When you're married, you'll usually coordinate with your
spouse about a wide variety of financial decisions. But one of the most
important choices you'll need to collaborate on is when to claim Social
Security benefits.
Working together to decide when to start receiving
retirement checks is crucial, because there are special rules built into the
benefits program for married couples. Because of them, one spouse's decision
about when to get their first Social Security check can have a profound impact
on their partner.
This may seem confusing, but the bottom line is there are
three big rules every married couple needs to know. Here's what they are.
1. Your decision to claim benefits early could affect
survivor benefits
In most cases, married senior couples have two Social
Security checks coming into the household. Each partner gets their own check.
But when one person dies, his or her payments cease. This can lead to a big
reduction in total household income.
The good news, however, is that the remaining spouse is
entitled to survivor benefits. As a result, they get to keep the larger of the
two payments either person was receiving. If the lower earning spouse is
getting a $1,500 retirement benefit and the higher earner is receiving $1,800,
the last surviving spouse would be able to continue receiving the $1,800 after
their partner's death.
Unfortunately, if the higher earner has made a decision --
like claiming benefits early -- that shrinks their Social Security check,
survivor benefits are also reduced. This could have a devastating impact on the
widow(er) left behind. As a result, it's crucial to consider how your partner
will fare if you were the spouse who earned more over your career. If you
decide to start getting Social Security checks ASAP rather than waiting as long
as possible to maximize survivor benefits, this could create serious financial
hardship if you pass away first.
2. Your spouse can't claim spousal benefits unless you've
started yours
When you're married, you have the choice of claiming either
your own retirement benefits (assuming you're eligible for them) or getting
spousal benefits.
Spousal benefits are based on your partner's work history,
and equal up to 50% of your partner's primary insurance amount (the standard
benefit available at full retirement age). There's just one problem: They won't
become available until the primary earner whose work record spousal benefits
are based on has claimed their own retirement benefits. In other words, if a
husband wants to claim spousal benefits based on his wife's earning history,
his wife would have to start her retirement benefits first, or vice versa.
Sometimes, it still makes sense for the higher earner to put
off a benefits claim, even if that means spousal benefits can't be
started. After all, as mentioned above,
waiting would increase survivor benefits. But in other circumstances, the
higher earner may want to start checks ASAP to make spousal benefits available.
This could make sense, for example, when one spouse didn't
work enough to get any retirement benefits at all. In this circumstance, the
couple would have no Social Security checks coming in until the higher earner
claimed -- but once that happened, two checks could start coming.
3. You can't earn delayed retirement credits on spousal
benefits
Finally, if you're claiming spousal benefits, you should
know that claiming them prior to your full retirement age can reduce them. But
delaying a claim beyond FRA won't increase them.
While your own retirement benefits go up if you wait longer
to claim them up until age 70, no delayed retirement credits can be earned on
spousal benefits. As a result, monthly Social Security checks don't increase if
you wait to claim spousal benefits after FRA.
Understanding all three of these rules can help you
coordinate with your partner so you can decide together when each person should
claim benefits to get the maximum combined Social Security income throughout
your lifetimes.
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