Social Security Strategies: Younger, Higher-Earning Spouse

Last Updated Jun 16, 2011 9:38 AM EDT

Social Security Strategies: Younger, Higher-Earning SpouseQ: How do you figure spousal benefits if the husband earns more but is younger. My wife is receiving benefits on her earnings. I'm 64, she's 66 and already taking hers. Is there a way to get more from Social Security?
A: The following is a response from my Right Financial Plan co-author Tiya Lim, who wrote the Social Security section of our book.

First, if you're married, you can only receive a spouse's benefit (dependent's benefit) after the working spouse has claimed his or her own benefit. Since your wife is already collecting her own benefit, you're eligible for a spouse's benefit when you file. Without knowing all the details of your benefit amounts, I'll answer as generally as possible.

To maximize your benefit filing option, I see two possibilities:

File for Your Spousal Benefit You file for a spouse's benefit at 66 and receive half of her full retirement benefit (the benefit she would've received if she filed at 66). Then, you wait until a later date (if possible, until 70) to switch to your own benefit, which will have accumulated delayed retirement credits (8 percent per year each year after 66). At that point, her benefit may also increase, since she's now eligible for a spouse's benefit.

File and Suspend You file and suspend your benefit at 66. This allows your wife to possibly collect a higher benefit. (This occurs if your spousal benefit to her is significantly higher. Again, without knowing exact amounts, I can't answer this definitively.) Then you'll be able to let your benefit accumulate those 8 percent delayed retirement credits by waiting to collect your own benefit at a later date (hopefully 70).

If you file for benefits now, you would only receive your reduced benefit. At 64, that's 86.7 percent of your full benefit amount. Since you're the higher earner, you won't receive anything in the form of a spouse's benefit. However, if you do file at 64, your wife would now be eligible for a spouse's benefit, and her benefit could increase depending on each of your benefit amounts.

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For further reading on Social Security, see the following posts:

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    Larry Swedroe is director of research for The BAM Alliance. He has authored or co-authored 13 books, including his most recent, Think, Act, and Invest Like Warren Buffett. His opinions and comments expressed on this site are his own and may not accurately reflect those of the firm.