Social Security - Delayed Benefits

Question 0

T or F - By waiting past FRA to claim their benefit, a primary beneficiary can increase both their own benefit, and the benefit of their spouse.

Answer 0

False. The maximum spousal benefit is 50% of the primary’s PIA. If the primary delays past FRA, their benefit will increase, but the spousal benefit will never be more than 50% of the PIA (the PIA is the primaries monthly benefit at their FRA). However, the spouse may eventually benefit by collecting the higher monthly benefit amount of the primary when the primary dies.

Question 1

For those who reach FRA in 2009, what is the increase in the benefit for delaying for each:

Increment month
Year
Total

Answer 1

For those reach FRA in 2009, the increase is 2/3rd of 1% per increment month (each month that passes after you reach FRA and that you do not claim your benefit). This equates to an 8% simple rate of return. If FRA is 66, the total increase is 32%.

Question 2

T or F - By waiting past their own FRA, a spouse can increase their spousal benefit above 50% of the PIA of the primary.

Answer 2

False - Spousal benefits are decreased by claiming prior to spousal FRA, but unlike the primary there is no ability to increase by waiting past FRA.

Question 3

For someone born between 1943 and 1954, how does delaying retirement past age 66 impact monthly benefits?

Answer 3

Each year of delay up to age 70 provides an 8%. However, increase is simple based on the FRA, not compounded. At the same time, the increase in the benefit is adjusted for inflation because COLAs also apply during the delay period.

Question 4

For those with an FRA of 66 or above, real benefits increase by 2/3rd 0f 1% per month, or 8% per year. Why is the increase in benefits real rather than nominal?

Answer 4

Each year of delay up to age 70 provides an 8%. However, increase is simple based on the FRA, not compounded. At the same time, the increase in the benefit is adjusted for inflation because COLAs also apply during the delay period. For these reasons, even taking into account the alternative use of money, unless there are very special circumstances (poor health, illiquid and/or very high after return investments) it almost always makes sense to delay benefits from a pure financial standpoint.

Question 5

What is the earliest age one can file and immediately suspend?

Answer 5

FRA

However, one can file and take benefits early (before FRA) and then stop (suspend) benefits at FRA, accumulate delayed credits at 8% per year, and then restart benefits. This does not reverse the original permanent reduction in benefits, but it can help offset it.

Question 6

How much higher is the primary benefit taken at 70 compared to one taken at 62? Is this increase inflation adjusted?

Answer 6

76%

Yes, this amount is inflation adjusted.

Question 7

What is the difference in a spousal benefit taken at FRA versus age 62.

Is the increase inflation adjusted?

Answer 7

43%

Yes, the increase is in real dollars