Example 1
John, age 66, and Sue, age 65 turning 66 in May 2016. He is a surgeon and she has been a homemaker most of her adult life. He plans to work until age 70. Their parents lived until their late 80s. John and Sue are in great health and have a long life expectancy.
Based on these assumptions we decided to wait as long as possible for John to take social security. We know that the surviving spouse will only get the greater of the two amounts and will lose the other spouse’s benefit at the first spouse’s death. With a long-life expectancy it is important maximize the survivor’s benefit.
The spousal benefit will not increase after age 66, so the person taking the spousal benefit should begin by age 66. However, if the high-earning spouse has not filed for social security then they can’t take the spousal benefit. John wants to maximize his benefit and, based on male life expectancy versus female, for his spouse. Therefore, John will need to file and suspend before April 30th in order for Sue to take the spousal benefit. This is where the deadline can impact them.
In the case illustrated above the couple could miss the opportunity to receive over $63,000 based on their life expectancy. This is Huge!!
Example 2
Bill, age 68, is looking to retire this year. His wife, Mary, age 67, would like to work for several more years. Bill’s recent annual earnings are around $65,000 per year and Mary’s are around $33,000 per year.
Mary would benefit most from taking the spousal benefit (restricted application) now and letting her Social Security benefit continue to increase by 8% each year after Full Retirement Age (age 66), until age 70. This could mean the difference between tens of thousands of dollars.
These real examples are based on individual and survivor life expectancies. It is important analyze your particular situation, including health, parent life expectancy, etc.
For more information, contact an advisor at Global View Investment Advisors at 864.272.0820 or www.globalviewinv.com.
