As you plan for your retirement, you will likely be faced with many decisions about Social Security. Many retirees focus on when to claim their benefits, but another question they should be asking is, “How should I claim my benefits?”. For married people, how they choose to claim benefits is often more important than when.
When the Social Security program was first created, men were generally the higher wage-earners while their wives either didn’t work or worked for far less pay. Society has changed quite a bit in that regard, but we still find that husbands almost always have the higher-earning work record. Of course, in cases where the wife is the higher earner, these rules would work just as well in reverse.
Spousal benefits were created to allow the lower-earning spouse some financial security. When you claim a spousal benefit, you receive a monthly check of up to 50 percent of your spouse’s benefit check. In order to claim spousal benefits,
- you must be at least age 62
- your spouse must be eligible for Social Security benefits
- your spouse must have already applied for those benefits
Here’s where things can get tricky. If the lower-earning spouse did indeed work for a number of years, he or she might be eligible for benefits on their own work record. And if those benefits are greater than the spousal benefit, why not claim them instead?
As you know, for each year that you wait to claim benefits, you checks will grow by about 7 percent. If you wait until age 70, you can see quite a significant difference in your benefit amount – something that could be important if you’re worried about inflation.
One common strategy is to file for spousal benefits based on your spouse’s work record, while deferring your own benefits until age 70. Then, at age 70, you can claim your own higher benefit amount. This allows the lower-earning spouse to draw some Social Security income until age 70, and then maximize their own benefits later.
There is one caveat to this plan: In order to take advantage of the rule, the lower-earning spouse cannot file for spousal benefits early, at age 62. He or she must wait until their own full retirement age to claim spousal benefits, while deferring their own benefits. Therefore, early consideration and careful calculation is the key to maximizing Social Security. For more information on Social Security rules and procedures, and for help with your own unique situation, call our office for a consultation.
This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency
15043 – 2015/11/16
