How do I maximize and use SSI as insurance?

I am 52, my wife is 56. I have a nice military pension, but if I pass away first, she will only get 55% of that, so SSI is important from an insurance perspective. At full retirement age, I will receive around $2200, she will receive about $1100. She will probably retire are 60, I will probably retire mid-60s. We have savings and pension that will help us delay until we can maximize our benefit.

Here is what I think: She can start her benifit at 62, at a reduced rate. If I wait until she is 67 to start mine, She will start getting the spousal amount of $1100, but I will get a reduced amount because I am 63. If I wait until 70, she will get the maximum if I die first, but will be 74 when she can get the spousal benefit. If she dies first, I can receive the same amount she was receiving, than claim mine at at 70 when the benifit maximizes.

Does this sound right? Are there any better options?

Thank you.

Hi,

Not exactly. If your wife takes her benefits at age 62 they will be reduced for age by about 30% from her full retirement age rate, and she would keep that reduction for as long as both of you are living even if she later becomes eligible for additional spousal benefits. For example:

Amber has a full retirement age rate (PIA) of $1000 but starts her benefits at age 62 at a rate of $700. Amber's husband Rob files for his benefits after Amber reaches her full retirement age, and Rob's full retirement age rate (PIA) is $2200. Amber's spousal benefit rate would be determined by subtracting her PIA from 50% of Rob's PIA, which in this example would be $100 (i.e. $2200/2 - $1000). That $100 would then be added to Amber's own reduced rate of $700 to give her a combined benefit rate of $800.

You're correct that your wife won't be able to receive spousal benefits at least until you start drawing your benefits, but if you want to provide her with the highest possible widow's rate you would want to wait until age 70 to start drawing your benefits. You are also correct that if your wife dies before you file for your own benefits you could potentially claim widower's benefits as early as age 60 and then switch to your own record at age 70.

You and your wife may want to strongly consider using our maximization software to compare all of your options and determine your best strategy.

Best, Jerry