How To Maximize Social Security Benefits for Married Couples

How To Maximize Social Security Benefits for Married Couples

When you retire, you get to decide what age you'll start taking Social Security. Your choice impacts how much you'll receive per month — and, while it's an important factor for all retirees, married couples have even more to consider.

By planning together, couples have extra ways to get more out of the program. These strategies can help you maximize Social Security benefits for married couples.

Social Security Overview

You can start taking Social Security as soon as you turn 62. Every month you wait past this point increases the amount you'll receive until the benefits max out at age 70.

The Social Security Administration gives one hypothetical example: Someone would receive $700 per month if they started at age 62, $1,000 per month if they started at age 67 and $1,240 per month if they started at age 70. Once you turn 70, the payments will not grow any further, so there's no more benefit to waiting longer to collect.

This creates a trade-off: You can start earlier to receive more payments in total, but each one will be smaller than if you wait to receive bigger checks in the future. To see how much you'd receive at different ages, you can request a free estimate from Social Security based on your earnings history.

How Payments Work for Married Couples

Married couples have a few other avenues for maximizing their Social Security payments. First, when each person starts Social Security, they can set up their payments two different ways — on their own work earnings or on the earnings of their spouse.

If you wait until your full retirement age (between age 66 to 67, depending on when you were born), the spousal benefit maxes out at 50% of your partner's Social Security check. Starting earlier reduces the percentage.

For example, imagine Amy has a Social Security benefit of $1,000 a month from her work. Her husband, Steve, would receive $400 a month based on his work at age 67. Alternatively, he could elect to receive a spousal benefit worth 50% of what Amy receives — in this case, $500.

If your partner passes away before you, you'll also have the option to inherit their Social Security benefit, replacing your check with their check. This could make sense if your partner has a larger payment.

Looking back to the previous example, if Amy passes away first, Steve can then choose to replace his $500 check with her $1,000 check as a survivor's benefit. These benefits can help women in particular overcome the unique challenges they face in retirement.

How To Maximize Social Security Benefits for Married Couples

Given the rules for collecting Social Security payments, married couples can generally take one of three approaches to make the most of their benefits.

  • 1. Start as early as possible. This could be a good choice if you and your spouse need more income early in retirement as well as if you have a lower life expectancy due to health reasons or because of family history. Although the larger payments from delaying can add up to more money over time, it typically takes over a decade of payments to reach the break-even point where delaying comes out ahead. This means you might not break even until your 80s. Those with a lower life expectancy may worry about reaching this point and choose to collect early.
  • 2. Delay for as long as possible. Oppositely, another strategy involves both spouses delaying collecting for as long as possible, aiming for when payments max out at age 70. This increases the size of Social Security for both partners — the couple gets the highest possible monthly income from the program, especially if they work past the full retirement age. This could be a good choice for those with a longer life expectancy. Social Security is one of the few guaranteed lifetime sources of income.
  • 3. Max out payments for the higher-earning spouse. Social Security payments are determined by how much you earned during your career. If one spouse earned more than the other, it could make sense to have them wait as long as possible and net a larger check.

By delaying, not only does the higher earner create a larger payment for themselves, but they also create a larger spousal and survivor benefit for their partner. The other partner can start collecting earlier and plan to switch to the spousal and survivor's payments later in retirement.

Other Factors To Consider

As you compare the three strategies, some other factors to consider as part of your decision include:

  • The income difference between spouses. The greater the difference in income for the spouses, the more it makes sense to use the third strategy: the higher earner delays collecting, while the lower earner gets to start earlier. A bigger income difference means that the lower earner is more likely to use spousal benefits (50% of their partner's check), so there is less downside for them to start early — they can switch a few years down the road. On the other hand, if both spouses earn similar amounts, then you are less likely to use spousal benefits, so the third strategy has less value. For budgeting, starting one check early and delaying the other could still make sense, but strategies one and two also have more value when your incomes are similar.
  • The age difference between spouses. If you and your spouse have a five-year or greater difference in age, the younger spouse has more of an incentive to start their payments sooner, especially if they earned less, while the older spouse has more reason to delay. This is because the younger spouse is more likely to outlive their partner, meaning they are also more likely to consider using the Social Security inherited benefit — and to use it for a longer time. On the other hand, spouses of similar ages are less likely to outlive one another by many years, so the inherited benefit may be less of a priority.
  • Your current income needs. While it's a nice idea to say it would help to delay Social Security, that isn't always possible. If you need more income right away and don't have any other retirement assets you can fall back on, it could mean starting one or both Social Security payments as soon as possible.
  • Whether you're still working. You and your spouse can apply for Social Security while you're still working. However, the Social Security Administration could reduce your monthly payment if you have earned income from a job before you reach your full retirement age. At the same time, you're locking in a lower Social Security payment.

If you're earning enough from work to cover your bills, consider delaying until after you've retired. If one spouse has stopped working, they can collect their Social Security without the reduction, even if their partner continues to work.

Making Your Decision

Choosing when to start Social Security can be a fairly complex conversation for married couples. Don't rush the decision — after you begin collecting payments, it's hard to go back. You do have a 12-month window to change your mind, but you would need to pay back everything you received from Social Security.

As you prepare for this crucial retirement decision, consider speaking with a financial advisor or retirement expert. They can help you run the numbers based on your earnings and other retirement savings to help you figure out how to maximize your Social Security benefits.

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