AssetBuilder Inc. Registered Investment Advisor - Simple Investing. Smart Future.

Scott,  I am a regular reader of your Sunday columns in the Nashville Tennessean but have never commented before.  I very much appreciated your reference to the Forbes article "The 62/70 Solution" which correctly points out (the apparently little known fact) that a wife who hasn't worked outside the home can file and collect "spousal" benefits if the husband continues working and "suspends."  Another article you recommended (by Alicia Munnell and M. Soto) which is also otherwise excellent states on page 5 that "The final category is where the wife's PIA is less than a thrid of her husband's.  In this case, the only meaningful benefit is the spouse's benefit.  For the wife to claim the spouse's benefit, her husband must retire."  This morning my wife and I had an appointment with the local Social Security office. I said I have reached full retirement age and want to file but suspend and my wife said she would like to file for spousal benefits.  Ala Munnell and Soto, the cordial and experienced Social Security official immediately told us cannot do that unless I file for and start taking retirement benefits.  I then read to her from a Wharton  School Pension Resaerch Council Working Paper by James Maheny and Peter Cranston which makes the Forbes 62/70 point in chapter and verse.  She  was very surprised and said, "All right let's try."  She seemed further surprised that the system said we were eligible.  So my wife will begin receiving spousal benefits and I will continue working and hopefully maintain suspended status until I reach 70.    Perhaps my case is very rare but the point seems little known, even among Social Security officials, even though this apparently has been authorized since reform of the Social Security Act in 2000.

    My column coming up this Sunday (2/17) covers another aspect of this issue--- our ability to do a "withdrawal of application" and redo our SS benefits at a new and later age provided we return the benefits that have already been paid out. The result is a significant increase in lifetime benefits and income, plus potential tax savings for many. This beats anything offered by the financial services industry cold.

    You're clearly a careful reader--- one who follows the informational links I include with my columns. Sadly, your habits are uncommon among Social Security agents, so lots of people will probably have your experience. I had a similar experience when I turned 65 and registered for Medicare benefits. The agent was surprised that I did not want to take SS benefits at the same time.

    When I told her that it was not a good financial move for me, she looked incredulous. She talked about the benefit of taking the money now since I didn't know when I was going to die, etc.

    A week later I returned and handed her a memo on the topic and a printed copy of the Munnell/Soto paper you mention. She waved it away, saying "You can believe what you want."

    That said, we shouldn't be too hard on those who work for Social Security. They work long hours and have to deal with a very complex system with more than 2,000 rules. Most are sincerely trying to get the very best results they can for their clients--- you and me.

    Many agents, for instance, are spending a good deal of time dealing with the confusion created by the new program of graduated premiums for Medicare. Since your premium is based on your household income for your most recent tax return, some recent retirees will be hit with premium increases that applied to a one year event such as an employer buyout but don't apply currently.

 Scott