Do you understand how Social Security retirement benefits work for (and with) your spouse? If not, you are not alone. Here is a summary of some key concepts in claiming and receiving a benefit as a husband or wife of a Social Security retiree.
Claiming a Spousal Social Security Benefit
Eligibility begins at age 62. The maximum spousal benefit is 50% of what your husband or wife receives. However, if you retire and claim the spousal benefit before your full retirement age (typically 66), the benefit will be less than 50%. This reduction in benefit depends on how many months before full retirement age you begin.
If you have worked, you can make a claim for your own benefits and can claim the greater of your own benefit or the spousal benefit. This should be carefully planned to maximize the overall benefit to the spouse. The Social Security Administration explains it this way:
If your spouse has reached full retirement age and is eligible for a spouse’s benefit and his or her own retirement benefit, he or she has a choice. Your spouse can choose to receive only the spouse’s benefit now and delay receiving retirement benefits until a later date. If retirement benefits are delayed, a higher benefit may be received at a later date based on the effect of delayed retirement credits.
In other words, it may be to your advantage to claim one benefit (e.g. the spousal benefit) earlier than your own, to take advantage of the annual increase in benefits that come from waiting until age 70.
This “claim now then claim more later” strategy can be used even if the spouse continues to work. You (the still working spouse) claim a spousal benefit. While you continue to work, your own retirement benefit continues to grow at 8 percent a year. Moreover, your additional work credits may increase the size of your benefit as well. When you reach age 70 (the maximum benefit age), you can switch from a spousal benefit to claim your own benefit, if it is greater.
Just don’t forget that if you claim any benefit before full retirement age, that benefit will be permanently reduced.
Social Security Spouse Claim and Suspend Strategy
Another technique for maximizing total Social Security retirement benefits received by a married couple is to use the “claim and suspend” strategy. This strategy can work if you can afford to wait until age 70 to claim all of your benefits.
The basic claim and suspend method involves the following steps:
1. One spouse claims his or her Social Security benefit. The other spouse signs up for the spousal benefit. The first spouse then immediately notifies Social Security that he or she wants to “suspend” his or benefit. This causes the primary benefit to stop but the spousal benefit continues.
During the time that the primary benefit is suspended, the amount of the benefit will increase by 8 percent a year, until age 70. The spouse then “unsuspends” and collects the larger benefit.
Again, you can use this strategy only if you are at full retirement age and have never collected early benefits.
Surviving Spouse Social Security Benefit
The benefit rules that apply to the surviving widow or widower of a deceased Social Security retiree are different. First, the survivor’s benefit can be as much as 100% of the benefit received by the deceased spouse. This means that if a spouse was receiving a 50% spousal benefit, that can double upon the death of the other spouse. (Not that this a good thing, but it helps a little.)
Second, the survivor’s benefit can be claimed by a spouse who is at least age 60. This is two years sooner than eligibility for a normal spousal benefit.
However, if the surviving spouse claims a survivor’s benefit before reaching full retirement age, the benefit will be decreased by as much as 28.5%, depending on age.
Final Thoughts on Social Security Spouse Benefits
I think the key takeaway from this discussion is this: Never claim your own Social Security retirement benefit without considering: (1) how it might affect your spouse after you die; and (2) how coordinating regular and spousal benefits can maximize the total Social Security payments that you receive as a married couple.
Photo credit: Travis Jon Alison