Maximizing Social Security Benefits for Married Couples Under the Law
If both spouses are eligible for Social Security benefits, each spouse also will be eligible for spousal benefits based on the other spouse. Moreover, each spouse will be entitled to survivor benefits if they outlive the other spouse. You should be aware, however, that you can no longer claim and suspend benefits in this context, as of April 30, 2016. As a result, you cannot collect spousal benefits until your spouse starts receiving their own benefits. (This is also true of minor or disabled children who are receiving dependent benefits based on a parent.)
Claiming Spousal Benefits Instead of Claiming Retirement Benefits
If you were at least 64 at the end of 2017, and you have reached full retirement age, you can claim spousal benefits instead of claiming your own retirement benefits. Spousal benefits may amount to as much as half of the retirement benefits of the other spouse. This means that someone who earned much less than their spouse can get more money through their spousal benefits than their own retirement benefits. You can file a restricted application if you meet the criteria for eligibility, and this strategy makes financial sense for you.
Only individuals who were at least 64 years old by the end of 2017 can file a restricted application to claim only their spousal benefits.
Even if you did not earn much less than your spouse, claiming spousal benefits instead of claiming retirement benefits may pay off in the long term. This is because your retirement benefits will increase by 8 percent for each year beyond your full retirement age that you wait to claim them, up to age 70. This elevated amount will remain in effect permanently, so your total benefits may be substantially increased.
Downsides to Claiming Benefits Early
You must take the highest benefit available to you if you file for benefits before reaching your full retirement age. You also should know that claiming either spousal or retirement benefits early will reduce the other set of benefits permanently if you eventually switch to them. If you claim spousal benefits before your full retirement age, therefore, your own retirement benefits may be significantly reduced. Likewise, claiming your retirement benefits early will reduce your spousal benefits by the same percentage.
A spouse who claims retirement benefits early does not need to worry about reducing the spousal and dependent benefits of their spouse and children based on this rule. The reduction applies only to their own spousal benefits.
The Split Strategy
It may sometimes make sense to have the lower-earning spouse collect first and wait for the higher-earning spouse to maximize their benefits.
Rules for Survivor Benefits
Claiming retirement benefits early does not reduce the amount of the survivor benefits that you can receive based on your spouse. These benefits are solely based on the work record of the claimant’s spouse. While this may seem callous, you may want to plan on collecting survivor benefits if your spouse is much older than you or dealing with a terminal illness. You could collect your retirement benefits or spousal benefits early, depending on which amount is higher, while knowing that you will be able to recover full survivor benefits eventually. This strategy may only work if your spouse does not claim retirement benefits before reaching their full retirement age. If they do, your survivor benefits will be reduced accordingly.
Claiming your retirement benefits early will reduce the amount of your spouse’s survivor benefits and the amount of any survivor benefits available to minor or disabled children. This can be a disincentive for people who believe that their spouse may outlive them or for people who have children who depend on them.