Signing up to receive your Social Security benefits is a big deal — and not just for you. If you’re married, the extra income will benefit your spouse as well. So it’s important to be strategic about when you want to claim. Your age at the time of application determines the size of the checks you qualify for.
If you and your partner are both 62 or older, you might decide to apply together. There’s no reason you can’t do this, but if your goal is to maximize your household benefits, you may want to explore some other options first.
Image source: Getty Images.
How the Social Security Administration calculates your benefits
The Social Security Administration bases your benefit on your average monthly income (adjusted for inflation) throughout your working years, and your age at sign-up. Everyone has a full retirement age (FRA) based on the year they were born. If you were born in 1960 or later, yours is 67.
Claiming at less than your FRA can shrink your checks by up to 30%. Or, put another way, every month you delay receiving Social Security increases your benefits. This continues until you qualify for your maximum benefit at 70. If your FRA is 67, claiming at 70 would give you 24% more than you would’ve gotten had you signed up at 67.
When you’re married, you could also be eligible for a spousal benefit. This is worth up to one-half of what your partner qualifies for at their FRA. While there’s an early claiming penalty of up to 35% on these checks, there’s no incentive to delay benefits past your FRA.
How to maximize your household Social Security benefits
When coordinating benefits with your spouse, you have to take each person’s health into account, as well as your financial situation and personal preferences. There’s nothing wrong with both of you claiming at the same time if that’s what you want. However, if one person is only eligible for a spousal benefit, you should note that they cannot claim checks until the other spouse has already begun receiving Social Security.
In situations where both partners are eligible for retirement benefits, things get trickier. If one person has significantly outearned the other, the low earner might choose to sign up early. This gives the household some money while the higher earner continues to delay Social Security until they qualify for larger checks. When that spouse eventually applies, the lower earner can switch to a spousal benefit if it’s worth more than what they’re currently getting.
If one spouse has a short life expectancy, it might seem they should claim early to get what they can. But it’s worth noting that early claiming permanently reduces the survivor benefit your spouse is entitled to after you die. Some married individuals in this situation choose not to claim Social Security at all, so their spouse will be eligible for a larger survivor benefit.
There are many factors to consider, and the best way to work through them is to sit down with your spouse and develop a plan together. Decide when each person will apply, and agree to revisit the discussion if one of you wants to change the plan down the road.
