Hello Larry,

I’m trying to help out some friends. John turned 66 last month and his PIA is $2600. His wife, Mary, turns 62 this month and her PIA is $260. John wants to wait till 70 for delayed retirement credits.

I gave them the following advice: Mary files for her own benefit at 62 and John immediately claims his spousal benefit until he turns 70 at which time he claims his own benefit.. Then Mary claims a spousal benefit on Johns record.

Is there anything wrong with my advice? Is there a better scenario for them? And ... would Mary’s spousal benefit be $1300 or $1235?

Hi,

I certainly wouldn't argue against the advice you gave them. As to whether or not there is a better overall strategy, I would suggest running the maximization software available on this website.

The strategy you suggested will likely play out as follows:
Mary starts out at age 62 with a reduced benefit of about $195 (i.e. $260 x .75). John files for spousal benefits only and receives about $130 (i.e. $260/2) per month. John then switches to his own record at age 70, at which time his monthly rate should be about $3432 (i.e. $2600 x 1.32). Mary files for an excess spousal benefit, which would amount to about $1040 (i.e. $2600/2 - $260). This excess spousal benefit would then be added to her own reduced benefit for a total benefit of about $1235.

If John dies first under the above scenario, Mary's total benefit would increase from $1235 to $3432.

Best, Jerry