For couples nearing retirement, effective Social Security strategizing can greatly enhance financial security, but the methods to do so are not always clear.
At a Glance
- Key Social Security claiming strategies for couples have changed since 2016.
- Delaying benefits until age 70 can increase total income substantially.
- Strategic planning can maximize survivor benefits, ensuring financial security.
- The spousal benefits landscape is complex and requires careful consideration.
Evolving Social Security Strategies for Couples
Couples navigating the path to retirement have seen significant changes in how they can claim Social Security benefits. Notably, the “file and suspend” strategy was rendered obsolete in 2016, and choices between spousal and retirement benefits have been curbed for those born after January 2, 1954. As strategies shift, couples must adapt their approaches by considering age, health, and financial situation to optimize benefits.
One effective strategy for maximizing Social Security involves both spouses waiting until age 70 to claim their benefits, thereby dramatically increasing their total income. Another option is the split strategy, where one spouse claims benefits early while the other delays, offering a flexible plan suited for different family situations, from caregiving to managing a disabled adult child.
When planning for #retirement, it’s important for women to know the factors that could impact their monthly payment. Find out more here: https://t.co/wGsudMd3cA
— Social Security (@SocialSecurity) September 14, 2024
Maximizing Survivor Benefits
Ensuring robust financial support in the event of a spouse’s passing is paramount. If the higher-earning partner delays claiming benefits, the couple can secure a more substantial monthly benefit, which then becomes the amount available to the surviving spouse. Given that the survivor receives the higher of the two benefits upon one partner’s death, delaying can prove beneficial, especially when the higher earner is older or has health issues.
“The higher earner’s benefit is what’s going to be paid if someone survives the other,” according to Jim Blair, lead consultant for Premier Social Security Consulting in Cincinnati.
Moreover, discussions between spouses on strategies can alleviate the burden when one partner passes away. Survivor benefits can reach up to 100% of the deceased spouse’s benefit, providing a lifeline during challenging times. Reviewing these options and potential financial implications helps tailor benefits according to a couple’s unique needs and future plans.
Are you eligible for both retirement and spouse's benefits? Here's what you need to know: https://t.co/pTR1zPMDy7 pic.twitter.com/LGBcKV9UZr
— Social Security (@SocialSecurity) December 6, 2023
Navigating the Complexities of Spousal Benefits
Understanding spousal benefits plays a critical role in a couple’s Social Security planning. While the spousal benefit can be up to half of the worker’s primary insurance amount, eligibility hinges on the spouse reaching age 62 or having a qualifying child. Coordinating these aspects with each partner’s earnings record, postponing claims increases potential benefits, reinforcing financial stability, a sentiment echoed by numerous financial experts.
According to Katie Brockman of The Motley Fool, “A whopping 60% of current retirees say their benefits are a major source of income, according to a 2024 poll from Gallup.”
Finally, claiming strategies must account for working while collecting benefits, taxes, and potential Medicare premiums. The goal remains to maximize Social Security benefits through strategic coordination, ensuring a robust, financially secure retirement.
Sources:
- https://www.aarp.org/retirement/social-security/info-2024/benefits-couple-strategies.html
- https://investor.vanguard.com/investor-resources-education/social-security/strategies-for-married-couples
- https://www.ssa.gov/oact/quickcalc/spouse.html
- https://www.fool.com/retirement/2024/12/23/1-important-conversation-to-have-with-your-spouse/
