Q: In a recent column, you said that most people retiring today are waiting until 70 to start their Social Security. But I read an article in USA Today quoting Social Security Administration statistics stating the majority of retirees take their Social Security at 62. Where did you get your information?
A: Yes, you are right and so is USA Today. What I meant to say in that column is that based on the emails I get, it seems to me that most people are waiting until 70. The vast majority of people who email me are asking questions about maximizing their Social Security benefits and that usually involves waiting until age 70 to claim the extra 32 percent in “delayed retirement credits” that are added to a person’s monthly Social Security check.
So based on all those emails, I assumed the majority of seniors were doing the same. Obviously, I was wrong.
And I wonder why I am hearing from the age 70 start-date group and not the age 62 start-date group. I’m guessing that those large numbers of people who start their Social Security at 62 don’t have many questions because their Social Security eligibility isn’t too complicated. On the other hand, readers who are into this maximizing business have all kinds of questions because the rules (which I’ve discussed hundreds of times in this column) can get a little complicated.
Having said all that, I do occasionally hear from people planning to take their benefits at age 62 and the rest of today’s column will highlight their questions.
Q: I turned 62 on Sept. 15 and filed for my Social Security then. I just got my first check on Nov. 21. I know my Social Security checks are one month behind, so that was my October payment. But what happened to my September check?
A: You aren’t due a payment for September. Here is why. Back in the 1980s, a conservative Congress was looking for ways to trim government spending. One of the ideas they came up with was a law that says you have to be 62 for an entire month before you can get your first Social Security check. Because you were not age 62 for the entire month of September, you can’t get a check for that month.
Q: I plan to start my Social Security benefits at age 62. Will that decision affect my wife’s eventual widow’s benefit?
A: Yes, it will. The reduction you take in your retirement benefits will carry over to any widow’s benefits payable to your wife — with a bit of a twist. At age 62, you are going to get 75 percent of your full Social Security benefit.
Let’s say your wife is over age 66 when you die. (It’s too messy to try to explain the reduction factors for a widow who is under age 66.) There is a law that says a widow over age 66 cannot get less than 82.5 percent of your full benefit. So she’ll actually get a 7.5 percent bump in benefits when you die.
If you wait until you are 66 to claim your benefits, you would get your full (100 percent) benefit rate. And your wife would also get that 100 percent rate after you die. If you wait until age 70 to apply for Social Security, you would get a 132 percent rate, and so would your widow.
Q: I’m still working full time. I make about $80,000 per year. But I plan to start my Social Security at 62. Is that a good idea?
A: It’s not a good or bad idea. It’s a non-starting idea. If you are still working full time and are under age 66, you are not due any Social Security benefits.
Only once you stop working, or start working part time and making around $18,000 per year or less, or turn age 66, whichever comes first, should you consider filing for Social Security benefits.
Q: I will take my small Social Security check at 62 next year. My husband, who is two years younger than me and has a much higher Social Security benefit, plans to wait until 70 to start his checks. I should be due some extra spousal benefits on his record. How will they be figured?
A: It sounds like you will be about 72 when he files for his retirement and you sign up for spousal benefits on his record. To figure those benefits, they will take your full age 66 rate (even though you took benefits at 62) and subtract that from one-half of your husband’s age 66 rate (even though he took benefits at 70). The difference will be added to your reduced retirement benefit.
To explain that further, let’s use an example. Say your full benefit is $800 per month and your husband’s full benefit is $2,700 per month. By starting your benefits at 62, you will get 75 percent of $800, or $600. At age 70, your husband is going to get 132 percent of his full rate, or $3,564. But again, your spousal benefit is based on his $2,700 rate. So they will take your full benefit amount ($800) and subtract that from one half of his full amount ($1,350).
That leaves $550 in spousal benefits, which will be added to your reduced retirement benefit of $600, giving you total benefits of $1,150 per month once you go on your husband’s record.
And for long-range planning purposes, you should know this. If your husband dies before you do, your widow’s rate is based on his full benefit, including the extra 32 percent he will get for delaying his benefits until age 70.
Once again, let’s run the numbers. Let’s say he dies when he is 80 and you are 82. (Your benefit rates will be higher by then because of yearly cost-of-living increases, but I’m going to use the current rates to keep my math simple.) You will always keep getting your own $600 reduced retirement benefit. Your $550 spousal benefit will stop after he dies, but you will start getting an extra $2,964 in widow’s benefits to take your total monthly benefit rate up to the $3,564 level he was getting.
