There’s a pretty good chance Social Security will end up playing a big role in your retirement income. Even if you have decent savings, it’s nice to have money coming your way each month that’s guaranteed not to run out. Claiming Social Security is definitely something important to discuss with your spouse. And if you’re each entitled to Social Security, you can explore different filing strategies.
Social Security & inflation: What you need to know
Timing strategies for collecting Social Security
Now before we dive into those, let’s review some basic Social Security claiming rules:
- You can claim retirement benefits as early as age 62.
- Full retirement age, or FRA (67 for those born in 1960 or later) is when you get your benefits without a reduction.
- Delaying benefits beyond FRA increases your monthly checks by 8% per year until age 70.
If you’re a married couple, you should also know the following about Social Security:
- The lower earner in your household can claim their own benefits based on their earnings record if eligible or claim spousal benefits worth up to 50% of the primary earner’s benefit at full retirement age.
- When one spouse passes away, the living spouse is eligible for survivor benefits equal to 100% of what the deceased spouse was collecting.
- Spousal benefits convert to survivor benefits automatically once the primary earner passes away.
Understanding these basic rules can set the foundation for coming up with a smart filing strategy.
Now, let’s talk about what those strategies might look like. In reality, there are dozens of filing scenarios you and your spouse can contemplate. Here, we’ve summarized five to give you a sense of the options you have.
Strategy 1: Both spouses file as early as possible
It’s as simple as it sounds. Both you and your spouse each claim Social Security as soon as you’re able to at age 62.
Pros:
- Extra money to fund an early retirement, travel, and other goals
- Could lead to more lifetime income if you and your spouse don’t live as long as the typical retiree
Cons:
- A loss of about 30% of your benefits compared to filing at FRA (assuming that age is 67)
- Could lead to less lifetime income if you and your spouse live well into your 80s or beyond
Who it may be right for:
- Couples with known health issues
- Couples with strong savings who won’t be reliant on Social Security to cover essential needs
Strategy 2: Both spouses file at FRA
With this strategy, both you and your spouse wait until FRA to claim benefits. You get the exact monthly paycheck you’re each entitled to based on your wage history without reductions or boosts.
Pros:
- Provides more income than an early claim
- Strikes a balance between early income and maximizing future payouts
Cons:
- No delayed retirement credits for waiting
- May force you to withdraw heavily from savings if you’re retiring early
Who it may be right for:
- Couples with moderate life expectancies
- Couples with decent savings who don’t need boosted benefits
Related: 4 Social Security misconceptions to clear up
Strategy 3: Both spouses file at 70
With this strategy, you and your spouse delay your claims as long as possible.
Pros:
- More financial flexibility once those larger monthly checks start coming in
- More protection against depleting your savings
- Stronger inflation protection (larger benefits make cost-of-living adjustments more meaningful)
Cons:
- May need to delay retirement until Social Security starts
- Could lead to less lifetime income if either spouse passes away early (more so if both spouses die young)
Who it may be right for:
- Couples who need to compensate for small nest eggs
- Couples in great health with a family history of longevity
Strategy 4: The higher earner delays while the lower earner files early
With this strategy, whichever one of your is eligible for a larger Social Security benefit waits until 70 to file. The lower earner claims benefits at 62, or any point ahead of FRA, so you have money coming in sooner.
Pros:
- Provides some immediate income from the lower benefit
- Maximizes the higher earner’s benefit
- Potential longevity protection if the lower-earning spouse outlives the higher earner
Cons:
- The lower earner’s benefit could get whittled down to a very small amount
- May need to delay retirement if the smaller benefit isn’t enough
Who it may be right for:
- Couples with a large gap in benefits
- Couples with a large age gap, and where the older spouse is the higher earner
Strategy 5: The higher earner files early while the lower earner delays
With this strategy, the higher earner takes benefits at 62 or at any point before FRA, while the lower earner waits until age 70.
Pros:
- Provides a larger monthly benefit immediately, which may allow for an earlier retirement
- Allows the smaller benefit to grow and potentially catch up to the larger benefit
Cons:
- Potential ongoing cash crunch due to reducing the larger benefit
- Potential reduction in survivor benefits if the lower earner outlives the higher earner
Who it may be right for:
- Couples who want to retire on the early side
- Couples who’d prefer to have both spouses file early but are scared to do so
Weighing your options as a couple
If your head is sort of spinning by now, that’s understandable. It’s a nice thing that Social Security gives you a choice of when to claim benefits, but there can be such a thing as too many options. And those options are compounded when you’re married with two sets of benefits to file for.
So if you’re struggling with the decision, consider sitting down with a financial advisor to review your situation. They can help you work through these and other options to come up with a plan that allows you to protect yourself financially while making the most of Social Security.
Related: Social Security & inflation: What you need to know