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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Social Security
Satisfied Customers: 13442
Experience:  Licensed CPA, CMA, CFE, CGMA M.Accy Also Teach Accounting courses at Master's Level
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Ive been studying about "File & Restrict" social security

Resolved Question:

I've been studying about "File & Restrict" social security retirement and considering this method for me and my wife. I turned 62 in September of this year, and my wife turns 62 in August of next year, 2014.
I'm the higher wage earner , and will max out with $2,400.00 monthly at age 66. My wife will receive $1,182.00 at age 66. If she files for early retirement at 62, which is our plan, her monthly take is $835.00. I would then file and suspend my benefits, and file for spousal benefits amounting to half or $417.50 monthly, leaving my benefits to max out at 66. Once I'm 66, I will stop spousal benefits and file for my full benefits. My wife would also stop receiving her benefits and file for spousal for half of my full retirement.

My questions are:
1. Can we use "File & Restrict" or "Apply & Suspend" with early retirement?
2. Does my wife need to be 66 before she can file spousal on my full retirement?
3. Is there a penalty applied to my wife since she filed for early retirement?
4. My biggest question - Does any of this make sense?

Working through the numbers, this appears to be the best way to max out our social security earnings.

Regards,
Gordon Knight
Submitted: 9 months ago.
Category: Social Security
Expert:  Megan C replied 9 months ago.

Megan C :

Thank you for your question, my name is XXXXX XXXXX I will be happy to help you today

Megan C :

How are you doing?

Megan C :

Unfortunately, you cannot use file and suspend in early retirement. You can only use this when you reach full retirement age. It is to allow your benefit to grow to its max at age 70.

Megan C :

If your wife draws early, her benefit will be forever reduced. She will never be able to draw a full 1/2 of your benefit.

Megan C :

She could file early, but you could not draw a spousal benefit early. Your own benefit would then be locked at its age 62 total, and that negates any positive impacts of putting off retirement.

Megan C :

These methods are only good once you reach full retirement age, unfortunately.

Customer:

Hello, Megan.

Megan C :

Hello

Customer:

I'm doing fine. Thanks for asking.

Megan C :

You're welcome

Customer:

Thanks for answering my questions. Unfortunately they are not the answers

Customer:

I wanted to hear.

Megan C :

I understand that they are not the answers you wanted to hear, but they will save you from making costly mistakes in drawing your benefits

Customer:

But, I understand, if the age is 62, it's 62! Is there any other recommendation if we need to take benefits at 62?

Megan C :

Well, if you take benefits at 62 you are forever reduced.

Megan C :

If you need to take the benefits, they would be reduced. Your wife's entitlement to your benefit would only be 35% of your benefit, not the full 1/2

Megan C :

And, if she took her own benefit, and you waited until 66 to draw your benefit and she wanted to switch, there may be an increase in benefits, although she will not draw a full 1/2 of your benefits

Customer:

Sounds like all options are off the table at 62.

Megan C :

Yes, early retirement limits your options unfortunately

Megan C :

If you are in good health, and plan on working until age 66, it's best to wait to draw. But, if you are in poor health or are going to stop working early it makes sense to draw early

Megan C :

There's not a "one size fits all" formula for social security - there are options.

Megan C :

But, those options are limited if you are under full retirement age.

Customer:

If I wait until 66 what would my wife draw? If not 1/2?

Megan C :

Well, what she would do is take 1/2 of your benefit, and subtract it from what she would have drawn at full retirement age with no reduction. Then, she would take that result and add it to her current benefit

Megan C :

So, if she could get $1,200 off you, and would have had a full retirement age benefit of $1,000 but drew $750 early, you would take $1,200-$1,000 = $200 ; $750 + $200 = $950

Megan C :

Still more than what she was getting, but not a full 1/2 of your benefits

Megan C :

There is no benefit to this if 1/2 of your benefit is equal to or less than what she could have drawn at full retirement age.

Customer:

Thanks for the information you've given me.

Customer:

I will have to take this and digest! I will get back with you once I have thought this out.

Megan C :

No problem, it is my pleasure

Megan C :

Okay. If you would, before you leave please rate me positively so that I can get credit for assisting you today

Megan C, Certified Public Accountant (CPA)
Category: Social Security
Satisfied Customers: 13442
Experience: Licensed CPA, CMA, CFE, CGMA M.Accy Also Teach Accounting courses at Master's Level
Megan C and other Social Security Specialists are ready to help you

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