Social Security Strategies for Married Couples to Maximize Benefit Checks
Deciding at what age to start receiving Social Security benefits is one of the biggest questions most retirees face as they approach retirement. If you’re married, the same questions become much more complicated. That’s because you and your spouse need to plan together to maximize your benefits. Fortunately, there are several strategies that married couples can use to help increase their Social Security benefits. In this article, we will discuss Social Security strategies that can help married couples maximize their benefits.
caution
Before we detail Social Security strategies for married couples, there are a few things couples need to understand.
The first and most important thing is to get an idea of the amount of benefits you can expect in retirement. One easy way to estimate your benefits is to create a mySocialSecurity account on the Social Security Administration (SSA) website.
Your mySocialSecurity account provides a personalized estimate of your future benefits based on your expected retirement age and work history. Alternatively, there are several calculators available online to help you estimate your benefits at different claiming ages. To get a clear idea of your maximum and minimum benefits, it’s a good idea to estimate your and your spouse’s benefits at different ages.
It’s also important to note that married couples cannot receive their full benefits until they reach full retirement age (FRA). Couples should also know that they can claim spousal benefits based on their partner’s work record. Spousal benefits can be up to 50% of the FRA spousal benefit.
Additionally, to maximize benefits, couples must understand how SSA calculates benefits. One of the most important factors in determining Social Security benefits is your work history.
SSA uses your 35 highest earning years to calculate your Average Indexed Monthly Earnings (AIME). If you have worked less than 35 years, SSA uses 0 for each year you worked less than one year. This will reduce your overall benefit amount.
After determining the AIME, SSA uses a formula to determine the Primary Insurance Amount (PIA). PIA is the amount you receive if you claim benefits at FRA.
Depending on your year of birth, if you claim benefits before FRA, your monthly benefit will be permanently reduced. On the other hand, if you claim after FRA, your benefits will increase. In fact, delaying your benefits until age 70 can increase your monthly benefits by up to 24% more than with a PIA.
In particular, four Social Security strategies for married couples can help you maximize your combined benefits. These strategies often revolve around when each spouse claims benefits. Choosing one of these four Social Security strategies will largely depend on your income and financial needs.
Social Security strategies for married couples include:
One person applies early and one person delays.
This is the best strategy for couples who need immediate money. Under this strategy, one couple would claim benefits early and the other would delay until age 70.
This strategy provides immediate income for the family while allowing the couple to benefit from higher deferred retirement credits in the future. Spouses who delay claiming benefits will receive a higher monthly benefit, which can provide long-term financial security for the couple.
Both claimed early
In some scenarios, it makes sense for both spouses to claim benefits as soon as possible, say at age 62. These strategies will result in lower monthly benefit checks, but you may get your money sooner.
For couples who do not expect to live long due to poor health, claiming benefits early is the best option. When choosing this strategy, it is important for couples to consider the long-term effects of reduced benefits.
Both postponed until age 70
Using these strategies will maximize your monthly benefit payments. As mentioned above, deferring benefits beyond FRA increases your monthly benefit. So, if your situation allows both spouses to delay benefits until age 70, adopting this strategy can significantly increase your monthly benefit check. However, such a strategy will only prove effective if both spouses work and receive benefits.
This strategy is more useful for couples who want to work longer and don’t have enough saved to retire early. This strategy is also suitable for people who love to work. On the other hand, such strategies may not be useful for people who do not expect to live long.
Person claiming spousal benefits
If one spouse’s lifetime earnings are significantly higher and the other spouse’s earnings are lower, it can be very beneficial to claim spousal benefits rather than your own. Therefore, the lower-earning spouse can benefit by claiming spousal benefits based on the higher-earning spouse’s record.
To claim spousal benefits, the lower-income spouse must be at least 62 years old, and the higher-income spouse must claim benefits on their own. Spousal benefits can be up to 50% of the higher-earning spouse’s benefit.
final words
These Social Security strategies for married couples can help them maximize their monthly Social Security checks. Choosing the right strategy requires careful assessment of each spouse’s financial needs, health, and work history. It is important to note that the strategies discussed above are not perfect and each has pros and cons. Therefore, the best strategy for you will be the one that helps you meet your current and future financial needs.
