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Coffee, Couch, Questions: When Should I Draw Social Security?


This is a new segment that I am thinking about adding to my video series. You let me know how much you like it. That’ll help me determine if I should keep it up.

Here’s the premise:

I sit on a couch, drink some coffee, and answer a question that has been asked of me.

Pretty simple, huh?

Oh yeah, most important of all… I keep all information about the questioner confidential.

Trust me… my compliance department would never let me get a video published that gave away anyone’s name or any personal info that could identify that person.

So here is the first question I have chosen for this series. I chose it simply because it landed in my inbox recently. So why not, right?

The Question – When Should I Draw Social Security?

When should i draw Social Security

Great question, “K.”

Let’s start at the beginning:

Will Social Security automatically check to confirm if he can get ½ of my earnings benefit?

A good way to operate when it comes to Social Security is to not assume that anything will happen automatically. It is not Social Security’s job to tell you of the best way to maximize your benefits.

You may get a worker at Social Security that is extremely helpful. That person may tell you that it would be better for you to take a different specific action.

But then again, you may not.

It’s always best to assume that they will take your order as you tell it to them. If your husband tells them that he’d like to start drawing at age 62, then it is safer to assume they will just accept that order. They may or may not tell you of another more optimal claiming strategy.

The second part:

“He is eligible for his own but it will be less than if he gets ½ of mine.”

A person can claim spousal benefits IF the other spouse is also drawing their benefit.

Now, it used to be that a person could file for benefits and then immediately suspend those benefits. This would allow their Social Security benefit to continue its increase up until age 70.

But since that person had “filed” the spouse could draw spousal benefits off it.

After April 30th 2016, if a person “suspends” their benefits, then a spouse won’t be able to draw a spousal benefit off that person. This is a relatively new change in Social Security benefits.

You can read more about that change here. 

Back to the question at hand… Since “K” would not be drawing Social Security benefits yet (since she is only 58), that means her husband would not be able to claim spousal benefits off her.

He would be stuck with his own benefits.

Drawing Social Security Early Reduces Benefits

Another factor to consider is that drawing early reduces benefits. Since “K’s” husband will be 62 next year (in 2017) that means his birth year is 1955.

People born in 1955 have a full retirement age of 66 years and 2 months.

Soc Sec Chart

https://www.ssa.gov/planners/retire/agereduction.html

If they begin drawing benefits at age 62, their full retirement age benefit will be reduced by 25.83%. So if their benefit at 66 years and 2 months would have been $1,000 per month, it will be reduced to $741 per month ($1,000 x 25.83% = reduction of $258/month).

What’s worse is that the spousal benefit is also reduced but at a greater amount if you begin Social Security benefits at age 62. It is reduced by 30.83%.

So if a person’s full retirement age benefit is $1,000, then their spouse could get up to 50% of this, or $500.

But if that spouse drew this spousal benefit at age 62, the $500/month would be reduced by 30.83%. It would become a benefit of $345/month ($500 x 30.83% = reduction of $154/month).

So in “K’s” case, even if she was already drawing her Social Security benefit at full retirement age, the fact that her husband would be drawing at age 62 would reduce this benefit to less than half of her full retirement age benefit.

But as it stands, “K” isn’t drawing a Social Security benefit right now. So her husband can’t claim spousal benefits off her.

The Takeaway

When it comes to determining when to draw Social Security benefits, the devil is in the details.

Most people know that a spouse can draw a 50% benefit. But when you look closer, it may not always be the case.

It should better be said that a spouse can draw up to a 50% benefit off their spouse’s full retirement age benefit.

In a nutshell, it can get confusing. And it’s smart to run the data through a Social Security timing software program.

Also, when planning for retirement it’s wise to make sure you have a retirement income plan in place to help you plan for all your income sources.

Social Security will play a very prominent role in most retirees’ income sources. But many retirees will typically need to supplement this with another income source.

Usually this other income source will be withdrawals from their savings and investment portfolio.

And a strategy on how to best accomplish this with the right mix of investments is very important for a person (or couple) approaching retirement. It will often times involve approaching this challenge from a risk management point of view.

Conclusion – When Should I Draw Social Security

Thanks, “K” for the question. It was a very important one. And I can see that you are already thinking through some of the important issues surrounding Social Security benefits timing.

It is obvious that you have done research and you are aware of some of the benefits people are entitled to under the program, such as the 50% spousal benefit. I hope this video and article have helped.

And if anyone else reading this has questions, please let me know. It doesn’t have to be about Social Security. It can be about other aspects of retirement planning, such as investments, portfolios, annuities, income planning, etc.

You can find my email on the contact page. I keep all identifying information confidential, just like I did with this question.

Or if you open the above video in YouTube you can leave a comment under it asking your question. Just remember, any comments you leave are visible to the public. So don’t put anything in there that you wouldn’t want others to see.  

And if you’d like to see more of the “Coffee, Couch, Questions” format for future videos, just let me know. If I get a positive response I’ll try to include some more in the future.

Best regards,

Chris Hammond

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