No. of Recommendations: 16
You say this as though it helps her end up with more money.

No, it helps her end up with more cash flow. It helps her increase her income. Her income at 70 would be double what her husband currently gets from SS.

what financial modeling

Monte Carlo.

She earned more income over her life than her spouse. He took SS at 62 so if she does the same, she will not have the option of retaining his SS assuming he passes first (he is less healthy and six years older).

The goal is to maximize her income at age 70 while leaving a small safety net. There is not enough IRA or taxable savings that they could live off of it so SS is very much needed - and we may find that they cannot afford to wait until 70 for her to take SS.

- if you tend to throw away money it enforces savings
- it's poverty insurance in case you invest badly
- it gets you more money if you live a really long time

All three are relevant for this couple. They have less than six figures in total savings.

But it does this at the cost of you having less money than if you just take the SS money starting at 62 and shove it in with savings. And you'll continue to have less money until around age 90 when the higher payout finally catches up.

No, as the money you get at 62 will earn you less than 1% in savings currently. The higher payout catches up in most cases around 82.

It makes absolutely no sense to take SS at 62 if all you are going to do is park it in a low interest account. We are not trying to maximize someone's inheritance, we are trying to maximize future income. Taking SS early makes sense for some but most couples with a life expectancy greater than 82 would benefit be delaying or using other options like file and suspend. If you think you will not live that long, then by all means, file early. Average life expectancy for a male age 65 is 82. For a woman at 65 it is 85.


62/70 split
There is a strategy, sometimes referred to as a 62/70 split, where the lower earner files early at age 62 based on his or her own benefit and then the higher earner later files at age 70.

When a lower-earning spouse files for benefits at age 62, the benefits are reduced based on the number of months before full retirement age.

If the higher earner has not yet filed, the reduced benefit will be based on the early filer's own earnings record.

If the higher-earning spouse has already filed for benefits at his or her own full retirement age, the lower earner would receive an amount equal to 50% of the higher earner's full retirement age benefit or their own benefit, whichever is greater.

However, the early-filing penalty would be applied to any benefits the lower-earning spouse receives, whether they're calculated based on that spouse's own earnings record or the higher-earning spouse's record.

If both spouses are in good health and expect to meet or exceed average life expectancy and can afford to wait, an alternative strategy would be for both spouses to delay filing until full retirement age. At the time of filing, the higher earner files and suspends his or her benefits until age 70 to continue accruing delayed retirement credits. At the same time, the higher earner can also claim spousal benefits based on the lower-earning spouse's record and then switch at age 70 back to his or her own higher benefit. That way, there are two checks coming in during the interim period.
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