Hi Larry, I read your book, cover to cover and it was very interesting. My wife and I also visited the Framingham Social Security last month. I remain confused.

I was born on 5/14/1950. Upon your advice, I am hoping to wait to age 70 to collect. My wife Anne was born on 2/21/1956. She would not be able to collect, at age 62, until 7/1/2018. (I think) Anne is a pre-school teacher and makes about $25,000 per year. After about $18,000, she would have to pay taxes on the additional $7,000 SS payment. The advice from the folks in Framingham was not to bother to collect because she would have to pay back everything? Anne intends to keep working until age 66 at least. They said that she should collect all of her SS at that age, or apply to collect 50% of mine, which would be a higher amount. What do you think.

Sincerely Yours,
Ken

Hi Ken,

It sounds like one option available to you and your wife would be for her to file for her retirement benefits this month, and for you to file just for spousal benefits only at the same time. If you did that, both of your benefits would be withheld until $1 of benefits is withheld for each $2 that your wife will earn in excess of $17,040 this year (https://www.ssa.gov/planners/retire/whileworking2.html).

For example, say that your wife's full retirement age rate (PIA) was $1000, but she filed effective with this month (i.e. age 62 & 1 month). Her benefit rate would then be reduced by a bit over 26% to $737 in this example. If you filed for spousal benefits only you would be due 50% of your wife's PIA, or $500 in this example.

If your wife plans to earn $25,000 this year, Social Security would withhold $3980 (i.e. ($25000 - $17040)/2) of benefits before starting to pay either you or your wife. Continuing our example above, it would require withholding of 3+ months of both of your benefits to cover the $3980 required, in which case Social Security would withhold 4 months of benefits prior to initiating payments. Any excess withholding would then be refunded at the end of the year. You could then switch to your own benefits at age 70, at which time your wife may or may not qualify for additional spousal benefits from your record.

Whether or not the above strategy would be advantageous in your case depends largely on your and your wife's relative benefit rates. It also comes down in part to personal preferences since it would almost certainly result in your wife receiving a reduced benefit rate for as long as both of you are living. You and your wife should strongly consider using our maximization software to run your numbers and determine which of the many filing strategies available to you is best in your case.

Best, Jerry