When one spouse earns significantly more than the other during their working years, then Social Security claiming can greatly affect retirement income. Many couples are unaware that they might be entitled to benefits based on a higher earner’s work record. Knowing how to navigate the rules for spousal benefits, survivor benefits, and claiming strategies can help maximize household income and boost the lifetime Social Security benefits payable.
Understand How Spousal Benefits Work
If the higher-earning spouse qualifies for a full retirement benefit, the lower-earning spouse may receive as much as 50% of that benefit, based on certain criteria. This can be particularly helpful if one spouse was out of the labor force for several years or had a much lower income.
Know Your Full Retirement Age
The amount received through spousal benefits depends partly on when benefits are claimed. Filing before full retirement age can result in permanently reduced monthly payments.
Consider Delaying the Higher Earner’s Claim
Delaying retirement after the full retirement age may increase the benefit that the higher-earning spouse receives through a delayed retirement credit. This increased benefit can also provide greater survivor benefits in the future.
Don’t Overlook Survivor Benefits
The surviving spouse might be able to receive the greater of the two Social Security benefits after the death of their spouse. This is especially significant when you want to maximize the benefit for the higher earner for many couples.
Review Your Earnings Record
Errors occasionally appear on Social Security earnings records and can affect future benefit calculations. Both spouses should periodically review their records to ensure all earnings have been reported correctly.
Coordinate Claiming Decisions Together
It’s easier to make social security decisions as a family than as two individual decisions. When considering the total lifetime benefits, coordinating when each spouse claims could have a significant impact.
Understand Divorce Rules
Sometimes, divorced people are able to receive benefits on a former spouse’s earnings record if they meet specific eligibility requirements, including length of marriage.
Evaluate Taxes on Benefits
Depending on total retirement income, a portion of Social Security benefits may be subject to federal income taxes. It is important to understand the interaction of withdrawals and other income sources to help in planning.
Consider Life Expectancy and Health
There is no one-size-fits-all claiming strategy. Health conditions, family longevity, retirement goals, and life expectancy can all influence whether claiming benefits earlier or later makes the most financial sense.
Seek Professional Guidance
Social Security regulations can be complicated, particularly for married couples. A financial planner and/or a Social Security specialist can work with you to determine your best claim options based on your circumstances.
