Social Security Strategies For Married Couples

by Joe Plemon on June 23, 2010

Married couples: Social Security is complicated and don’t let anyone tell you otherwise. Is either of you (or both of you) close to retirement age? Are you wondering if you should start earlier or later? Before you decide, make sure you understand these two aspects of Social Security: “spousal benefit” and “surviving spouse benefit”. Let’s start with the definitions.

Spousal benefit

The lower earning spouse has a choice: to claim a “spousal” benefit of up to 50% of the higher earning spouse’s benefit or to claim his own earned benefit. The higher earning spouse must be already collecting benefits before the lower earning one can qualify for a spousal benefit. And this spousal benefit will be reduced for every month under full benefit age. For example, if the spouse is already drawing a $1600, the lower earning spouse could qualify for $800 a month at full retirement age; or 75% of $800 ($600) if starting at age 62.

Surviving spouse benefit

A surviving spouse of a retiree drawing Social Security will receive 100% of that pension, with the following provisions:

  • The survivor must be full retirement age. If not, the benefit will be reduced based on age.
  • If the survivor is insured on her own record and the benefit of the deceased spouse is higher, the survivor will continue to receive her own benefit and also the difference between her benefit and the deceased spouse’s benefit.

Simply put, the surviving spouse will receive the greater of her benefit or the deceased spouse’s benefit, providing she is full retirement age.

Got those definitions? Good! Now for some Social Security strategies.

For clarity’s sake (and because it is this way in most families), I will refer to the higher earner as the man and the lower earner as the woman throughout the rest of this article.

Strategy of waiting

All Social Security benefits are greater when delayed. Because the spousal benefit is dependent on the higher earner’s benefit, the advantages are compounded. Say the higher earning spouse’s benefit is $2,000 at full retirement age. If his spouse also waits until full retirement age to start her spousal benefit, she will draw 50%, or $1,000, for a combined $3,000 monthly benefit. On the other hand, if the higher earning spouse starts his benefit at age 62, it will be reduced by 25% to $1,500. Because 50% of $1,500 is less than 50% of $2,000, this reduction also affects the spousal benefit. But if the spouse starts drawing at age 62, she won’t even receive the full 50% of the $1,500; her benefit will likewise be reduced by 25% from $750 to $562.50 for a combined benefit of $2062.50. Obviously, waiting can make a huge difference.

In the same way, waiting will also affect the surviving spouse benefit. In the above scenario, the surviving spouse benefit drops by $500 (from $2,000 a month to $1,500 a month) when the benefits start early. If you consider this benefit as a form of life insurance, a $500 per month decrease is substantial.

Should Spousal Benefit always be delayed until full retirement age?

Not necessarily. The age differential of the spouses should be considered. For example, if the husband is 70 and the wife is 62, she should consider beginning her spousal benefit at the reduced rate. Why? Because the husband is likely to die earlier and, at that time, her survivor’s benefit (based on HIS pension) would kick in. This is the same benefit she will receive whether she starts at age 62 or not, so she should consider bringing the extra money into the household now.

How to draw Spousal Benefit while waiting

Suppose the husband is full retirement age and wants to wait until age 70 before starting his benefits. Will the wife, who cannot draw the spousal benefit unless her husband has started his pension, need to wait until he is 70? Not if the couple takes advantage of voluntary suspension.

Here is how it works: The husband files for his benefit and the wife files for the spousal benefit. The husband then immediately requests a voluntary suspension of his pension. The wife will be able to collect her spousal benefit while the husband’s future benefit will grow by 8% annually. I like this strategy because the couple is bringing in “bonus” household income while the husband is patiently maxing out both his future pension and his wife’s future survivor benefit.

Another way to claim a Spousal Benefit while waiting

Suppose the husband wants to wait until age 70 to start his pension but his wife also qualifies for benefits based on her own work record. Think through this one with me: she could start her benefit and he could sign up for the spousal benefit while waiting until age 70 to start his own. At that point he switches to his own higher benefit. As in previous examples, this will increase the survivor’s benefit, but will do so while bringing extra income into the household. And the wife could also switch to a spousal benefit based on what the husband’s benefit would have been at age 66. This is very similar to having your cake and eating it too.

One caveat: the higher earning spouse cannot use this tactic if he is younger than full retirement age.

Summary

Social Security can be complicated, but you can make intelligent decisions if you understand these basics. This is your pension that you have paid into all of your working life. Make sure you maximize your benefits.

One more thing: Social Security rules change, so I strongly recommend that you check with the Social Security Administration with all of your questions.

Have you started receiving your Social Security benefits?  What strategies did you use?  Would you recommend to those who haven’t started yet?

Creative Commons License photo credit: joguldi

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{ 96 comments… read them below or add one }

Joe Plemon September 22, 2012 at 1:03 pm

Bob,

As I tell others, Social Security is confusing and my understanding of these issues could be incomplete or plain wrong. Please check with your SS office for more “official” answers. With this caveat, my understanding of your situation is that your second wife (I will refer to her as second wife in my answer even though you are not married yet) could qualify for full survivor benefits at her full retirement age, reduced benefits as early as age 60, or may receive benefits as early as age 50 if she is disabled. See the below quote from the SS web site:

“If you are the widow or widower of a person who worked long enough under Social Security, you can:
*receive full benefits at full retirement age for survivors or reduced benefits as early as age 60.

*begin receiving benefits as early as age 50 if you are disabled AND the disability started before or within seven years of the worker’s death.

*receive survivors benefits at any age if you take care of the deceased worker’s child who is under age 16 or is disabled and receives benefits on the worker’s record.

I do not think that the fact that your ex-wife is eligible to draw from your benefit should affect whatever your second wife could draw. In other words, it may be possible for two different spouses to qualify for a survivor benefit on the same beneficiary.

Apparently, because your second wife’s 10 year old daughter is not “the deceased worker’s child” (your child), there is no survivor benefit for your second wife to care for her, even if she is under age 16.

Clear as mud? Tell me what you think.

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Ann October 18, 2012 at 1:54 pm

Hi Joe,

I was married 25 year’s to a man who has now remarried. I am 64, he is 67. I have not remarried.
Am I eligible to collect on his SS?? If so, what percentage and does he already have to be collecting. He still works, so he probably isn’t. What would be the smart move for me?

Thank you.

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Joe Plemon November 1, 2012 at 5:43 pm

Ann — Sorry for the delayed reply. Yes, you can collect on your former husband’s benefit. The following is a direct quote from the SS web site:

“A person can receive benefits as a divorced spouse on a former spouse’s Social Security record if he or she:

Was married to the former spouse for at least 10 years;
Is at least age 62 years old;
Is unmarried; and
Is not entitled to a higher Social Security benefit on his or her own record.

In addition, the former spouse must be entitled to receive his or her own retirement or disability benefit. If the former spouse is eligible for a benefit, but has not yet applied for it, the divorced spouse can still receive a benefit if he or she meets the eligibility requirements above and has been divorced from the former spouse for at least two years.”

Your benefit should be the same as normal spousal benefit, which is 50% of your spouse’s benefit, less a reduction in benefit for each month you are under full retirement age. Also, this spousal benefit would need to be more than any benefit you are currently drawing or qualified for on your own work record. You should talk to your local SS office to learn all of the details, but the key thing is that you have benefits coming from your ex-spouse’s SS.

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Becky November 8, 2012 at 2:45 pm

my husband is 62 and ma start getting his SS soon. I am 56….we have our 7 yr old grandson (adopted)….can Our grandson and me also draw a check from my husbands SS?

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Joe Plemon December 3, 2012 at 3:16 pm

Becky,

You need to talk to your local SS office for clarification, because these things are complicated, but my understanding is that yes, both you and the grandson can receive benefits in addition to those your husband would receive. The following is a quote from the SS web site:

“Even if he or she has never worked under Social Security, your spouse

can begin collecting the benefits as early as age 62. However, if the benefit begins early, the amount will be permanently reduced by a percentage based on the number of months up to his or her full retirement age.

can qualify on your record for Medicare at age 65.

can receive a benefit equal to one-half of your full retirement amount if they start receiving benefits at their full retirement age.

who is caring for your child who is also receiving benefits can receive the spouse’s benefit no matter what his or her age is.

Your spouse would receive these benefits until your child reaches age 16. At that time, the child’s benefits continue, but your spouse’s benefits stop unless he or she is old enough to receive retirement benefits (age 62 or older) or survivors benefits as a widow or widower (age 60).”

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Joe Plemon December 3, 2012 at 3:07 pm

Ron,

As I understand, both spouses (the one who files and suspends AND the one who signs up for spousal benefit) need to be full retirement age. The following is a quote from the SS web site (note the third paragraph):

“If you have reached full retirement age, but are not yet age 70, you can ask us to suspend retirement benefit payments.

If you apply for benefits and we have not yet made a determination that you are entitled, you may voluntarily suspend benefits for any month for which you have not received a payment. Your request to suspend benefits may include any retroactive benefits that might be due.

If you and your current spouse are full retirement age, one of you can apply for retirement benefits now and have the payments suspended, while the other applies only for spouse’s benefits. This strategy allows both of you to delay receiving retirement benefits on your own records so you can get delayed retirement credits.

Note: If you want to do this, only one of you can apply for retirement benefits and have the payments suspended.”

I hope this helps.

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Lowrie December 3, 2012 at 3:28 pm

The strategy Joe recommends is the one I followed, several years ago; and it appears to have worked: My wife and I went in person to the local office when she (younger) reached FRA; I filed and immediately suspended; she filed for spousal benefits and has received them for several years; now I am scheduled to receive my own benefits, having reached 70. So far so good, as the man who jumped off the Empire State building was heard to say as he passed the 50th floor.

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Z.Shao January 10, 2013 at 9:51 pm

Hi Joe,
Thanks for the very intuitive article!
I have a specific case,which I can not get answers from SS web.
I am almost 65 and want to claim for benefit at FRA while my wife is 63 now. She can start her benefit at a reduced amount now.
Say: 50% of spouse benefit is $1000 for her when I reach 66.
The benefit she claims now is $300 based on her own work record at reduced rate.
When she reaches FRA, can she still get the full 50% of spouse benefit or $1000 in total ?

Thanks for help!

ZS

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Joe Plemon February 27, 2013 at 10:30 am

Your wife will be able to receive the spousal benefit, assuming it is more then her benefit. However, if she starts her own benefit before FRA, any future benefit (including spousal) will be permanently reduced by the same percentage her own benefit was reduced.

This is a quote from the SS web site:

“If your spouse is under full retirement age and qualifies on his or her own record, we will pay that amount first. But if he or she also qualifies for a higher amount as a spouse, they’ll get a combination of benefits that equals that higher amount. If he or she begins receiving benefits:

between age 62 and their full retirement age, the amount will be permanently reduced by a percentage based on the number of months up to his or her full retirement age.”

I hope this helps.

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Rebecca February 19, 2013 at 4:02 am

Hello, I am 57 yrs old and my husband is almost 63. I have not worked much at all in my life and am in poor physical condition. Can Iapply for disability and draw from my husbands SS ?

Reply

Joe Plemon February 27, 2013 at 10:46 am

Rebecca,

Sorry, but your question is beyond what I am competent to answer. I have not been able to learn if you can draw disability based on your husband’s SS, so you need to apply through your SS office to see what you qualify for. Of course, when you turn 62, you will be able to draw a spousal SS retirement pension (not disability) from your husband’s benefit.

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Steve February 19, 2013 at 7:16 am

Joe – we have conversed in the past on your site and all of the comments have been extremely helpful. I just wanted to qualify what I think is my correct course of action and get comments.

I am 5 years younger than my wife. My wife qualifies for her own SS benefit. I am the higher wage earner.

What I plan on – when my wife reaches FRA at 66, I will be only 61. We intend for her to start her benefit at FRA. When I reach FRA at 67 I intend to file and then suspend. We then will have my wife file for 50% benefits under my benefit amount, since the amount will be larger, which should be equal to 50% of my qualified benefit if I started at FRA. I will then start my benefit at 70.

I believe this should help us achieve the maximum benefit dollar amount possible. Am I on the right course of action knowning the bylaws of the SSA rules today?

Thanks,

Steve

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Joe Plemon February 27, 2013 at 11:06 am

Steve — I like the way you think, and I see no reason why your plan would not work. You are not only maxing out your benefits, but (because you won’t start your benefit until age 70), you are maxing out the survivor benefit as well, which could provide savings on life insurance premiums — because you won’t needs as much coverage — in your later years.

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Steve February 28, 2013 at 7:02 am

Joe – thanks a bunch for your comments…comforting to know that the plan seems to be workable at least with the present rules. Time will only tell.

Steve

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Mike Jacob April 3, 2013 at 10:56 am

I’m 65 wife is 62. Both had careers. My SS benefits are only moderately higher than wife’s.
We plan to apply for benefit on her record very soon ($1,511). At 66 I will then file a restricted application for Spousal Benefit only ($755.50). Later applying at 70 for my full benefit ($3,011).

1. If I happened to die prior to 70, would her total Survivor Benefit amount revert to my FRA (66) or would it equal the benefit available to me at 67, 68, 69 (the actual date of death)?
2. Is there any penalty for her (having filed early – 62 1/2) that could affect her Survivor Benefit as long as she files for the Survivor Benefit after her age 66?
3. If I died at 70 and after I applied for my normal benefit, wife would be 68. For her Survivor Benefit is there any applicable formula that decreases her benefit if she files at 68 as compared to waiting until she is 70 to file for the Survivor Benefit.
4. Would there be any benefit/reason for me to additionally “File and Suspend” at 66 before filing for my (restricted) Spousal Benefit?

Thanks in advance – I hope my questions are clearly stated. Surely hope you can help. We’ve seen the experts.

Reply

Joe Plemon April 8, 2013 at 11:08 am

Mike,

Yes, your questions are clearly stated, and I am glad you have already seen the experts because I don’t consider myself as such. This being said, I will give you my best shot at answering these questions, but, as I always do, I recommend talking to your local SS office.
1. If you were to die before your wife reaches FRA, her survivor benefit would be reduced accordingly. However, based on this quote from SS website: “A widow or widower, at full (survivor’s) retirement age or older, generally receives 100 percent of the worker’s benefit amount”, I am thinking that her benefit would be based on your benefit amount at the age when you pass away.
2. No. Her survivor benefit is based on your benefit, not hers…even if she starts her own before FRA.
3. No. Her survivor benefit could be reduced if she draws on it before she is FRA, but I have never read that it could be increased by waiting until she is 70 to start drawing it. I could be wrong, so let me know if you learn differently.
4. Of course, the main reason you would file and suspend would be to increase your pension once you turn 70. Doing so will also increase your spouse’s survivor benefit which has the additional advantage of giving her more life insurance, which means you may not need as big a policy on yourself, which means that waiting until you are 70 might allow you to save on life insurance premiums.

I hope this helps. Social Security is confusing, so please check my thoughts with the experts. Also, if you find out that anything I said is not true, please let me know.

Thanks,
Joe

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Jeff Cargile July 23, 2013 at 1:25 pm

My wife and I are both 59 years old. My birthday is 1/30/54 and wife’s birthday is 4/2/54. My wife retired from the public school system around 4 years ago (2009) after 30 years of employment. I am still employed at a pharmaceutical company. We are both obviously eligible for SS. I am beginning to think about what might be my best option(s) regarding drawing social security. I’ve read various articles and know about the 8% loss per year if you draw money beginning at age 62 and the corresponding pay addition of 8% a year if you wait until age 70. At this point I do not think I will consider waiting until age 70 to draw SS. I am more intersted in the possibility of either my spouse or myself (probably her since she is the lower wage earner) possibly drawing SS around age 62 followed by me at around age 66. I ‘m leaning toward drawing SS earlier rather than later because I might be dead later. I definitely plan to remain employed until at least age 65 due to Medicare. Can my spouse initially take advantage of a spousal benefit even though I would not be retired or age 66 when she might draw SS at age 62? Please provide feedback and or your comments regarding what you think might be my best approach given my present scenario.

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Joe Plemon July 30, 2013 at 4:34 pm

Jeff,

My understanding on the spousal benefit is that the beneficiary must be FRA before Social Security would allow him to take a spousal benefit without beginning his own pension. Therefore, you would need to be 66 before you could take a spousal benefit without starting your own.

If you and your wife both want to start your pensions earlier than age 66, it appears that (because you are basically the same age) neither one of you could claim a spousal benefit without claiming your own. However, whenever you claim your benefit, your wife (the lower wage earner) would have a choice of claiming 50% of your benefit (less deduction if she is less than FRA) or her own full benefit — whichever is larger.

This link will take you to a helpful article: http://www.socialsecuritychoices.com/info/freespousal.php

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Barry July 31, 2013 at 9:34 pm

I found this article that agrees with your “Another way to claim a Spousal Benefit while waiting”
http://moneyover55.about.com/od/socialsecuritybenefits/a/socialsecurityspousebenefit.htm
That said: “After you reach full retirement age, you can choose to receive only the spouse’s benefit, and delay receiving your retirement benefits until a later date, allowing you to receive a higher benefit later based on the effect of delayed retirement credits.”
We are thinking about following this strategy. We are thinking of having my wife (64) start her benefits when I reach 66 and I will file for spousal benefits. When I’m 70, I will begin taking benefits on my record and she will take spousal benefits. We think waiting to take benefits on my record makes sense because we will receive the increased payments until the last one of us dies. We are thinking about taking her benefits now because the penalty for taking early will apply only until the first of us dies. Additionally the combination of my spousal benefit and her reduced benefit will be greater by about 8% than her spousal benefit from my record even if she waited until FRA. We will be about $27,000 ahead when she would have started to collect benefits. The penalty we will suffer for taking early will be about $104 a month. Thus it will take over 20 years to catch up even if we earn no return above inflation on the early collected money. We are thus hedging our bets by betting one of us will live a long time but taking some of the money off the table early in case one of us goes early.
What do you think?

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Joe Plemon August 1, 2013 at 5:32 pm

Barry,

You asked what I think. I think you have put a tremendous amount of thinking and strategizing into your plan, and I find absolutely no fault in it. So…I say go for it and I hope you both have a long and happy retirement.

Joe

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Steve January 8, 2014 at 2:05 pm

Hello Joe – been some time since I asked any questions so hope this is OK to ask another one.

Back in February of 2013 I mentioned the following which you agreed was a sound plan:

I am 5 years younger than my wife. My wife qualifies for her own SS benefit. I am the higher wage earner.

What I plan on – when my wife reaches FRA at 66, I will be only 61. We intend for her to start her benefit at FRA. When I reach FRA at 67 I intend to file and then suspend. We then will have my wife file for 50% benefits under my benefit amount, since the amount will be larger, which should be equal to 50% of my qualified benefit if I started at FRA. I will then start my benefit at 70.

Note: what I need to ask now – my wife has a non-SSA pension from the State of California. I understand that when she files for benefits that any benefit she is eligible for will be reduced by “x” amount given she has a stream of income from a qualified, non-SSA source of another gov agency. Question is – if her amount is reduced, say 50+% per the language today (and could be much more up to 100%) and she waits until FRA and gets a very reduced amount – when I file when I am 67 and suspend – is the spousal benefit she will be entitled to also reduced by more than 50% given the existing pension income stream? Does the issue of having a different gov pension stream coming in impact the factor that she is eligible for 50% of my FRA benefits?

My question make sense?

Thanks,

Steve

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Joe Plemon January 27, 2014 at 1:42 pm

Steve,

Your question makes perfect sense, but I am not going to be much help because her SS benefit is evidently determined by whatever State of California benefit she draws. The limitation may not be a SS rule, but a California rule. Some states do not allow “double dipping”, which is probably why her SS benefit is going to be very limited if she is already drawing the California benefit. My guess (and this is definitely a guess) is that if her SS benefit is reduced because of the California benefit, it will also be reduced when she attempts to draw a spousal benefit. You will need to ask both agencies (SS and State of California retirement system) lots of questions to get your answer. Sorry I can’t be of more help. Let me know what you find out.

Reply

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