So confused about Social Security

[sun starved Gayle]

Why, why is it so hard to get information from them ?

My question:

Can I retire at 62, draw benefits from my own SS account, then switch to drawing spousal benefits when my husband retires several years down the road ? Is there any penalty for doing this ?

 

[SmithOp]

Short answer is No, they closed that loophole with recent legislation. If your husband dies before you then you get his amount only as survivor.

I can recommend this book if you want to learn all there is to know about SS.

https://www.amazon.com/dp/B01C7U3FLQ/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1

If he was born before Dec 31st, 1953 then he can get spousal based on yours at his FRA until he files his own (at 70 the max).

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[Talent312]

My DW gets more than I do becuz she worked well-past her FRA, while I retired at 62.
But even if I was eligible for spousal benefits, it'd still be less that what I'm getting now.

.

 

[sun starved Gayle]

Thanks for the replies, I have ordered the book.

 

[breezez]

I have worked since 15. Now 48, feel I can retire in about 7-8 years if all goes well, but want to hold off till 65 to get SS. My biggest concern with retirement before Medicare eligibility is health insurance, since the ACA, options have gone to almost nothing, while deductibles and costs have skyrocketed.

If you retire early how does not working the last few years before collecting effect what your qualified to collect?

 

[PigsDad]

If you retire early how does not working the last few years before collecting effect what your qualified to collect?

Others can correct me, but I believe as long as you have 35 years of income, having no income the last few years before collecting will not affect your benefit. However, if you continued to work, those last year's income would replace some of the lower income years in your 35 year history, so your benefits could increase. Hope that made sense.

Kurt

 

[Talent312]

Only your 35 highest-earning years count. To have 35 years of earnings at age 62, you must have reported earning since age 27. Otherwise some of those years will be counted as -0- ... a situation you can correct by working past age 62.

You can work as long (or as short) as you want, and your Social Security benefits are still based on your 35 highest-earning years (even if some of them are -0-).

<clear as mud?>

.

 

[Talent312]

... My biggest concern with retirement before Medicare eligibility is health insurance...

My employer-based insurance would'a kept me working until 65, except that I was able to tag onto it as a retiree, albeit at a much higher premium (subsidized vs. unsubsidized). Fortunately, I retired my monthly mortgage payment at the same time.
.

 

[Luanne]

My employer-based insurance would'a kept me working until 65, except that I was able to tag onto it as a retiree, albeit at a much higher premium (subsidized vs. unsubsidized). Fortunately, I retired my monthly mortgage payment at the same time.
.

Same here. I retired at 62, dh (who had been covered under my insurance) was 67. I got retiree benefits at that point, which dropped my husband (or maybe it was just cheaper for him to go to a Medicare supplement plan). I could have also kept my daughters on my plan, but again it was cheaper for them to get separate policies.

 

[bbodb1]

Pardon my dropping in here but this thread is timely for me in that I am looking at retiring in 7 years. One aspect I am very uncertain about is insurance for those retired. I know there is Medicare but with all I hear about its shortcomings, it seems likely Medicare would be insufficient.

How are any of you covering your insurance needs in retirement if I may ask?

 

[Luanne]

Pardon my dropping in here but this thread is timely for me in that I am looking at retiring in 7 years. One aspect I am very uncertain about is insurance for those retired. I know there is Medicare but with all I hear about its shortcomings, it seems likely Medicare would be insufficient.

How are any of you covering your insurance needs in retirement if I may ask?

First of all, when you turn 65 you have to sign up for Medicare Part A. If you still have private insurance through an employer you don't need a supplement at this time.

When you are no longer employed, then you need to sign up for Medicare Part B. At that time you can decide whether you want a Medicare Supplement plan (also known as Medigap) or a Medicare Advantage plan. You don't have to have either of these, but unless you are extremely rich and can pay for your healthcare out of pocket, you will want to. Some employers will offer a Medicare supplement or Advantage option to you. Mine did, but it was cheaper to go elsewhere.

Before I turned 65 dh and I went in and talked to our State Farm agent. He had sent me a letter offering a meeting to discuss Medicare plans. I didn't buy my supplemental plan through him (I went with the cheapest one I could find as they all have to provide the same coverage) but I learned a lot about what the different options were.

I am actually paying more now between what is taken out of Social Security for Medicare and my Medicare supplement plan that I did for insurance while I was working. However my employer also offers an HRA if I purchase either my Medicare supplement OR a prescription coverage through them. I did purchase the prescription coverage and by doing that I get $2600/year and my dh gets $1500/year. I've been informed this amount is going to be looked at and my belief is it will either be lowered, or eliminated. But currently that amount covers Medicare and the supplement at least.

This is all based on my knowledge and my own personal experience.

 

[bbodb1]

Thank you for that info, Luanne.

 

[Luanne]

Thank you for that info, Luanne.

And don't worry, before you turn 65 you'll be bombarded with information in the mail about Medicare.

 

[clifffaith]

I'll start taking SS in January when I'm 62. Cliff is 18 years older so we figure we might as well take mine now because who knows when he'll kick the bucket and I'm left with just his (his dad lived to 93, albeit without his faculties after about 85, so I'm hoping Cliff gets to 95 intact). The problem as someone else pointed out is medical insurance for the next three years. I'm paying $814/mo right now and we are hoping to limp along with old customers calling us and the odd new customer finding us in the yellow pages. Up to age 65 I can still sell draperies, even if I have to limp in when my back is at its worst. But don't want Cliff on ladders as we go along (although he does much better on the ladder than he does on the floor trying to get back on his feet after working on something on the floor) and so hiring an installer will cut into what little bit I can bring in.

 

[rapmarks]

Pardon my dropping in here but this thread is timely for me in that I am looking at retiring in 7 years. One aspect I am very uncertain about is insurance for those retired. I know there is Medicare but with all I hear about its shortcomings, it seems likely Medicare would be insufficient.

How are any of you covering your insurance needs in retirement if I may ask?

Medicare pays eighty percent, you usually buy a supplemental insurance to cover most of the rest. I am not sure which shortcomings you have heard.


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[Talent312]

How are any of you covering your insurance needs in retirement if I may ask?

In a nutshell --

Pre-65, some of us kept our employer-provided plan (retiree class may have a higher premium).
... Mine went from $30/mth (subsidized) to $700/mth (unsubsidized). [BTW, drugs are included.]
... OR You can do "COBRA" for 18mths, but then will need to buy thru the Obamacare or privately.

At 65, you need to sign up for Medicare (if you wait there are penalties). Choices:
(a) Original, with an optional supplement plan that covers deductables + copays.
.... You will also need a medicare-approved drug plan (search on medicare.gov)
(b) An "Advantage" Plan, that may include drugs + dental, but have a limited network.

... Either way, trying to ditch Medicare entirely would be too costly for words.
.

 

[VacationForever]

I have worked since 15. Now 48, feel I can retire in about 7-8 years if all goes well, but want to hold off till 65 to get SS. My biggest concern with retirement before Medicare eligibility is health insurance, since the ACA, options have gone to almost nothing, while deductibles and costs have skyrocketed.

If you retire early how does not working the last few years before collecting effect what your qualified to collect?

I retired at 53 and I will have to pay for health insurance through the Exchange and/or individual market for 12 years. One can only hope that early retirees get some reprieve in a few years time, whether it is universal health care or the ability to buy into Medicare at even say up to 5X of Medicare rate, depending on age. To determine SS benefit, SS uses 35 years of highest contribution amount, adjusted to net present value (aka wage inflation) for each year.

I only put 18 years into SS but was at the maximum rate for most of the years, which means I have 17 years with zero contribution. Because my PIA is high, the SS office clerk confirmed that there is no benefit in claiming SS spousal benefit regardless of whether I am 62 or full retirement age because my PIA is higher than half of my spouse's PIA. I intend to collect SS at 62.

Yes, if you retire early, plan to set aside $ for health insurance and living expenses.

 

[Conan]

Interesting to me the large number of people who plan to retire early, at age 62 or even younger.

How confident are you that your savings will last a lifetime (or two lifetimes with your spouse)?

There are lots of retirement income calculators, but the simplest rule of thumb is you can maybe safely withdraw 4% per year of what you've saved.

Assume your social security benefit will be $18,000/year starting at age 62 (equivalent to about 24,000 at age 66).
How much have you saved?
Is that enough to live on?

Savings = $ 500,000
Soc Sec + Investment Income at age 62 = $38,000
Healthcare and income tax = $10,000
Spendable Income $28,000


Savings = $1,000,000
Soc Sec + Investment Income at age 62 = $58,000
Healthcare and income tax = $10,000
Spendable Income $48,000


Savings = $2,000,000
Soc Sec + Investment Income at age 62 = $98,000
Healthcare and income tax = $10,000
Spendable Income $88,000

 

[rapmarks]

Conan, your income tax doesn't go up when your income does in your figures. Congrats to someone who has income of 98 k and only spends 10k on healthcare and income tax.


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[Blues]

If you retire early how does not working the last few years before collecting effect what your qualified to collect?

I strongly suggest that you fill in this form with your actual earnings record:

https://www.ssa.gov/pubs/EN-05-10070.pdf

In particular, look at Step 5, which illustrates how the benefit is skewed toward lower incomes. If your Average Indexed Montly Earnings (AIME in SS-speak) is at least $5336, then you're in the 15% bracket. At that point, increased earnings have only a minor effect on your benefit, and I wouldn't worry too much about itl

SSA replaces 90% of the first $885 of AIME, then 32% up to $5336, and then only 15% of anything over that. So, as long as your AIME is over $5336, then even if the additional income goes directly into your average - e.g., you haven't yet reached 35 years - then each additional $1000 of income will increase your benefit by slightly less than 36 cents per month. An extra $100K yields an increase of $36 per month. That's not nothing, but it's a very reduced response.

Bob, who has always been good at math.

 

[Talent312]

I retired at 62 becuz working until 65 or FTA would not make a significant difference.
I'd have a slightly higher SS benefit and pension, but it would not change my lifestyle.

.

 

[Sugarcubesea]

Interesting to me the large number of people who plan to retire early, at age 62 or even younger.

How confident are you that your savings will last a lifetime (or two lifetimes with your spouse)?

There are lots of retirement income calculators, but the simplest rule of thumb is you can maybe safely withdraw 4% per year of what you've saved.

Assume your social security benefit will be $18,000/year starting at age 62 (equivalent to about 24,000 at age 66).
How much have you saved?
Is that enough to live on?

Savings = $ 500,000
Soc Sec + Investment Income at age 62 = $38,000
Healthcare and income tax = $10,000
Spendable Income $28,000


Savings = $1,000,000
Soc Sec + Investment Income at age 62 = $58,000
Healthcare and income tax = $10,000
Spendable Income $48,000


Savings = $2,000,000
Soc Sec + Investment Income at age 62 = $98,000
Healthcare and income tax = $10,000
Spendable Income $88,000

I'm not confident I will have enough saved by 62 so I'm working till 66 not by choice but by need

 

[Conan]

Conan, your income tax doesn't go up when your income does in your figures. Congrats to someone who has income of 98 k and only spends 10k on healthcare and income tax.

I could have prepared more detailed examples. Of course social security is never fully taxable, and many retirees favor tax-exempt investments. If you want to use $20,000 or $40,000 for income tax and healthcare (Parts B, D and a supplement) feel free.

Which gives more support for the concept that one should look before leaping into early retirement.

 

[WinniWoman]

Things get even more dicey if one spouse passes. I am stressing that we should plan to live a lifestyle based on one SS check, investments/cash, and no pension. I can't even imagine how we will do this and we have a nice amount of savings. We better get our tent ready....

 

[rapmarks]

Those that live in states with high property taxes can really feel the pinch when you are retired. Even if you downsize, you can still have a property tax bill that is going to gobble up your income.


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