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Question for the Money Doctors

Question submitted on Jun 17, 2018.

Question

I was born in April 1951. I have worked at least 40 quarters and I am entitled to the minimum social security benefits. My wife who was born in April 1954 had no earnings so she is not entitled to any benefits on her own account. She is entitled to spousal benefits.
I planned to wait until age 70 (April 2021) to start getting benefits in order to get the maximum benefits available.
However, I read recently that if I start taking benefits now (full retirement age), my wife is entitled to receive half of my benefits as spousal benefits. If I wait until age 70, then my wife will not be entitled to spousal benefits until she reaches age 70 (3 years later in 2024). So it is not worthwhile to wait until age 70.
Is that correct?

Answer

There are a few factors to consider when determining whether or not to delay receiving social security benefits.  These include your working status, projected cash flow situation, you and your spouse's health, anticipated longevity of social security funds available, as well as your age compared to that of your spouse.  However, on the surface, your thought process seems to make sense.

Despite your spouse not having worked, nor paid into Social Security, she is eligible to collect retirement benefits under your Social Security work record since she is beyond the minimum age of 62.  As you state, she will not be able to do this until you begin collecting for yourself.  Since you are at full retirement age, your spouse indeed can receive up to one-half of your benefits.  Your spouse is eligible for the same maximum of one-half of your benefits despite when you determine to begin social security, so she would be receiving benefits when you reach age 70 (if you were to wait until then to begin receiving your benefit) regardless of her age at that time.  

Although there may be benefits to waiting until age 70 to receive maximum benefits, it may be more beneficial to begin collecting immediately since you are at full retirement age and there is uncertainty as to how long Social Security benefits will be available in the long term.  You also get the benefit of receiving funds now instead of more funds later in life (should the program remain unchanged) at times when the funds may not have as much utility for you.  Additionally, the recent report update by the Social Security Trustees highlighted continuing financial challenges for both Social Security and Medicare.  The report urges Congress to address the challenges these programs face soon, so the solutions will be less dramatic and can be implemented over a longer period of time, thus reducing the impact of any changes.  Unfortunately, Congress historically tends to only act in crisis situations for these type of programs so we consider it generally better to collect Social Security benefits as soon as possible/eligible.

Please consider consulting with your financial advisor and/or tax preparer to determine which option would be in your family’s best financial interest.  Visit www.findacpapfs.org to find a specialist in your area.

 


For additional information visit http://www.360financialliteracy.org/

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