My friend, who worked very few years at a low rate, took SS at age 63. She gets about $300/mo. When her husband gets to 66 yr, 4 months and claims his retirement, she’ll switch to half his amount, which will be the max (I think his is $3400/mo?) so she’ll get quite a raise.
And she’ll spend it all on jewelry.
So your friend’s $300 at 63 is based on her work record. One can’t collect SS based on a spouse’s work record until that spouse files. Since your friend took the $300 before her full retirement age (FRA), your friend was penalized approx. 20% of the amount that she could have received at her FRA. When friend’s husband retires, friend is entitled to what she would receive at her FRA or half of her husband’s benefit, whichever is greater, in this case half of 3400 or 1700. But it’s my understanding that the penalty for taking benefit at 63 will be baked into calculation, meaning friend will get $1700 minus 20% ($340) or $1360. So yes still quite a raise.
The real kicker is that when as in above higher earning spouse dies, you friend would be able to step up and claim her deceased husband’s full retirement benefit of $3400, but would only get double her $1360 or $2720.
I don’t think that’s quite right about survivor benefits. I think they’re reduced if you claim survivors bene’s before your full retirement age but I don’t think claiming your own benefit ‘early’ effects the survivor benefit if by the time you claim the latter you’ve reached full retirement age.
My friend getting her $300 is not in very good health (never has been) and even though her husband is 2 years older, it isn’t very likely she’ll outlive him. That’s why she took it early even though they don’t need the money (she just spends it). We all joke that he’s The Picture of Dorien Gray because he looks exactly the same, year after year.
When I made my decision to start taking early, I figured out that I’d be paid almost $100,000 in the 4.5 years of ‘early start.’ My payment is about $500/mo less than it would have been at 66 yrs/ 8 months, and I think I figured the break even mark at about 72 years. I thought it was worth it to have the money now.
That’s my thinking too, @twoinanddone
Open Social Security is a great calculator for figuring out how various claiming strategies will affect you. SSA website is actually pretty helpful, too. When you go on SSA’s site, you can update their information to show what your payments will be at various ages - but be sure to set it to $0 annual income if you will be retired-but-not-claiming after a certain age. If you find your spouse’s PIA, you can plug it in & determine payment under various scenarios.
I might regret it when I’m 73, but I’ll show them and just die first.
For me, we wanted additional cash flow at the time and I knew we would be doing the obligatory IRA and 401(k) withdrawals down the road. We wanted to leave those accounts intact as long as possible.
As a general note, I have found it worth running a few scenarios for social security benefits plus RMD(s). With two SS incomes, we wanted to understand some of the tax implications - wrt percent of SS subject to federal tax.
Our decisions were made a few years back with all ramifications considered.