How Married Couples Can Make The Most of Social Security


Social Security is an important piece of your retirement income. With an estimated 63 million people taking advantage of the system and its dollars supplementing about 40% of retirees’ income, Social Security has a significant impact on your retirement plan, lifestyle and cash flow.

Making the most of your benefits is a task that requires a great deal of time to get right. Married couples have a unique advantage, as they have more choices when it comes to claiming benefits. But with more choices come more complexities. 

There are many ways for married couples to maximize their Social Security income. We are going to walk through a few for you to keep in mind today.  

1. Use spousal benefits to your advantage

Spousal benefits offer a great opportunity for a spouse to claim benefits off of the other’s work record. This strategy is most beneficial when one spouse has been the primary income earner throughout the course of the marriage. To qualify for spousal benefits the following have to be true:

  • You are 62 or older
  • You have been married for at least one year
  • Your spouse has already claimed their benefits

The caveat here really lies in the fact that your spouse needs to actively receive their benefits before you can enroll in spousal benefits. This makes optimizing your enrollment date even more crucial. 

Spousal benefits provide up to a maximum of 50% of the other spouse’s full retirement benefit. The amount you will receive is determined by the age you file, your spouse’s primary insurance amount, and your own work record. 

The earlier you apply for spousal benefits prior to your full retirement age, the more your benefits will be permanently reduced. While you can file for spousal benefits at 62 (should your spouse be enrolled first), this will permanently reduce your monthly benefit by about 35%.  You will be eligible to receive the full spousal benefit by enrolling at your full retirement age (FRA) which is 67 for those born in 1960 or later.  

To optimize your Social Security income, it is wise to delay collecting benefits until you reach full retirement age if at all possible. Unlike traditional Social Security benefits, spousal benefits don’t accrue delayed retirement credits after reaching FRA, so it doesn’t make sense to wait to claim spousal benefits after you have reached FRA. 

Spousal benefits are a great way to add additional household income. Your financial advisor will be able to help you come up with the best strategy to help reach your retirement income goals. 

2. Prioritize survivor benefits

Many couples overlook creating a strategy for their partner’s survivor benefits. When a spouse passes away, the surviving spouse is eligible to receive their late spouse’s Social Security benefit if it is higher than their own. By collecting benefits at 62, this permanent reduction in benefits could drastically impact the surviving spouse. 

After a spouse passes away, the surviving person will either receive their benefit or their late partner’s benefit, whichever is higher. This reduction in benefits could prove troublesome, especially if one spouse drastically outlives the other. To make the most of survivor benefits it is important to assess your life expectancy and make a realistic plan to support the surviving spouse. 

Even though spousal benefits do not accrue delayed retirement credits, survivor benefits do which makes it even more important to optimize the higher earner’s benefits. By waiting to claim at least until FRA and even potentially waiting until 70, you are better able to maximize survivor benefits and bring in the most monthly income for the household. 

This strategy, of course, does come with its drawbacks, namely waiting 5-8 years after retirement to start collecting Social Security. If one or both spouses delay their benefits (i.e one collects at FRA and the other collects at 70), you will need to have a strategy to cover your retirement expenses until the time you decide to collect your benefits. Be sure that you assess each scenario and decide on a plan that will make the most sense for you and your loved one. 

3. Don’t forget the nuts and bolts

It can be really easy to get caught up in the strategy of optimizing benefits but it is equally important to remember the practical outcomes of claiming Social Security, namely taxes and working in retirement. 

Taxes play a huge role in your retirement income, which is why it is important to create a tax planning strategy that includes your Social Security benefits. According to the Social Security Administration, if you file as single and you make between $25,000 and $34,000 you will have to pay income tax on up to 50% of your benefits, 85% if you make more than $34,000. For married couples filing jointly with a combined income between $32,000 and $44,000, you will pay income tax on up to 50% of your benefits, 85% for any income over that amount. 

Another important factor to consider is whether or not you are going to continue working while collecting Social Security. You can do this, but if you are working and collecting benefits before you reach your full retirement age, you could run into withholding of your benefits depending on how much you make. In 2020, if you make more than $18,240, you’ll have $1 in benefits withheld for every $2 you make. This money isn’t lost, rather it is added back to your monthly checks once you do reach FRA. Even though you will get that money back, by collecting early you are permanently reducing your benefit for the rest of your life. 

4. A financial planner can help

Social Security is an important part of your retirement plan. Creating a strong strategy to optimize your benefit will help supplement your retirement lifestyle for years to come. When it comes to Social Security there are many factors to consider, such as, when to collect your benefit, potential taxes incurred along the way, assessing longevity risk, among other things. 

Your financial planner will be able to help you navigate through these tough decisions to create a plan designed with your needs and goals in mind. Retirement looks different for each person and there are so many strategies to consider for collecting benefits. Schedule a call with us so we can work with you to make a strategy to maximize your benefits and help you live the life you want. 


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