IMO, the decision on when to take SS depends solely on how reliant you will be on those payments, not on how long you’ll live. If SS will provide the main or a significant chunk of your retirement income, it makes sense to maximize that amount. If SS is a less or unimportant component of your retirement income, take it whenever you want.
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Not on this family where I am subject to the offset and windfall provisions. I can never collect SS based on my husband’s earnings.
Our financial advisor looked at our savings which we specifically beefed up prior to DHs retirement, and suggested he wait as long as possible to collect SS. He will start on his 70th birthday. He was working g until recently.
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Same here. My teaching pension is the main source of our retirement income. MY SS is much reduced due to WEP and GPO will keep me from a survivor benefit from my wife. Her SS is modest, but doesn’t support us. So we took our SS at age 63.
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How does the teacher’s pension work if your wife outlives you? Are there any survivor benefits?
My mom is subject to WEP and GPO and receives none of my dads SS. They apparently were unaware of this.
I’m a little over cautious about what will happen if I outlive my husband
In my state, we elected to have DH get 1/2 of my pension should he outlive me. The reduction in monthly benefit was not huge.
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In my state my pension is reduced by about 5% so that my wife gets 2/3 of my pension if I die first. About 20 yrs ago, the reduction was in the area of about 11-15%, but it was reduced when it was deemed that the fund could support that reduction–investments were paying off well.
If she dies first, then the 5% reduction is eliminated.
I will also state that there are no public monies in our pension system, it is entirely self-funded. Teachers pay in 11% to the plan. We are 95% funded, as the last 5% is supposed to be chipped in by the state, but they never do.
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Seems unfair that a person can elect to get a portion of a pension that doesn’t pay into social security but the opposite is true for the other spouse. Who did pay into social security
I understand that’s the law and that’s the rules but it is certainly imbalanced. I do wonder what the gender difference is.
I know there is a segment trying to change the GPO and WEP.
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@deb922 i sent you a message so as not to go off topic or touch on political issues.
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The decision for me was the time value of money. By having the cash flow, one can have more left in investment choices. Some people are very much lured by the ‘guarantee’ of the increase of SS from one’s full SS age until age 70. To me, it is ‘guaranteed’ money, but one has to deal with the unknown variable of length of one’s life. So to me it is a lure selling security of future monthly payment amounts but a bit of ‘forgetting’ the downside of maybe not really realizing the full expectation due to a shorter life.
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Correct, but the proper discount rate is not what your portfolio advisor can earn, but a similar investment. (Finance 101)
And don’t forget that the SS actuary tables are based on a single life, not a married couple, where the odds of one spouse living into their 90’s is increasing every year.
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That article was excellent for hitting on points for people to think about.
We do have a small portion in our portfolio in bonds, only because certain investments that our financial advisor chooses has some bonds in that fund’s portfolio.
And the last line in the article was the nail I hit on, in that my lower SS amount had it be less advantageous for delay.
One financial planning class instructor gave example of why he is working past age 62, deferring SS. He is much older than his stay at home wife, who has very little SS of her own. Also his health issues and family history make it likely that wife will outlive him. So he wants to maximize potential for her spousal (half) payments.
Of course if a couple needs SS payments at retirement, as is often the case, then the decision point is retirement age.
We met with 3 different financial advisors before we retired. All 3 said wait until 70 to collect SS, unless you really need the money.
Assuming you have other money sources available, they suggested you draw from them as necessary between retirement and 70, and then draw less from them once you get to 70.
In my family mom and 3 siblings have all died at 70 or before, so I’m not sure what I will do. I will probably let it grow until at least my full retirement age (whatever the one @67 is called).
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If I had joined my state’s teacher pension plan right out of college, I would have never paid into SS (except working part time while a student, would not be close to the 10 yrs required) during my entire teaching career, and would not collect a cent from SS.
It is precisely because I worked in jobs paying into SS in excess of 10 years that I can collect SS, but in my state (one of 17, I believe), my SS is reduced.
It is fair. Those teachers who do not ever pay into SS do not collect from it. Those who do pay in can collect.
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Yes. I collect 1/3 of what my benefit would have been. It covers my Medicare bill. And I worked for seven or eight years in states where I did contribute to SS…plus all of my HS and college jobs.
This subject could be its own thread on the political forum.
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The whole thing is so confusing to me. Dh has a pension and will collect SS because he is in the rare district in out state that contributes to SS. But I am still confused about WEP. Does it apply to us or not? If it does, WTH does that even mean? Every time I think I understand it, I realize that I really don’t.
WEP is Windfall Elimination Provision. In 17-ish states, a teacher pension is considered double-dipping vis-a-vis SS, and if one qualifies for SS, it is much reduced.
GPO is Government Pension Offset. It applies to survivor benefits. As someone with a teachers pension, if my wife pre-deceases me, I do not collect a survivor benefit from her SS.
The confusion is because in some states a teachers retirement is a combination of SS and a pension. In others, like my state, teachers do not pay into SS and receive a pension w/o SS. UNLESS, you’ve worked enought quarters (40) paying into SS, then you get a much reduced SS each month.
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To add to your post, GPO applies to spousal as well as survivor benefits. Also, unless you’ve paid into social security for 30 years, WEP will decrease significantly your benefit amount. Between 20 and 30 years of social security employment the amount deducted by WEP gradually decreases. Here’s a link to the ss page which explains it better for anyone who wants more info on this.
As TayTay sings, “It’s me. Hi. I’m the problem. It’s me.”
In other words, I’m sure what you wrote made sense, pero, no comprende. Really, it’s me.
Me too! All I got out of it was how to google the acronyms and determine that we aren’t affected in VA. Big phew!