Hi Larry,

I have been reading all your responses to various questions but none never seem to match my situations., so here goes. I am 61 years old and my wife is 64. My wife retired when she turned 62 and started to collect her social security and pension. I am planning to retire when my wife reaches her full retirement age which I believe is 66 and 2 months. We chose this because if I understand the rules at that point she would be eligible for one half of my full retirement benefit regardless of the fact that I am retiring early, Do I have this correct?

More about me. I was laid off about 2 year ago and had to take a significant cut in salary. before I was let go my estimate for my social security at my full retirement age was about $2900 a month. Since then I noticed that the number has gone down about $100. My guess is that my rolling 35 year average will now decrease. Me second question is would it be smart to file and suspend my social security at 62 to prevent my benefit from continuing to decrease.

A little more about our retirement. We both have pensions and larger than average IRA's (former 401k) so with social security we should be quite comfortable in retirement even if I retire early.

Thank you for any help with these questions.

Al

Hi Al,

If your wife first becomes eligible for spousal benefits at her full retirement age (FRA) or later, then her spousal benefit rate will be unreduced even if you file before your FRA. But, that doesn't mean she'd receive half of your full retirement age rate. Since your wife filed for her own benefits at age 62, she'll be stuck with that reduction even after she starts drawing spousal benefits.

For example, say Mary files for her benefits at age 62. Mary's FRA rate, or primary insurance amount (PIA), is $1000, but she receives a reduced rate of $750. When Mary reaches FRA her husband files for his benefits with a PIA of $2600. Mary's unreduced spousal benefit amount would be calculated by subtracting her PIA from 50% of her husband's PIA, which in her case would be $300 (i.e. $2600/2 - $1000). That amount would then be added to her own reduced rate of $750 to give her a combined rate of $1050 (i.e. $750 + $300).

You can't file for and suspend your benefits at age 62, nor would that lock you into a higher rate. You could file for reduced benefits at age 62, but you couldn't voluntarily suspend your benefits until you reach FRA. And, if you voluntarily suspend your benefits then any spousal benefits that your wife qualifies for on your record would also be suspended. Furthermore, if you file for benefits anytime prior to FRA and continue working, both your benefits and your wife's spousal benefits could be subject to full or partial withholding based on Social Security's earnings test (https://www.ssa.gov/planners/retire/whileworking.html).

Your PIA will be calculated based on an average of your highest 35 years of wage-indexed earnings (https://www.ssa.gov/pubs/EN-05-10070.pdf). You can't lower your PIA by stopping or reducing your work and earnings. If your earnings in a current or future year are lower than in all of your previous highest 35 earnings years, then that year simply wouldn't be used to calculate your benefit rate. If your estimated PIA has gone down recently, it's because your previous estimate was based on projected future earnings that didn't materialize.

Another factor that you need to consider is that if you die before your wife, she would then be eligible for the higher of her own benefit rate or your benefit rate. So, if you file for reduced benefits your wife would be stuck with that reduced rate as a widow assuming that your reduced rate is higher than her own rate. On the other hand, if you waited until age 70 to start drawing your benefits your wife could then receive your full age 70 rate as a widow. You and your wife have many possible options to consider, so you should strongly consider using our software (https://maximizemysocialsecurity.com/purchase) to compare all of your options so that you can determine the best overall strategy for claiming your benefits.

Best, Jerry