Taking SS early (62)

[DLSJR]

This has been very interesting, Thank You to those who’ve contributed knowledge on this important topic. I hit FRA next month and plan on starting to take SS now that I’ve hit the point where I won’t be penalized for continuing to work and earn income. I’ll probably continue working full time for another 3-5 years as it’s helps fund my very expensive hunting addiction. Learning that non-employment income doesn’t count toward the $205,999 threshold is great, I didn’t know that.

Question… As I understand it from comments here, if I’m at full retirement age and my wife passes, I’d be eligible for spousal benefits, but I’m not real clear on what I’d be limited to. For me, this is important as my wife suffers from a serious long-term illness and is likely to pass in the next year or so, at either 63 or 64. I’m trying to wrap my head around that piece so that I get it right. Can anyone shed a bit more light on this aspect of Spousal benefits?

 

[KnightExtreme]

Good stuff. But damn hard to read and comprehend.

Remember, it's not insignificant to wait an extra 3 years after full retirement age (FRA) to start SS. You get almost 30% higher payments for the rest of your life.

MAX WIFE INCOME:

While we are both alive, I and my wife MUST wait until FRA before taking SS for her to receive 1/2 of my FRA benefits. I can make more if I wait until age 70, but she can never make more than half of what I would make if I take SS at 67---while I am alive. She WILL make less if either of us start SS before FRA.

If I die, my wife will get whatever I am getting at that time. So if i wait until age 70 and then die before her, she'll get my full SS payment, including the full extra ~30% that I earned by waiting till age 70 to collect SS.

Not sure you mean not waiting? What I was advised if you Can wait till 70, you can get 30% more from SS. I know my brother lost 25% because he did take it at 62 after another brother and he that had small business and that other brother got brain canecr and passed. So because it was only him he could not keep the business going well. Yet had bills to cover with his family. I am single never married so I have no other means / spouse support from SS income. So I opted to wait for me, it was a no brainer to get a little more from the extra 4 month waiting that and my milltary service gives me a few more dollars. (which SS advised I would not see that increase till 2026) But I never made big wages so I am under the 2150.00 with having Medicare subtracted now, (a month then take out Part B & Part D Medicare Costs though I did stop working at 64.5) I need health insurance, once I hit 65 I went on Medicare. But those costs including what you pay direct to Medicare (Admin Fees/CMS) ( I was unaware of having to also pay that $) It was not easy stopping most of my activites to cover these costs for 2 years but I did. But these costs annually increase (so the so called cola does not cover these increases much less the other increases for food, property taxes, home and auto insurances and then utilities & city services as they all have increased including the cost for simple water has gone up $20.00 over the last 2 years! And this month was informed that my internet service provider will increase $5.00 more which is closing in on $100.00 a month.) I do have a very small retirement account but that is more for emergencies like home repairs and unexpected / unforeseen cost increases. But I am making it (surviving). Though my deer hunting is not as much as liked... But at least I still have my vacant hunting property which gives me something to do... (So it depends on the person as others I know have yet to go on Medicare using their spouse's health insurances so they have some extra coin and then using VA for some medical needs.)
I just try and keep busy Now...

 

[Tenstrike]

This has been very interesting, Thank You to those who’ve contributed knowledge on this important topic. I hit FRA next month and plan on starting to take SS now that I’ve hit the point where I won’t be penalized for continuing to work and earn income. I’ll probably continue working full time for another 3-5 years as it’s helps fund my very expensive hunting addiction. Learning that non-employment income doesn’t count toward the $205,999 threshold is great, I didn’t know that.

Question… As I understand it from comments here, if I’m at full retirement age and my wife passes, I’d be eligible for spousal benefits, but I’m not real clear on what I’d be limited to. For me, this is important as my wife suffers from a serious long-term illness and is likely to pass in the next year or so, at either 63 or 64. I’m trying to wrap my head around that piece so that I get it right. Can anyone shed a bit more light on this aspect of Spousal benefits?

I am sorry to hear of your wife's medical condition, best wishes with that. The way I understand this issue is that upon the death of your spouse you would receive a $255 one time death benefit and the larger of the two SS payments. if your FRA monthly payment is larger than your wife's you would receive the larger of the two, you do not receive both. This is my understanding and you should seek expert advice.

 

[texag10]

This has been very interesting, Thank You to those who’ve contributed knowledge on this important topic. I hit FRA next month and plan on starting to take SS now that I’ve hit the point where I won’t be penalized for continuing to work and earn income. I’ll probably continue working full time for another 3-5 years as it’s helps fund my very expensive hunting addiction. Learning that non-employment income doesn’t count toward the $205,999 threshold is great, I didn’t know that.

Question… As I understand it from comments here, if I’m at full retirement age and my wife passes, I’d be eligible for spousal benefits, but I’m not real clear on what I’d be limited to. For me, this is important as my wife suffers from a serious long-term illness and is likely to pass in the next year or so, at either 63 or 64. I’m trying to wrap my head around that piece so that I get it right. Can anyone shed a bit more light on this aspect of Spousal benefits?

Tenstrike is correct. If you delay claiming your own benefit, (without knowing more of your situation, this could be very much worth doing given you will continue working) you could claim a survivor's benefit upon your wife's passing. This would let you receive her PIA since you are FRA, then max your benefit by delaying until 70.

 

[Mike Islander]

Not sure you mean not waiting? What I was advised if you Can wait till 70, you can get 30% more from SS. I know my brother lost 25% because he did take it at 62 after another brother and he that had small business and that other brother got brain canecr and passed. So because it was only him he could not keep the business going well. Yet had bills to cover with his family. I am single never married so I have no other means / spouse support from SS income. So I opted to wait for me, it was a no brainer to get a little more from the extra 4 month waiting that and my milltary service gives me a few more dollars. (which SS advised I would not see that increase till 2026) But I never made big wages so I am under the 2150.00 with having Medicare subtracted now, (a month then take out Part B & Part D Medicare Costs though I did stop working at 64.5) I need health insurance, once I hit 65 I went on Medicare. But those costs including what you pay direct to Medicare (Admin Fees/CMS) ( I was unaware of having to also pay that $) It was not easy stopping most of my activites to cover these costs for 2 years but I did. But these costs annually increase (so the so called cola does not cover these increases much less the other increases for food, property taxes, home and auto insurances and then utilities & city services as they all have increased including the cost for simple water has gone up $20.00 over the last 2 years! And this month was informed that my internet service provider will increase $5.00 more which is closing in on $100.00 a month.) I do have a very small retirement account but that is more for emergencies like home repairs and unexpected / unforeseen cost increases. But I am making it (surviving). Though my deer hunting is not as much as liked... But at least I still have my vacant hunting property which gives me something to do... (So it depends on the person as others I know have yet to go on Medicare using their spouse's health insurances so they have some extra coin and then using VA for some medical needs.)
I just try and keep busy Now...

For all my discussions, I mean wait till 70 if you are healthy. Or if you are going to die, also wait till 70, so that your wife gets what you earn at 70 the rest of her life.

 

[49ereric]

For all my discussions, I mean wait till 70 if you are healthy. Or if you are going to die, also wait till 70, so that your wife gets what you earn at 70 the rest of her life.

I thought the spouse survival benefit maxes out at FRA?

 

[Habitat#1]

What about a person selling a business and has a decent 401K saved up?I would be getting a annual payment for 8 years, do I have to pay the 1.00 for every 2.00 earned, I read that somewhere

 

[Mike Islander]

What about a person selling a business and has a decent 401K saved up?I would be getting a annual payment for 8 years, do I have to pay the 1.00 for every 2.00 earned, I read that somewhere

Selling your business or taking 401(k) payments won’t affect your Social Security, because the 1 to 2 calculation only applies to wages, not assets (even financial). You'll get your "full" SS check starting at 62 without subtracting any money, but it will be a much lower check for life than if you start at 67 or 70. Starting at 62 gives you the smallest check; waiting until 70 gives you the largest — about 75% higher.

• If you start Social Security at 62, your monthly check is about 30% smaller than if you wait until full retirement age (67).
• If you wait until age 70, your benefit grows about 8% per year after 67 — roughly 24% more than at full retirement age, and about 76% more than starting at 62.
• Example (typical case):
  • At 62: ≈ $2,000 per month
  • At 67: ≈ $2,900 per month
  • At 70: ≈ $3,600 per month
• The “$1 for every $2” rule applies only before full retirement age (67) and only to earned income (wages or self-employment).
• Business sale proceeds or 401(k) withdrawals are not counted as earned income, so they don’t reduce your Social Security benefits.

If you have a spouse and you die, she will get your check, whatever it is at the time of your death. So if you start at 62, she'll get a low check (like the $2000 example). If you start at 70 and then die, she'll get the highest check, about $4000 like in the example...for the rest of her life. This is one of the most important reasons that I plan to wait for 70. I'll make great income until then, and if anything happens to me, my wonderful wife will get a decent bit more each month beyond our retirement.

 

[Habitat#1]

So even if not working I can choose at what age I start collecting?

 

[Mike Islander]

So even if not working I can choose at what age I start collecting?

You do not need to be working when you start collecting Social Security. You can start collecting Social Security anytime from age 62 onward — but the age you start affects how much you get:

• Age 62: earliest possible, but you get a reduced benefit (about 25–30 % less) for life.
• Full Retirement Age (FRA): about 66–67, depending on birth year — you get 100 % of your calculated benefit.
• Up to age 70: if you wait past FRA, you earn delayed retirement credits (≈ +8 % per year) until 70, the maximum age for increases.

Remember, though, that you have to have worked for 10 years to get ANY benefit, and the benefit is based on your average wage for the highest 35 years of your life. That's another good reason to wait for 70 if you are working and making the most money of your career. SS recalculates your base rate per the increased average wage for the HIGHEST 35 years of work. Your check gets higher because your average wage continues to rise.

• Once you’ve earned at least 40 credits (≈ 10 years of covered work), you’ve permanently qualified for retirement benefits.
• After that, you can stop working entirely and still claim benefits any time from age 62 onward (or later for a higher amount).
• When not working, your monthly payment is then based only on your past earnings record, not whether you’re currently employed.

 

[j3h8]

If I’ve got maximum allowable SS benefits, have far more than the 20 credit, but stop working at 50. Would that reduce my benefits seeing as I’ll have 30 years employed not the 35 years for the past calculation, or would they remain maxed?

 

[DLSJR]

Tenstrike is correct. If you delay claiming your own benefit, (without knowing more of your situation, this could be very much worth doing given you will continue working) you could claim a survivor's benefit upon your wife's passing. This would let you receive her PIA since you are FRA, then max your benefit by delaying until 70.

I just learned something valuable as I’d never thought of that strategy. Thank you!

 

[Mike Islander]

If I’ve got maximum allowable SS benefits, have far more than the 20 credit, but stop working at 50. Would that reduce my benefits seeing as I’ll have 30 years employed not the 35 years for the past calculation, or would they remain maxed?

Yes, it will lower your monthly check, because they'll average you income over 35 years, 5 of which will be zero earnings. But if you made good money, it won't be that much lower, maybe 10% lower check.

 

[texag10]

I thought the spouse survival benefit maxes out at FRA?

There are 3 possibilities for survivor's benefits:
1. Equal to deceased's PIA. This would be used for someone who passed away before claiming their own SS, but FRA or younger.
2. What the deceased was receiving at time of death. Used when the deceased has claimed their own benefit, could mean less than PIA if they started early, or more than PIA if they delayed.
3. What the deceased would have been eligible for at their death. This is used if someone was delaying, but hadn't claimed yet. For example, husband is waiting until 70 to max benefit, but passes away at 69.

Then you have the age the survivor claims impacting the benefit too. They can start as early as 60 (~70.5% of the survivor amount) up until FRA or later (100%).

I just learned something valuable as I’d never thought of that strategy. Thank you!

You're welcome! Feel free to PM me if you have more specific questions. I'm on parental leave for another month and am missing helping people with financial planning.