by AMAC Certified Social Security Advisor Russell Gloor
Association of Mature American Citizens
Dear Rusty: I am currently 68 and am waiting to take maximum benefits at age 70. I have been retired for 3 and a half years. My wife turned 62 in February of this year. She stopped working around 1994. What is the best way to maximize our SS benefits? Both of us have longevity on our side. My wife’s parents lived into their 80s, her grandmother lived to 96. My mother lived to 84, my father to 98. We are both very active, no big health issues.
Signed: Planning Ahead
Dear Planning: You’re already on a path to maximize your benefits by waiting until you are 70 to claim. Given that both of you are in good health and assuming you both live a long life, maximizing your wife’s benefit will yield you the most in cumulative Social Security benefits.
Assuming you are the higher-earner, your wife’s highest benefit will probably be her benefit as your spouse, so maximizing her spousal benefit would be an excellent strategy. Although your wife is eligible to collect her own SS benefit at age 62, if she does so her eventual spousal benefit will be reduced to something less than 50% of your full retirement age (FRA) benefit.
Here’s how that works: A spousal benefit, if taken at one’s full retirement age (66 ½ for your wife), is 50% of the higher-earning spouse’s benefit at his full retirement age (not the increased benefit you get by waiting until age 70). But if the spousal benefit is taken earlier than full retirement age it is reduced actuarially according to the number of months before FRA it is claimed. If your wife claims her own SS benefit at age 62, her eventual spousal benefit will be less than 50% of your benefit, because the spousal boost is added to her early benefit amount. Said another way, any time a Social Security benefit is taken earlier than one’s full retirement age it is reduced. In your case, when you claim your benefits at age 70, your wife will be 63 ½. If she is already receiving her own SS benefits she will be automatically deemed to be filing for a spousal benefit at that time, and the amount of her spousal benefit will be reduced due to starting it earlier than her FRA.
However, if she is not yet receiving her own SS benefit, she will not be deemed as filing for her spousal benefit until she files for her own SS on her own work record. The only way your wife can get the full 50% of your FRA benefit amount is by waiting until her full retirement age to claim her benefits. And if you are both in good health and expect to live at least until your mid-80’s, your wife waiting until her FRA to apply will give you the most in cumulative lifetime benefits (as well as the highest combined monthly benefits).
But keep in mind that the decision of when to claim benefits must always take into account current financial needs, current health and lifestyle, and anticipated longevity. If you don’t need the money right now, and if you’re both in good health and expect a long life, then maximizing both of your benefit amounts as described above would be a very sound strategy.
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website or email us.