Social Security is particularly advantageous to married couples. It offers four additional claiming options: survivor; spousal; file and suspend; and restricted application. Even a spouse without an earnings history is eligible for the spousal and survivor benefit.
Couples should bear in mind that their Social Security claiming decisions are connected. When and what one spouse claims will affect the other’s benefits. With more claiming options available, there are also more considerations for married couples.
Claiming Decisions Affect the Surviving Spouse
When the first spouse dies, the larger retirement benefit will continue for the survivor, whether it’s your spouse’s own retirement benefit or yours, and the smaller payment stops. Therefore, the spouse with the higher earnings should maximize his or her own retirement benefit so the survivor receives the highest possible payment.
The Spousal Benefit
The spousal benefit is unique to married couples and qualified divorcees. For married couples, the spousal benefit entitles one spouse to the higher of his or her own earnings or 50% of the spouse’s full retirement age amount less early claiming reductions. To be eligible for the spousal benefit, you must be age 62 and your spouse is entitled to or is already receiving a retirement benefit.
If you’re divorced, you might be eligible to receive benefits based on your ex-spouse’s record. To qualify, you must have been married for 10 or more years, be currently unmarried, be age 62 or above and not have filed for benefits. In addition, your ex-spouse must be entitled to benefits, and your retirement benefit must be less than what you would receive based on your ex-spouse’s record.
You do not need to coordinate with your ex-spouse to file for the spousal benefit, and he or she can’t prevent you from filing. Also, your filing for the spousal benefit has no bearing on the filing qualification for either your ex-spouse or your ex-spouse’s current spouse.
Special Claiming Options
There are two additional Social Security perks that married couples can claim: file and suspend and restricted application.
File and Suspend. With this choice, one spouse at full retirement age or older files and suspends receiving retirement payments until a later date. This allows both the retiree’s and the survivor’s benefits to grow while triggering availability of the spousal benefit.
Restricted application. To file a restricted application, the spousal benefit must be available. This means that one spouse has filed or has filed and suspended benefits, triggering the spousal benefit. The other spouse at full retirement age then files a restricted application to receive the spousal benefit ONLY, while his or her own retirement benefit is suspended and accumulates delayed retirement credits. Then the spousal benefit recipient can change later to his or her own higher retirement benefit. This “switch” strategy allows a person to take a limited benefit for a certain period, then switch to a higher benefit later.
Call your financial advisor today to find out how Social Security can best augment your financial plan.