How married couples can earn more Social Security benefits

(MoneyWatch) Married couples seeking to maximize their Social Security income will need to pull off an intricate foxtrot through a thicket of bewildering rules. But having an experienced teacher helps. So here are a few winning strategies to help you successfully complete this dance, part of my 16-week course on planning your retirement

My yardstick for determining which strategy is best? The total income you'll receive from Social Security over both your lifetime and your spouse's. A related goal is to maximize the income payable for the widow, since it's very common for wives to outlive their husbands.

A quick note: You'll understand the strategies described here much better if you review my prior posts on your Social Security income and your spouse's Social Security income.

You'll also need to do just a little homework. First, determine the Full Retirement Age (FRA) for both you and your spouse. Then determine the Social Security benefits that you're eligible for based on your wage earnings record and your spouse's wage earnings record. You'll want to find out which income is higher for your spouse: the benefit based on their own earnings or the actual "Spousal Benefit," which is equal to as much as half of the benefit based on your wage earnings. Both of my prior posts explain these concepts.

Your last bit of homework is to estimate each of your life expectancies; two excellent websites for this purpose are www.livingto100.com and www.bluezones.com.

Now let's look at some strategies that apply the rules described in my prior posts to one common situation involving a husband and wife.

Suppose the husband has the higher earnings history and is older than his wife. Still, his wife's own wages have been high enough to make the Social Security benefit based on her own wage earnings higher than the spousal benefit she would receive based on her husband's earnings. This is a common situation when both spouses have worked a full career during their lifetimes.

In this situation, it might pay for the husband to maximize his Social Security income by delaying the start of his benefits as long as possible, up to age 70. The reason: He'll most likely die first, and after his death, his wife will receive the Social Security income he was receiving, which is higher than her own Social Security income.

So when should she start her own Social Security income? That depends on how long she expects to live and how long she expects her husband to live. Do you remember the two numbers from my previous post -- age 78 and age 82-1/2? (If not, check out that post now). If the wife estimates that both she and her husband will live until she attains age 78, she'll be "money ahead" if she starts her income at age 66 instead of age 62. If she thinks that both of them will be alive when she reaches age 82-1/2, then she'll be money ahead if she waits until age 70 to begin receiving her income. I realize it's not much fun to think about mortality in this way, but try to focus on the numbers instead of the emotion. You'll be glad you did.

If the husband is several years older than the wife, there's an awfully good chance he might die before she reaches age 78 or 82-1/2. If she thinks he'll die before she turns 78, then starting benefits at age 62 is better for her. If she thinks he'll die later but before she turns 82-1/2, then starting benefits at age 66 is the better choice. In both of these situations, she'll be better off starting her income early -- before age 70 -- since she'll bump up to his higher income when he dies.

For software and strategies that will help you choose the best Social Security benefits strategy for married couples, check out these websites: Social Security Choices, Social Security Solutions, and Social Security Timing.

Stay tuned for my next post, which describes the "file and suspend" maneuver that offers the potential to boost your spouse's payout by more than $90,000.


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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

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