Overlooking Social Security Spousal Benefits Could Leave Him Clipping Coupons
Category: Financial and taxes in retirement
April 5, 2021 – Naturally enough, most people concentrate their focus on their own Social Security retirement benefits. If they are careful, they compare the advantages of taking it early (as soon as age 62), waiting to Full Retirement Age (FRA, which is 67 for those born 1960 or later), or hanging in to get the maximum benefit at age 70. While it is great to know your own situation, most people overlook the importance of the benefits that might apply to their spouses. For some couples, particularly where one member earns much more than the other and Social Security will be the major source of income in old age, a bad decision can be disastrous down the road. This article will lay out the issues involved, so people can decide the best strategy for maximizing their Social Security spousal benefits.
There are two different scenarios to consider: spousal benefits while you are both alive, and survivor benefits when you depart this world. Let us take them one at a time.
- Spousal benefits while you are both alive.
Comments on "Overlooking Social Security Spousal Benefits Could Leave Him Clipping Coupons"
Kathryn says:
Shouldn't the 8 years from age 62-70 be considered ? If the high earner would have taken his SS at age 62 at $2324/ mo. he would have earned $223,104.00 in those 8 years. Money earned waiting from age 62-70 is $0
So yes I understand that waiting earns an individual more monthly, but it can take many years to balance out.
Admin says:
Yes, the foregone benefits from 62 to a later claiming age should be considered. It will take some years to get back to even. Claiming early particularly makes sense if you have reason to believe both people in the couple will not live long lives. Or if you need the money to survive.
But one thing to remember is that the actuarial prediction for taking early vs. delaying is based on the person taking the primary benefit, not the survivor. If the lower earning spouse lives longer (usually but not always a woman, who live longer than men, and are often younger), delaying the benefit has a longer time to paid back the foregone income.
Another big thing to consider is that the breakeven point assumes that the person lives to the average life expectancy - using the actuarial adjustment factors that went into place in 1983. Those assumptions haven't been adjusted since then. In 1983 the life expectancy for someone age 65 was 81.7, in 2021 it is 84.1
Because the SSA life expectancy assumptions have not been revised in almost 30 years, many experts believe that the minimum claiming age (62) is too young, and the rewards for delaying benefits too generous. So, these are all good things to consider when making the best decision for you and your spouse.
HEF says:
I am older than my husband - the higher wage earner. We are both waiting until FRA to take our benefits. For me - that will be this summer. I have applied and asked for my own benefits. I assume that when he gets his - the end of 2022 - mine will bump up to 1/2 of his. Is this a correct assumption?
Admin says:
Since it appears you were born after Jan 1, 1954 the Restricted Benefit is not available to you, as I think you are implying. So when you apply in 2022 you will get either 50% of his benefit (since you both applied at FRA), or a benefit based on your own record if it is higher. That is how I interpret it.
Richard Gorman says:
I am 66 yrs.,& retired, while my wife is younger, and is working full-time. Presently receiving a monthly pension, I have also qualified for social security benefits,(Although at a reduced monthly amount). If I were to begin collecting my social security benefits, my immediate monthly amount would be $248.00 as compared to $308.00 in 2024.Would it to my advantage to claim now or wait until either I turn age 70 or when my wife retires?
HEF says:
Thanks for your reply, John, but you didn't actually answer my question. I have already applied for my Soc. Sec to begin in June. I am just wondering, if I am correct in assuming that my payment will increase once my husband applies for his (which is greater) - 1-1/2 years later. From what I read at Soc. Sec., it will - but.....never assume?!
Editor comment: I must have missed that in your question, sorry. Assuming that you think that 50% of your husband's benefit will be greater than 100% of your benefit, yes, I would agree with your assumption. My understanding is that SSA will give you the highest benefit you are entitled to, even though you didn't originally apply for a spousal benefit. But that is just my interpretation, you might want to clarify with SSA when your husband applies.