Are you a married couple about to enter your golden retirement years? Is Social Security going to be a main component of your retirement income? If you answer yes to one or both of these there are certain steps that can be taken that will enable a couple to boost benefits. There really is nothing simple about filing for Social Security and in many cases it can be a very complex matter. The best thing to do is make sure you understand the benefits, visit with a Certified Financial Planner or an attorney that has experience with Social Security issues and then plan a visit with your local Social Security office. The age of retiring and just collecting a monthly check is history as everyone needs to understand the benefits in order to get the most out of the system.
As a general rule if in a married couple one spouse is expected to live past age 80, the cumulative lifetime benefits will generally be the highest if the spouse with the higher earnings delays their payment until age 70. One reason for this is that for most born in the mid to late 1950’s or later your full retirement age is your 67th birthday. For a person whose full retirement age is 67 such as I, for every year that Social Security is delayed my monthly payment will be 8% higher per year until I reach age 70. So if you delayed taking your Social Security benefit from age 67 to 70 the benefit payments would be 24% higher.
Now that is provided that as a couple you can survive without the main earner’s Social Security payments until age 70. And then a major goal is to maximize the benefits for the surviving spouse after age 80. Now if the main earner dies the surviving spouse is entitled to 100% of the death benefit once the surviving spouse is at or past their full retirement age. If the benefit is taken prior to their full retirement age the survivor’s death benefit will be reduced. However all of this is dependent on both spouses living until they both have reached their full retirement age. And obviously one’s total lifetime benefit will depend not only on when they start their benefits but how long they will actually receive them. If your family has a history of early deaths it may not make sense to delay your benefits until age 70. When to start taking benefits is a decision that you need to make knowing your whole story and is not something that can be learned in a blog. In order to make the best decision for you and your spouse consider all aspects of your life, health, family history, current and future needs and what assets you have saved for retirement.
One way to maximize your Social Security benefits as a couple provided both of you are age 62 at a minimum is for the higher earner to file and then suspend their benefits. You will have to know your due benefits here as a couple as one spouse may be eligible for their own benefits at age 62 based on their earning history. But 50% of the higher earner’s benefit may indeed be higher and worth getting. But the key there is the higher earner must initiate their benefits in order for spousal benefits to be paid. This is where the higher earner files for their benefits then suspends the payments allowing the spouse to collect spousal benefits despite the fact the higher wage earner is not actually receiving any payments. If the spouse is not at their full retirement age the spousal benefit will be less than 50% of the higher spouses benefit. But if the higher wage earner continues to work they will accrue delayed credits until they reapply for their benefits.
Social Security is not something to be afraid of but it is a topic where you need good and solid information to base any decisions on. There are many little tips and ideas that are available for retiring couples and in many instances individuals but you have to be in contact with a qualified person who can give you honest and valuable advice. The Social Security Administration is a good source but they may or may not have your best interest at heart. And they certainly are not a Certified Financial Planner who has been trained in financial matters and is knowledgeable on your entire picture as you will have developed a working relationship with them. They should be aware of your history, financial needs, current situation and provided you have been honest with them they will have an idea of your estimated longevity based on the family history you have provided them. If you do not wish to work with a planner do your research on the Social Security website, write a list of questions you will need answered and then plan to visit the local Social Security office to get answers to your questions.
