Social Security tips that should factor into a couple’s decision on when to file
As you transition into retirement, you’ll face many big decisions. One significant choice, when it comes to your retirement income, will be when and how to file for Social Security benefits as a couple. While there are many approaches to consider when deciding how you and your spouse should receive these benefits, unfortunately, many of them can result in you receiving significantly less than what’s available to you.
Each decision you make as a couple can impact the monthly Social Security benefits you receive. To prevent you and your partner from getting short-changed, consider these 5 Social Security tips for helping married couples maximize their benefits.
Determine The Benefits Estimates For You & Your Spouse
Your first step in maximizing your Social Security benefits should to be visit the Social Security Administration website. The link below will provide you estimates for how much you’ll collect if you start receiving benefits between age 62 and age 70.
Go to ssa.gov to get your Social Security estimates
Wait At Least Until Full Retirement Age To Claim Benefits
If you start early, you get less on a monthly basis. Consequently, if you wait longer, you get more on a monthly basis. You can choose to start collecting Social Security benefits at 62 (the earliest age possible), but your benefits will be permanently reduced from what you would have received if you waited until your full retirement age (FRA). Claiming benefits at 62 means your monthly benefit is likely to be about 25-30% less than what you would have received at your FRA.*
Conversely, healthy couples looking to maximize their lifetime payout, would benefit by waiting past their FRA to collect your benefits. Doing so could increase your future monthly payout by up to 8% each year until you turn 70, when benefit increases stop.
*It is important to note, if you file before FRA and continue to work, your benefits are reduced $1 for every $2 you earn over a certain amount ($17,640 in 2019). The year of your FRA, benefits are reduced $1 for every $3 you earn over a certain amount ($46,920 in 2019). Your monthly benefit will be readjusted to pay you back the amounts withheld once you reach FRA.**
Delay Social Security Benefits For The Higher Earner
After comparing the estimates between you and your spouse, pay special attention to the difference between the estimates. The spouse with the highest earnings may want to delay receiving monthly retirement benefits from Social Security as long as possible, but not beyond the age of 70. Over time, the higher earner’s increases will be worth more than the lower earner’s increases. Because the surviving spouse will collect the larger of the two payments, maximizing the larger payment will benefit both spouses.
Consider A File-And-Suspend Approach
Employing a file-and-suspend approach will help you take advantage of the Social Security spouse’s benefits. If both spouses file for benefits at FRA and then suspend them, this allows one spouse to claim a spouse’s benefit as both of them continue to let their regular benefits grow. If the couple intended to delay collecting anyway, this monthly spouse’s benefit effectively equals free money. Further information about this strategy can be found here.***
Consider A File-And-Restrict Approach
With a file-and-restrict approach, one of the spouses must be collecting his or her regular benefits. Say you are 66 and your spouse is collecting Social Security based on her earnings history, you can file and restrict your application and qualify for your spousal benefit based on her earnings history. Employing this strategy, you will collect a spousal benefit while you postpone collecting your own benefits, which continues to grow. Once your regular benefit has grown to a level that satisfies you, you can withdraw your restriction and begin collecting that amplified benefit for the rest of your life. Further information about this strategy can be found here. ****
What You Can Do Next
Talk with your spouse about what would be best for each of you both now and in the future, make sure you explore some scenarios with the social security calculator.
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Disclaimer: The information provided in this blog is for educational and informational purposes only and solely as a self-help tool for your own use. The information contained in this blog is not intended to be a substitute for legal or financial advice that can be provided by your own financial advisor. Although care has been taken in preparing the information provided to you, Shoreline Financial Advisors, LLC cannot be held responsible for any errors or omissions, and accepts no liability for any loss or damage you may incur. Always seek financial and/or legal counsel relating to your specific circumstances as needed for any and all questions and concerns you have now or may have in the future.