In general, the primary factors that determine when married people should take Social Security are the same as those for determining when unmarried people should take Social Security:
- The longer you expect to live, the more sense it makes to delay Social Security.
- The more you care about maximizing your spendable income as opposed to maximizing the amount you leave to your heirs, the more sense it makes to delay Social Security.
And as we’ve discussed before, if one spouse’s Social Security benefit is significantly higher than the other spouse’s, delaying benefits for the higher-earning spouse is often an especially good deal because it results in an increased payout for the longer of the two spouse’s lifetimes (due to survivor benefits).
In addition to the above considerations, however, there are two clever strategies available to married couples that (depending on circumstances) might allow them to maximize their Social Security benefits even further.
The “Spouse then Switch” Strategy
If your spouse has reached full retirement age and is eligible for a spouse’s benefit and his or her own retirement benefit, he or she has a choice. Your spouse can choose to receive only the spouse’s benefit now and delay receiving retirement benefits until a later date. If retirement benefits are delayed, a higher benefit may be received at a later date based on the effect of delayed retirement credits.
Example: Steve and Beth were both born in 1945, so they each reached their full retirement age of 66 this year. They have similar earnings histories, so their own retirement benefits will be larger than what either would receive via a spousal benefit.
When Steve reaches full retirement age, he applies for his own retirement benefit, and when Beth reaches full retirement age, she applies for a spousal benefit. Four years later, when Beth reaches age 70, she files for her own retirement benefit.
Result: Beth was able to receive spousal benefits for four years (from age 66 to 70) at essentially no cost to her, since her own retirement benefit was growing the entire time because she had not yet filed for it.
Note: When filing for only a spousal benefit, it’s important to make it very clear that you are not filing for your own benefit. I’m told by readers who have done this that it’s probably best done in person rather than online, so that you can make sure that the SSA employee you’re speaking with understands exactly what your intention is.
The “File and Suspend” Strategy
Again from SSA.gov:
If you are full retirement age, you can apply for retirement benefits and then request to have payments suspended. That way, your spouse can receive a spouse’s benefit and you can continue to earn delayed retirement credits until age 70.
Example: Katie and Joe were both born in 1945, so they each reached their full retirement age of 66 this year. Katie has earned significantly more than Joe over their lifetimes. As a result, Joe’s spousal benefit is going to be larger than his own retirement benefit.
Both Katie and Joe have family histories of people living well into their nineties. As a result, they’ve decided it makes sense for Katie to delay her own Social Security retirement benefit until age 70.
Spousal benefits, however, do not increase for delaying beyond full retirement age. Joe, therefore, would like to claim spousal benefits starting at 66 (his FRA), but he cannot claim a spousal benefit until Katie has filed for her retirement benefit (which she doesn’t want to do until age 70).
Solution: Katie files for her retirement benefit as soon as she reaches full retirement age. She then immediately requests to have payments suspended. Because Katie has filed for her retirement benefit, Joe can now file for his spousal benefit. And because Katie has had payments suspended, her benefit will continue to grow until age 70.
Combining Both Strategies
If both spouses want to delay their own retirement benefit until age 70, it may be possible to combine the two strategies above to get 3-4 years of “free” spousal benefits for one spouse.
Example: Christopher and Patricia were both born in 1945, so they each reached their full retirement age of 66 this year. They have similar earnings histories, and they both want to delay their retirement benefits until age 70.
Upon reaching full retirement age, Patricia files for benefits and asks to have payments immediately suspended. Christopher then applies for a spousal benefit (as outlined in the first strategy above). Then, at age 70, Christopher switches to his own retirement benefit, and Patricia ends the suspension of her benefit payments.
Result: Christopher is able to receive spousal benefits for four years (from age 66 to 70), while they both allow their own retirement benefits to grow until age 70.
Important note: To implement the combined strategy, it’s often important for only one spouse to file and suspend. Once you’ve filed for your own benefit (even if you’ve suspended payments), if your own benefit is greater than 50% of your spouse’s full retirement benefit, you cannot choose to collect only a spousal benefit. As a result, if both spouses file for their own benefit, neither one will be able to get the “free” years of spousal benefits.
Hi Mike,
Interesting article, thanks for putting it together. I do have a question in regard to the “File and Suspend Strategy.” Can the lower income earner (Person A) start to take their reduced SS benefit at 62, then when the higher incomer earner (Person B) reaches their FRA at 66 and after that person (Person B) files for and suspends their benefit, then can Person A claim the Spousal Benefit? Bothe Person A and Person B are the same age.
Thanks
That’s a super question John.
The answer is, yes, a person can claim his/her own benefit at 62, then switch to a spousal benefit later.
However, that spousal benefit will be reduced by an amount (dollar amount, not percentage) equal to the amount by which his/her own benefit was reduced by claiming early.
Mike,
Thanks for the response, I was unaware of the reduced Spousal Benefit if the lower income earner starts their SS benefit before FRA. Accounting for this reduction, we would be better off waiting for the lower income earner waiting until 66 to claim the Spousal Benefit.
Here is another scenario that I am not sure would work. Same situation, a married couple with the same age. The lower income earner (Person A) takes their full retirement benefit at age 66. The higher income earner (Person B) applies for Spousal Benefits at age 66. Then when they both turn 70, the higher income earner (Person B) claims their full retirement benefit and the lower Income earner (Person A) claims Spousal Benefits.
Is this possible?
There may be something I’m missing, but I think that would be possible.
My understanding is that starting at age 70, person B would get his/her PIA, plus the applicable credits for delaying. Person A would get the greater of his/her own PIA or 50% of person B’s PIA.
Note that, after age 70, that’s exactly the same result as if person B had filed at FRA (and suspended until age 70) and person A had claimed spousal benefits at FRA.
So I believe the decision would come down to which strategy would pay more from FRA to age 70. And that’s a question of which of these two amounts is greater:
Mike,
Again, thanks for the reply. I am not sure what PIA stands for but I am going to assume it is the dollar amount that represents your SS Benefit at full retirement age (66). If that is the case I just want to confirm a new learning for me, based on your reply. In regard to the Spousal Benefit, it is determined at Full Retirement Age (66) and doesn’t increase in scenario where the higher income earner delays their benefit until age 70.
Oops, sorry. I used the term “PIA” in prior Social Security articles, but didn’t realize I hadn’t defined it in this one. PIA is “primary insurance amount,” which as you surmised is the amount of one’s own benefit if he/she were to collect at exactly full retirement age.
Spousal benefit is based on the worker’s PIA, then adjusted based on when the spouse claims that spousal benefit. It is not affected by when the worker claims his/her own benefit (aside from the fact that a spousal benefit cannot be claimed until the worker claims her/her own benefit). For a bit more info about that calculation, see this article.
I’ve always wondered how this will play out for families with a disabled spouse. My wife was disabled pretty early in her career, and she collects (permanent) disability, and can expect to do that until I retire.
Presumably, because of my long earnings history her spousal benefit will be larger than her own benefit when that time comes (about 25 years from now).
She’s older than I am by 18 months. What happens when she reaches retirement age? Will her disability payment stop at age 62 or 67 (her full retirement age I believe)? Will she claim her own retirement benefit until I retire and then switch to a spousal benefit?
Since I’m asking questions, is there anything else I’m likely to overlook?
I read all of your Social Security articles and find them very interesting. I’ve always wanted to ask, but this is the first time I felt like my questions wouldn’t be completely afield. It’d be a great service to talk about disability payments in general, perhaps in a future article, since there seems to be few articles on that topic.
Mr. Oblivious,
Under the Combining Both Strategies option, you noted that this earns 3-4 years of “free” spousal benefits for one spouse. Normally when one put quotes around free, it is implying that it’s not really free. I’m looking at this scenario for the first time and unless I’m wrong, it does in fact appear to be free money. The only caveat is that neither spouse can get full benefits until age 70, whereas most people start even before they hit their FRA. But for those who can delay, I think it really is free money. Am I wrong?
Hi Don.
First let me be as up front as possible: I’m learning as I go here with regard to Social Security, so there’s still much I don’t know. Disability benefits are most definitely in that category right now.
Per the Social Security Handbook, benefits for (still-living) disabled workers end at the sooner of
a) the second month after the disability ends, or
b) the month before full retirement age.
When the disabled worker reaches full retirement age, his/her benefits are automatically converted to retirement insurance benefits. Per this article (you’ll have to scroll down a bit), what they mean here is that it’s now considered to be a retirement benefit rather than a disability benefit. The amount does not change.
So I believe this means that she can continue receiving her disability benefit (though it will eventually be called something else) until it’s beneficial to switch to a spousal benefit. (Though she cannot do so until you have filed for your own benefit.)
And, as far as I can tell, her spousal benefit would be calculated just like anybody else’s. That is, it’s based on your PIA (the amount you’d receive at full retirement age) and on when she claims it.
Hi Matt.
My apologies for not being more clear. Yes, according to my understanding, it is free to the couple in question. I only meant that it’s not free from a macroeconomic perspective–in that somebody (taxpayers) is paying for it.
Thanks, Mike. One other question on the combination strategy. Does it actually matter when the higher earner decides to start benefits (i.e., there is no actual need to file and suspend)? You’re using age 70 in your example to get to the highest benefit, but from the spouse’s POV, it doesn’t matter, does it? The spouse would still collect at FRA based on the higher earner’s PIA regardless of when the higher earner starts collecting, then switch to his/her own PIA + credits at age 70. Right?
Matt,
You’re correct that spousal benefits are not affected by when the other spouse files. (Aside from the fact that the other spouse must have filed before spousal benefits can be claimed.)
So for example, the age at which Spouse A filed for benefits has no impact on the amount of Spouse B’s spousal benefit (though Spouse B cannot file for Spousal benefits until Spouse A has filed for benefits).
So in my example for the combined strategy, the spouse who files at FRA for his/her own benefit does not necessarily have to suspend in order for the other spouse to be able to get the 3-4 years of free spousal benefits. (Alternatively, he/she could suspend, but end the suspension prior to age 70.)
Thanks, Mike. One last final question on your Important Note. If low earner’s own PIA is greater than half of high earner’s PIA, does this strategy work? If high earner files and suspends at FRA, can low earner take a spousal benefit or does it automatically revert to his/her own benefit since it is higher than the spousal amount?
Yes, if the high-earner files and suspends at FRA, the low earner can file for just spousal benefits at FRA, then switch to his/her own benefit later.
The problem would kick in if the low-earner also filed for his/her own benefit at FRA (with the mistaken idea of suspending payments and claiming just spousal benefit between FRA and 70). In that case, given he/she has filed for his/her own benefit and given the assumption that his/her PIA is more than half the high-earner’s PIA, the low-earner would not be able to take only spousal benefits.