When you’re married, sorting out when each of you should start taking Social Security can be doubly hard.
In this week’s column, Phil Moeller, the author of Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs and co-author of the updated edition of How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security, answers two reader questions on this tricky topic.
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How can my husband and I get the most from Social Security?
Donna L: I am so lost in regard to Social Security and how to collect the most for my husband and myself.
We are both 63. He has been at the same company for 35 years and plans to retire at the age of 66 and 2 months. I work as a home health care worker and make only around $10,000 a year. I also have been receiving Social Security disability for about seven years; my monthly payments are about $800.
Please advise us on how we may make the best decision in the coming three years. Ever grateful.
Donna Marie: We are both 68. If my husband is collecting his Social Security now but I will not collect until I am 70, do I earn money from his check over and above what he collects?
Phil Moeller: Aside from it being “Donna” week at Considerable, these two questions are good ones for explaining Social Security benefits strategies for couples.
Our first Donna is already collecting her benefits, so there is not much she can do to affect their size or to help out her husband. If he had been born prior to early 1954, he might have been eligible to file a restricted application for just a spousal benefit on Donna’s earnings record while delaying his own filing until it reached its maximum amount when he turned 70.
However, it looks like he was not born until 1955 at the earliest. I’m guessing a bit here, but she says he wants to file at 66 years and two months of age. This is the full retirement age (FRA) of someone born in 1955. Anyone born in 1955 or later is too young to file a restricted application.
The only real choice for Donna’s husband is when to file. Once he has reached his FRA, he will begin earning delayed retirement credits that can boost his monthly benefit by more than 30% if he waits until age 70 to file. If he waited until then, he would be giving up benefits for three years and 10 months between his FRA and age 70.
This is not an inconsequential amount of money. However, given Donna’s low earnings, maximizing her husband’s benefit is very important. When one of them dies, the household’s largest benefit will go to the surviving spouse.
By waiting until 70 to file, her husband can guarantee that Donna will get the largest possible survivor benefit should she survive him. I don’t know if her life span will be shortened by her disability, but maximizing his benefit is probably the best form of longevity insurance she has.
Our second Donna is old enough at age 68 to file the type of restricted application that our first Donna’s husband could not. Because Donna II’s husband has already filed for his own benefit, and because she has already reached her own FRA, she can collect a spousal benefit equal to half of his FRA benefit entitlement.
Then, when she turns 70, she can file for her own retirement benefit and receive an additional payment equal to the amount by which this benefit exceeded her spousal benefit.
Collecting spousal benefits has no impact on the retirement benefit of the other spouse. To this extent, married couples have a claiming edge compared with single persons who cannot claim spousal benefits.
I doubt this edge would be part of the law if Social Security was being created today. But back when spousal benefits were created, women often did not work outside the home, and providing spousal benefits to them was relatively more important than it would be today.