Question about coordinating/maximizing our benefits:

My wife turns 62 in May of this year (2018). Her FRA is 66 and 4 months. She has stopped working and has no plans to ever work again. I turn 64 in March of this year (2018). My FRA is 66. I am currently working and will stop working at the end of this year but plan to wait until my FRA to file at which time the PIA will be about $2800/month. If my wife waits until her FRA, her benefit would be about $160/month. If she files for benefits this year (2018), it would be about $120/month. Does it make sense for her to do this and then re-file (is that the correct terminology) for spousal benefits in 2020 after I have filed for my benefit. And can you tell me how much additional benefit she would get at that time? Or at least how to calculate it? Thanks.

Hi,

Your wife will keep any reduction that she takes on her own record even after she becomes eligible for spousal benefits. And, if she files for her retirement benefits she'll be deemed to have also filed for spousal benefits as soon as she's first eligible for those benefits, which will result in her spousal rate also being reduced if you file for your benefits before your wife reaches full retirement age (FRA).

For example: Say Sally has a full retirement age rate (PIA) of $160 but files at age 62 and receives a reduced rate of $118. Sally's husband has a PIA of $2600 and files for his benefits when Sally turns age 64. Sally's unreduced spousal benefit would be calculated by subtracting her PIA from 50% of her husband's PIA, which would be $1140 (i.e. $2600/2 - $160) in this example. Sally's spousal benefit would be reduced for age to $918, which would be added to her own reduced retirement benefit to give her a combined benefit amount of $1036 (i.e. $118 + $918).

You and your wife should strongly consider using the maximization software available on this website in order to be sure that you choose the best overall filing strategy.

Best, Jerry