What Is The Best Strategy In Our Case?

Jan 20 2017 - 6:30am

My husband lost his job December 2014 at 61 yrs old and was diagnosed with major depression and schizoid personality disorder (he was a software engineer) and has been unable to find work, finally giving up. My daughter turned 14 yesterday. I work full time as an accounting auditor. We bought your software and did the calculations and then they changed the SS laws. We got your new book and read it, but feel our situation is too complex to make a decision that will last a lifetime on our own. Should we fight hard for disability for him and expect to get significant payments for our daughter to make up for the deficit of taking pre-age 70? We have considerable 401K amounts but not enough to feel safe taking SS reduced payments now. The worst part is she's gifted and will be needing college tuition soon and how do we best manage our income to qualify for financial aid? We originally planned to both work till 70 but he is showing early signs of his dad's Alzheimer's and I am only 53 but just had a minor stroke this year (stress?). It ends up being too many variables. Does my salary of 74,000 disqualify us from getting payments for our daughter or me from getting spousal benefits to care for her if he retires or gets SSI? By the end of this year we will have exhausted our non-401K savings and we've tightened our belts as much as we could. The family health insurance payments alone are well over $10,000. We are willing to pay for a more comprehensive assessment and provide all needed details, if it is within our means, because we are extremely impressed by your expertise on SS. Thank you, Laura & Tom

Hi Laura & Tom,

I'm sorry to hear about the health problems that both of you are having.

The best scenario would be if Tom gets approved for Social Security disability (SSDI) benefits. That way, he could start drawing his full retirement age rate early, and your daughter could receive child benefits on his record. Laura's earnings would have no bearing on Tom's ability to draw SSDI, nor would they affect your daughter's eligibility.

If Tom's claim for disability benefits is disallowed, he can file an appeal (https://www.ssa.gov/pubs/EN-05-10041.pdf). A relatively high percentage of disallowed claims end up being approved at the Hearings level of appeal, at which point you can appear in person before an administrative law judge responsible for making the determination on your case.

If he can't qualify for disability benefits, having Tom file for reduced retirement benefits so that your daughter can get child's benefits is certainly something to strongly consider. In fact, he could file for reduced retirement benefits while his claim for disability is pending, and if he ends up being approved for disability his benefit rate would be adjusted back up to his full retirement age rate. And, he would still have the option of suspending his benefits between ages 66 & 70 in order to receive delayed retirement credits. The only potential downside is that he runs the risk of being stuck with a percentage reduction for any months that he receives reduced retirement benefits if he doesn't end up being approved for disability benefits.

You may want to rerun the maximization software to see what it recommends with regard Tom's options on filing for reduced retirement benefits.

Best, Jerry