It is my vague understanding that the spouse should take early as possible, then at full retirement age of older spouse apply for spousal benefits and the higher earner should take at age 70…

That would be good, assuming that they can afford to have the husband hold off until 70.  I run SS scenarios a lot with clients, and in most cases, waiting is more of a gamble, as the break-even is pretty old, and there is no real benefit until WELL into your 70’s.  If I tell someone that they make out better at age 80, most say “yeah, but what if I die…”.  And they are right.  Where there is a real advantage is if the husband has a non-joint life pension, and you need to maximize the SS later in life in case he croaks with his pension.

Also, if they CAN wait until 70 to take the benefit, I usually suggest they just take it at 62 and invest (conservatively) that paycheck until 70.  When you get to 70, if it turns out that it would have been better to wait, you simply give the money back, “undo” the whole thing, and take the new age-70 benefit (yes, this can be done, but rarely ever happens).  But if the guy gets into bad health and is going to kick the bucket (or died already), then you have 50-160K already banked.  Look at it this way, if someone was going to get $125K given to them from 62-70, it would take a LONG time to make that up after age 70.  Like 7-10 years.  And once they make up that difference, they are now at BREAK-EVEN.  So the only benefit is going forward.

I have found the biggest determinant of whether it makes sense to take early benefits is whether they will keep working and to what extent. Losing $1 for every $2 over that earned income limit takes a substantial bite out of net proceeds and substantially decreases the ‘break even’ age.

Well, actually, you get that money back after you stop working, so sometimes it makes sense to TAKE social security while still working.  Most people aren’t aware of that.

B24 - I was unaware of that and have looked into it (ssa.gov). As I read it, and please correct me if I’m wrong, but they simply recalculate benefits when you reach your full retirement age. In the example I read, you lose $750 monthly benefit for 12 months, they raise your benefit at FRA to $800 per month. So, giving up 12 months @ $750 = $9000 in lost benefits. $9000 divided by $50/month additional benefit = 180 months or 15 years to break even. Assuming full retirement age of 67, then break even = 82.



I don’t know that it changes too much with my recommendation, but it is certainly new information to me. Also, one more reason to conference call with the local SSA office.

Thanks B24

No problem.  And yes, you are correct.  It does not come back to you in a “lump sum”, but rather over time.