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Strategies to Maximize Social Security for Married Couples

A couple looks over their plans for when they'll file for Social Security.

Making the most out of Social Security benefits is a crucial aspect of retirement planning, especially for married couples. Optimizing these benefits can significantly impact your quality of life during retirement, providing a steady and reliable source of income. From delaying Social Security until age 70 to strategically splitting your benefits, here are four common Social Security strategies to help married couples maximize their benefits. A financial advisor can also provide valuable guidance as you plan for retirement.

Estimate Your Benefits

Before delving into specific claiming strategies, it’s essential to begin by estimating your Social Security benefit, as well as your spouse’s benefit. You can do this by creating a mySocialSecurity account on the Social Security Administration’s website. This account provides you with a personalized estimate of your future benefits based on your work history and projected retirement age. You can also use SmartAsset’s Social Security calculator, which can help you estimate how much your benefits could be at different claiming ages.

It’s important that you and your spouse estimate your monthly benefits at different claiming ages so you can have a clear understandiong of your maximum and minimum benefits. Remember, you won’t receive your full benefit until you reach full retirement age. Also, keep in mind that married couples can claim spousal benefits based on their partner’s work record, which can be up to 50% of their spouse’s benefit at full retirement age.

Understanding How Your Benefit Is Calculated

First and foremost, your work history plays a significant role in determining your Social Security benefit. The Social Security Administration (SSA) calculates your average indexed monthly earnings (AIME) based on your 35 highest-earning years. If you worked for less than 35 years, then zeroes will feature in the calculation, which can lower the overall benefit amount.

Once your AIME is determined, the SSA applies a formula to calculate your primary insurance amount (PIA). This is the amount you would receive if you claim benefits at your full retirement age, which varies depending on your birth year.

Understanding these calculations is vital for creating a smart Social Security strategy. If you start receiving benefits before your full retirement age, your monthly payment will be permanently reduced by up to 30% Conversely, waiting until after your full retirement age can lead to increased monthly benefits. In fact, if you delay Social Security until age 70, your benefit will be worth up to 24% more than your PIA.

Additionally, consider your health and longevity when planning your strategy. If you have reason to believe you’ll have a longer-than-average lifespan, waiting to claim benefits might make sense as it could result in a higher lifetime benefit payout and vice versa.

Strategy 1: Both Spouses Delay Until Age 70

A married couple chooses to both delay their Social Security benefits until age 70.

One effective strategy for married couples is for both spouses to delay claiming their benefits until they reach the age of 70. Delaying benefits beyond your full retirement age results in increased monthly benefit amounts. If both spouses have worked and earned their benefits, this strategy can lead to substantially higher combined monthly income during retirement.

This strategy may make the most sense for couples that don’t have enough savings to retire and must continue working until at least age 70. It also may be suitable for those who simply enjoy working. However, if you don’t anticipate living very long for one reason or another, this strategy may not produce more total income compared to claiming earlier.

Strategy 2: Capitalize on Spousal Benefits

A married individual is entitled to claim a spousal benefit based on their spouse’s earnings record. This can be particularly beneficial when one spouse has significantly higher lifetime earnings.

To qualify for a spousal benefit, the lower-earning spouse must be at least 62 years old, and the higher-earning spouse must have already filed for their own Social Security benefits. As mentioned earlier, the spousal benefit can be up to 50% of the higher-earning spouse’s benefit.

For example, suppose Max and Amy are deciding when to claim their benefits. Amy, who maxed out her benefits by delaying them until 70, collects $4,300 per month. Max, however, would only collect $2,000 per month if he filed for his own benefit now. Instead, he files for a spousal benefit that’s worth $2,150, producing an extra $1,800 per year for him and Amy this year.

Strategy 3: One Spouse Claims Early, One Delays

A couple considers way to maximize their Social Security benefits.

Now let’s think about a different scenario. What if one spouse needs immediate income while the other can afford to delay Social Security until age 70 and max out their benefits? You and your spouse may decide the best way to maximize your Social Security benefits is to adopt a split or hybrid approach.

This strategy can provide some immediate income while still allowing the couple to benefit from higher delayed retirement credits in the future. The spouse who delays claiming will ultimately receive a more substantial monthly benefit, which can be crucial for long-term financial security.

Strategy 4: Both Claim at 62

In some cases, it may make sense for both spouses to claim their benefits as early as possible, at age 62. While this strategy results in lower monthly benefit amounts, it provides income earlier, which may be the best option for couples with health conditions that could lead to shorter life expectancies. However, it’s important to weigh the long-term implications of reduced benefits when considering this option.

Bottom Line

Maximizing Social Security benefits for married couples requires careful consideration of individual financial circumstances, including each spouse’s work history, health and retirement goals. Married couples can potentially maximize their benefits by delaying until age 70, capitalizing on spousal benefits or taking a hybrid approach. Some couples may actually be better suited claiming at the earliest possible age. Each has its pros and cons, and none can be definitively classed as the best approach. The best strategy is the one that aligns with your individual circumstances and long-term goals.

Retirement Planning Tips

  • If you’re looking to maximize your Social Security, you can consider what’s called the Social Security bridge strategy. The approach calls for delaying your benefits and using other assets like 401(k)s and IRAs to cover your spending in retirement while your benefit increases in value.
  • A financial advisor can help you save and plan for retirement. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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