Here are four strategies couples can use to help manage their combined Social Security income. These approaches were written into Social Security law to encourage retirees to delay taking benefits, reducing costs for the Social Security trust fund. To use them, you must both be at “full retirement age” (eligible for 100% of your Social Security benefits) in all but one case. Full retirement age is 66 to 67, depending upon when you were born.
- Claim spousal benefits instead of your own If you earned less than your spouse, your benefit checks will be smaller. But you might get a bigger check by “restricting” your application and claiming spousal benefits instead—half your spouse’s full retirement check. (Your spouse loses nothing.) Example: Your spouse’s full monthly benefit is $2,000. You get $1,000 in spousal benefits. Your combined Social Security income is $3,000.
- Pump up the survivor’s benefit Social Security has a survivor benefit for widows and widowers—100% of the deceased spouse’s checks. If you’re older than your spouse and earned more, you can inflate his/her survivor’s benefit by waiting until 70 to claim your benefit, says James Pavletich, who, with his wife, Jan, became consultants after long careers in the Social Security Administration.That grows your checks 8% a year. If you die first, his/her survivor benefit is 100% of your supersized check. Example: At your full retirement age, 66, you’d receive $2,200 a month. But waiting until 70 increases your benefits 8% a year, to $2,904. Your checks are larger and so is your spouse’s survivor benefit.
- File and suspend If you’re the bigger earner, file for benefits at full retirement age, but hold off (“suspend”) taking them. That lets your spouse claim a spousal benefit from your work record while your payout keeps growing at 8% a year until you’re 70. Example: You and your spouse are both 66—your full retirement age. Your spouse wants to retire. Social Security will pay him/her $900. Your checks would be $2,200. If you file and suspend, waiting four years to collect, your spouse can collect a spousal benefit of $1,100 now and your benefit keeps growing, to $2,904 a month. When you collect at 70, your spouse can “revert” to his/her own benefit, now 8% a year larger, or $1,188, according to Pavletich. Together, you’ll pull in a combined $4,092 a month. If you die first, your spouse’s supersized survivor benefit is $2,904.
- Claim some now, and more later You’re at full retirement age. Your spouse, 62, has a few years to go. You could both file now. You’d get $2,000. Your spouse would get $700 (70% of his/her $1,000 full benefit for claiming early). This is the strategy most couples use. But, can you both live with smaller checks for a while? If so, you could claim a spousal benefit while letting your own benefit—the larger one—grow. Example: Your spouse gets $700 monthly, you receive $500 in spousal benefits—$1,200 a month total. When you’re 70, claim your benefit—now $2,640. Your combined monthly Social Security income is $3,340. Also, your spouse’s survivor benefit went from $2,000 to $2,640 a month.
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