, Do you think anyone like to comment or provide information/guidance to the following post, if this is not something the group may not want to read please do not post. thanks Here is our situation - Any advice will be welcomed. I am retired DoD Civilian (35.5 years of Service), Civil Service Retirement System (CSRS), and have paid 36 Quarters of Social Security Prior to the Government Civilian job ¡V current age 58. My wife worked for a large Grocery Chain and recently started drawing her SS at 62. My concerns are: Catch 62 - If a veteran is a US Government employee and retires his/her CSRS retirement will be reduced by 2% per year of Military Service if they do not pay in 7% of the monies they made while on Active duty to the CSRS. This happens when and if they become eligible to draw Social Security (age 62). Notice there is no Option ¡§When they become eligible¡¨. This was signed by President Reagan around 1986. I had 3.5 years of Military duty and had to ante up $1150 for the time served. Believe me I did not have that much fun, travel and adventure. Windfall Elimination Act - When I elect to start drawing my Social Security after age 62 I will not be able to draw the full amount, I am not sure what it will be but friends of ours are getting about 50% of their benefit check. If I die before my wife she will have an option to draw 55% of my CSRS pension or my Social Security. If she dies before me I get nothing. I will not be able to collect any of her Social Security and only a partial amount of mine. I have gone back to work to get my additional Social Security Quarters paid and to add some $$ to the savings. The CSRS has/had some good benefits, so I cannot complain too much but this seems terribly unfair especially the spousal benefits that we cannot receive. Thanks Posted by CD on October 13, 2007, 8:07 am CIL wrote: > Mr. Moderator, > > Do you think anyone like to comment or provide information/guidance to the > following post, if this is not something the group may not want to read > please do not post. > > thanks > > Here is our situation - Any advice will be welcomed. > > I am retired DoD Civilian (35.5 years of Service), Civil Service Retirement > System (CSRS), and have paid 36 Quarters of Social Security Prior to the > Government Civilian job ¡V current age 58. > > My wife worked for a large Grocery Chain and recently started drawing her SS > at 62. > > My concerns are: > Catch 62 - If a veteran is a US Government employee and retires his/her CSRS > retirement will be reduced by 2% per year of Military > Service if they do not pay in 7% of the monies they made while on Active > duty to the CSRS. This happens when and if they become > eligible to draw Social Security (age 62). Notice there is no Option ¡§When > they become eligible¡¨. This was signed by President Reagan around 1986. > I had 3.5 years of Military duty and had to ante up $1150 for the time > served. Believe me I did not have that much fun, travel and adventure. > > Windfall Elimination Act - When I elect to start drawing my Social Security > after age 62 I will not be able to draw the full amount, I am > not sure what it will be but friends of ours are getting about 50% of their > benefit check. If I die before my wife she will have an option to > draw 55% of my CSRS pension or my Social Security. If she dies before me I > get nothing. I will not be able to collect any of her Social > Security and only a partial amount of mine. > > I have gone back to work to get my additional Social Security Quarters paid > and to add some $$ to the savings. > > The CSRS has/had some good benefits, so I cannot complain too much but this > seems terribly unfair especially the spousal benefits that we cannot > receive. > > Thanks > My husband retired after 33 years (CSRS). We knew the Windfall Elimination Act would reduce his SS by about 50%, but we can collect all of mine as long as I live...correct? We were not aware that he would not be able to collect my SS when I die...is this really true!!! :-( ======================================= MODERATOR'S COMMENT: Please trim the post to which you are responding. "Trim" means that except for a FEW lines to add context, the previous post is deleted. Posted by Ron Rosenfeld on October 12, 2007, 5:00 am >I also calculated that IF I had placed the monies received from S.S. into a CONSERVATIVE safe investment (5%), from age 62 to 65, and not used it for living expenses UNTIL I reached age 65, that I would have had to live PAST age104 before I realized a difference in income. I did similar calculations and began taking SS early. In the same AARP Bulletin, there is another article on when to start taking SS (http://tinyurl.com/23plbj). One of the comments made by that author as a reason to start early is: "You don't need the money. You are comfortable financially, so you plan to invest your benefits." In my case, it allowed me to "not withdraw" funds from my Roth IRA. So for the last three years, during which I've gone from age 62-65, I've averaged 16.2% per year in that account. --ron Posted by Elizabeth Richardson on October 12, 2007, 2:00 pm : quoted-printable I can only relate my personal position. When I approached age 62, I = did the research, and crunched the members. I missed this the first time. Which members were you crunching? Those = working for social security? Elizabeth Richardson ------=_NextPart_000_001F_01C80CB6.EABA05A0 Content-Type: text/html;         charset="big5" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; charset=3Dbig5"> <META content=3D"MSHTML 6.00.2800.1555" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV><FONT face=3DArial size=3D2></FONT>&nbsp;</DIV> <BLOCKQUOTE=20 style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; = BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px"> <DIV>"Cal" &lt;<A=20 wrote in=20 message <A=20 = rzxwpPanZ2dnUVZ_jqdnZ2d@comcast.com</A>...</DIV> <DIV><FONT face=3DArial size=3D4></FONT><FONT face=3DArial size=3D4>I = can only relate=20 my personal position. When I approached age 62, I did the research, = and=20 crunched the members.</FONT></DIV> <DIV><FONT face=3DArial size=3D4></FONT>&nbsp;</DIV></BLOCKQUOTE> <DIV><FONT face=3DArial size=3D2>I missed this the first time. Which = members were=20 you crunching? Those working for social security?</FONT></DIV> <DIV><FONT face=3DArial size=3D2></FONT>&nbsp;</DIV> <DIV><FONT face=3DArial size=3D2>Elizabeth Richardson</FONT></DIV> <DIV>&nbsp;</DIV></BODY></HTML> ------= Similar Threads Posted Social Security questions September 5, 2007, 5:08 pm Social Security Redux September 24, 2007, 2:35 pm Social Security Rate of Return January 29, 2007, 5:47 pm SOCIAL SECURITY THREAD CLOSED February 2, 2007, 1:42 pm Social Security Spouse Benefit April 26, 2007, 10:42 am interesting way to game social security February 18, 2008, 11:22 am Social Security survivors benefit April 30, 2008, 7:19 pm future Social Security benefits and taxes December 7, 2006, 10:11 am Optimizing Social Security Benefit withdrawal February 9, 2007, 12:34 pm Thread Closed (was: Social Security Rate of Return) February 2, 2007, 8:48 am