One of the biggest decisions for a married couple is when each one should claim their social security benefits.
If you are both close in age, you have different optoins for when each of you should claim benefits with the aim of maximizing your benefits depending on each other’s expected benefits and how much money you’ve socked away for retirement.
Remember that the amount you will receive from Social Security depends on your age at the time of filing. You’ll get less (as low as 70% of your full benefit) if you claim before reaching your “full retirement age,” which is 67 for most people, but you can get more the longer you delay up to age 70.
Here’s a look at some options for when to file for Social Security to maximize your combined income potential.
Example 1. Lower-earning spouse first claims and later switches to spousal benefits
Under the rules, one spouse is eligible to receive 50% of the higher earner’s benefits if that is more than they are receiving on their own.
Sherry’s monthly benefit at full retirement is $1,400 while her husband Steve’s is $3,200. He is two years younger. If they both file at 67, she will collect a $1,400 benefit for 36 months.
After Steve files at 67, Sherry is eligible for a spousal benefit of $1,600, or half of Steve’s benefit amount. George still will receive his full $3,200.
The caveate: If Sherry waits to file until she turns 70 to claim benefits, her monthly benefit will be $1,736 (124% of $1,400), which is more than her spousal benefit. However, she will miss out on the $50,400 she would have received by filing at 67.
Example 2. Higher earner waits to claim
Armand’s monthly benefit at 67 is $2,500 and $3,100 at age 70. Jessica’s monthly benefit is $2,000 at age 67 and $2,480 at age 70.
By waiting, Armand’s monthly benefit grows by $600. Maggie’s grows by $480, so he’ll gain more by waiting. This is best in situations where the lower earner has a shorter life expectancy and both can get the most of her benefit.
Example 3. Both claim at 70
Armand and Jessica above would earn a compbined $4,500 a month if they file at 67, but $5,580 if they both wait until they turn 70.
This is a good strategy if both are in good health and one (or both) are still working or have other financial resources from which to draw, like a 401(k), Roth IRA, brokerage account or traditional pensions.