Wow this is a good reply. I have started playing with OpenSocialSecurity and I have been scratching my head on why the tool recommends my spouse (3 year younger than me) to take the lower benefit ($500 PIA) at age 62 instead of FRA (67).One reason for OpenSocialSecurity’s frequent recommendation of 62 (low earner) and 70 (high earner) is that the spousal benefit “goes away” when the first spouse passes - the survivor’s benefit is equal to the high earner’s benefit regardless of which spouse passes. The strategy is to have the low earner claim as early as possible (for more months of payments) for the benefit that ends earliest and have the high earner delay to increase the benefit that will continue the longest.Try https://opensocialsecurity.com/.
I suspect it will recommend you waiting until 70 and spouse at 62 but look at the value at ages from 62 to 67. At 67 and beyond there will be no permanent penalty for the spouse taking her own benefit early. There is no way it will recommend waiting past 67 as the bump up by waiting will only be available for 7 years when you start your benefits and the spouse can start spousal benefits and your spouse would have had to forgo $821/month for the years from age 67 to 70.
To put it in “return-on-investment” terms: the low earner’s ROI is calculated on “first to pass”, the high earner’s ROI is calculated on “last to pass”.
I am the higher earner (~$3200 PIA) and it recommends me to wait until 70. I get this part.
What happens if my spouse apply for benefit at FRA (67) instead of 62? This part I do not fully understand. What are the pros and cons for my spouse to take the low benefit at 62 (suggested by tool) instead of 67 (no reduction in benefit)?
Statistics: Posted by silvergga — Thu May 23, 2024 8:26 pm