My wife and I both retired early. My birthdate is Oct-1955, hers is Mar-1954. My estimated benefit at FRA is $2,700/mo and my reduced benefit at 62 yrs old is $2,000. Her estimated FRA benefit is $700 and reduced 62 yr old benefit is $540 (this is reduced since she taught public school for a portion of her career). We desire to start taking one or both benefits ASAP, but we have some flexibility to wait if the increased payments make it worth waiting for. Should she 1) Start her benefit now and then take her spousal when I file at 66, or 2) Wait and file for her benefit when she turns 66 and then take her spousal when I file at 66? Or, does it make sense for her to take her benefit at 66 and for me to take my spousal benefit for two years prior to me turning 66 and filing?

Hi,

You and your wife were both born after January 1 1954, so you weren't grandfathered under the new law passed by Congress last year. As a result, you no longer have the option of applying just for spousal benefits at full retirement age, then switching to your own account at age 70.

Your wife's full benefit amount is well under one-half of yours, so there would be no advantage for her to wait past her full retirement age to apply. If she files before her full retirement age, her benefit will be permanently reduced for age. I'll give you an example based on the amounts given in your question.

Say your wife files now and receives $540/mo. She will not be deemed to apply for spousal benefits until you file, so let's say that she'll be full retirement age when you apply. Her spousal benefit would be calculated by taking half of your unreduced benefit, or $1350 (i.e. $2700/2), then subtracting her full retirement age benefit of $700. This would result in an excess spousal benefit of $650, which would be added to her own reduced benefit of $540 for a total benefit of $1190. If she waited until full retirement age to apply for both benefits instead, she would receive a full half of your unreduced benefit amount, or $1350.

Keep in mind that the above example is based on the estimates you furnished, so the actual amounts will no doubt vary somewhat. There are numerous different filing strategies that you could employ, so you may wish to run the maximization software available on this website in order to make your options clearer.

Best, Jerry