Married Couples: Coordinate Social Security Claims to Boost Benefits

Social Security is a significant part of most married couples’ retirement-income plans. And couples can bolster that foundation of income by thousands of dollars by carefully timing when each spouse claims benefits.

Coordinating claims can make the most of the benefits available to each spouse. For instance, one spouse can delay claiming past full retirement age to boost his benefit amount with delayed-retirement credits, while the other spouse files earlier than full retirement age to bring in some income now.

That’s the strategy Robert, 71, a Kiplinger’s Retirement Report subscriber, and his wife, 66, followed. She started benefits at 62 and uses her check for pocket money and gifts for her grandchildren, he says. Robert, who asked that their last name not be used, waited until 70 to claim, boosting his benefit and the potential survivor benefit for his wife. “I wouldn’t want to leave her without enough,” he says.

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Like Robert and his wife, you and your spouse may have significant gaps in your ages and benefit amounts. Those factors can make a difference in determining when spouses may want to claim.

Taking such factors into account is important because choosing when to claim benefits has long-lasting consequences. “It’s a huge decision because basically you’re setting up what you’re going to receive for the rest of your life,” says Jim Blair, a partner with Premier Social Security Consulting, in Sharonville, Ohio.

A key step is determining when the higher earner’s benefit should start, because that is the benefit that will last the lifetime of the spouse who lives the longest. Sometimes, the higher earner will decide to take his benefit at age 62 or well before his full retirement age (which is rising from 66 to 67, for those born in 1960 or later) because he thinks he’s not going to live long enough to justify delayed claiming, says Elaine Floyd, director of retirement and life planning for Horsesmouth, an adviser training program. However, if he waits until age 70 to claim, his benefit will grow by 76% from age 62 to 70, and this higher amount will transfer to his lower-earning spouse after he dies. Failing to maximize the benefits of the higher-earning spouse is “the number-one mistake” most couples make when they file, Floyd says.

For example, take a couple where both partners are age 62, Floyd says. The husband is the higher earner, expecting a monthly benefit of $2,600 if he claims at his full retirement age of 66 and 4 months. The wife worked part-time and expects an $800 monthly check at her full retirement age. If the wife claims her benefit at full retirement age (and switches to a spousal benefit after her husband claims), and the husband waits until age 70 to claim, the couple will receive $1,336,261 over their expected lifetimes, compared with $1,074,047 if they both claim at 62—a difference of more than $262,000.

So even if the husband expects he won’t live a long life, he should maximize his benefit for his wife, who likely has a longer life expectancy. “The most loving thing a higher-earning husband can do is to claim his benefit at 70,” says Floyd.

Making Use of the Restricted Application Strategy If You Can

Keep in mind that some boomer couples can still make use of a claiming strategy that the government is phasing out. If you were born before January 2, 1954, you can file a restricted application for spousal benefits only. That lets you claim a spousal benefit after reaching full retirement age if your spouse has claimed benefits, while you let your own benefit grow to age 70. That extra income can help the couple delay his higher benefit and bring in more total benefits, says William Reichenstein, a Baylor University professor and a principal at Social Security Solutions. (A spousal benefit is worth up to 50% of the higher earner’s benefit, though it’s reduced if the spouse claims a benefit early.)

Consider a couple with a higher-earning husband born in 1953 and a wife who is three years younger, Reichenstein says. His life expectancy is age 85, while hers is 90. His full retirement age benefit is worth $2,000 a month, while hers is $1,200. In this case, she should file for her benefits at age 63, when the higher earner reaches full retirement age, so that he can get four years of spousal benefits, Reichenstein says.

Under this strategy, she will get a $940 monthly check starting at age 63, while he will get a $600 monthly spousal benefit, or half of her full benefit of $1,200. (The spousal benefit isn’t reduced because he is claiming it at his full retirement age.) At 70, he switches to his retirement benefit of $2,640, which grew 32% because he earned delayed-retirement credits of 8% a year until 70 (on top of that, he’ll get the annual cost-of-living adjustments, too). After his death, her $940 benefit check stops, but she picks up a survivor benefit of $2,640 per month based on her deceased husband’s earnings record. (As long as she claims a survivor benefit after she turns full retirement age, the survivor benefit won’t be reduced, even if she had previously claimed a reduced benefit or spousal benefit.)

Using the restricted application strategy boosts their total benefits over the course of their projected lifetimes by nearly $100,000 more than if they claimed benefits at their full retirement ages and didn’t use the strategy. Taking the route of restricting an application provides $971,760 in total lifetime benefits for this couple based on their life expectancies, Reichenstein says. If instead he files for retirement benefits of $2,000 per month at his full retirement age of 66 and she files for retirement benefits of $1,200 per month at her full retirement age of 66 years and 4 months, they would end up with $98,160 less.

For couples who don’t qualify for the restricted application strategy, having the higher earner delay may be harder but not impossible if the lower earner qualifies for even a minimal benefit of her own. The lower earner could take her own benefit early to bring in income, while the higher earner waits until at least full retirement age or a few years beyond, if not until 70.

But delaying can be tough for one-earner couples, in which one spouse has no benefit of her own. That spouse can’t take a spousal benefit until the earner claims his benefit. If the couple is the same age and he delays until 70, they will have no Social Security income until then. One-earner couples should run the numbers to consider whether having the earner claim a benefit at full retirement age or shortly after makes more sense, so they can trigger the spousal benefit for the non-earner sooner than if they delay.