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How to Maximize Social Security Benefits as a Married Couple

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There are thousands of factors for couples to consider when determining how to manage their Social Security retirement benefits. This includes some of the basics like the age of both spouses, how much each has earned, when each plans to retire, what their life expectancy is, and what other forms of income they have. Couples should not wait until nearing retirement age to begin investigating how their retirement plans will impact them in the long run.

Impact of higher vs. lower earning spouse

Social Security retirement benefits replace a percentage of a worker’s pre-retirement income based on their lifetime earnings. This ranges from as much as 75 percent for very low earners to 27 percent for high earners. The more you earn, the greater your benefit.

Spouses who earn less than their partners, who are at least 62 years of age, may qualify for a spousal benefit: a monthly Social Security payment which can be as high as 50 percent of the spouse’s benefit amount. The higher earner will still get 100 percent of their benefit amount, even if the lower earner also receives benefits from their earnings. Generally speaking, the Social Security Administration will first pay an individual their own benefit. But if the amount they would receive as a spouse is higher, they will augment that benefit amount up to the amount of the higher spousal benefit.

How to claim spousal benefits

There are many variables about how and when one can apply for a spousal benefit. If you were born before Jan. 2, 1954, you can apply for a spousal benefit without applying for your own benefit, thus allowing your own benefit to continue to accrue. If you were born after that date, you must apply for both benefits at the same time because of a 2015 change in the law. 

If you are within three months of 62, or older, you can apply for spousal benefits online. If not you must call the national toll-free service at 1-800-772-1213 (TTY 1-800-325-0778) or visit your local Social Security office. Appointments are not required, but may make waiting times shorter. 

Among the documents you may be asked to bring are:

  • Birth certificate or other proof of birth;
  • Proof of U.S. citizenship or lawful alien status if you were not born in the U.S.;
  • U.S. military discharge paper(s) if you had military service before 1968;
  • W-2 forms(s) and/or self-employment tax returns for last year;
  • Final divorce decree, if applying as a divorced spouse; and
  • Marriage certificate
 

For many of these, such as birth certificates, originals are required. If you don’t have access to them, Social Security will help you acquire them. They also may ask many other questions about your history.

Impact of working spouses

There is an annual limit to how much a spouse can earn and still receive spousal or survivor benefits. In 2020, that limit is $18,240. That amount doesn’t include income such as other government benefits, investment earnings, interest, pensions, annuities, and capital gains. It does include an employee’s contribution to a pension or retirement plan if the contribution amount is included in the employee’s gross wages.

If a spouse is under the full retirement age for the entire year, Social Security will deduct $1 from the benefit payment for every $2 earned above the annual limit. In the year the spouse has reached full retirement age, the limit rises to $48,600 for 2020 and Social Security will only deduct $1 for every $3 earned above that limit. Beginning in the month the spouse reaches full retirement age, no deductions are made as a result of their earnings. Once the spouse reaches full retirement age, they will receive in increased benefits the amount that was withheld before that age.

Social Security has an earnings test calculator to help estimate how working will impact your benefit. With an increasing amount of seniors deciding to continue working into retirement, it is becoming more and more important to understand the implications of having income from work.

Deciding when to start collecting

Deciding when to start collecting requires complicated mathematical computations because there are thousands of possible combinations of benefit amount, age and earnings of respective spouses, health of respective spouses, and date of retirement that can impact when the couple should apply for benefits. 

As the Social Security website explains: “A couple with a non-earning spouse entitled to only the spousal benefit can face almost 6,000 possible month-of-age claiming combinations, depending on their respective birth years. For couples with a lower-earning spouse who is entitled to an own-record benefit only or who is dually entitled to both an own-record benefit and a spousal benefit, possible claiming-age combinations number over 9,000.”

In the majority of couples, the higher earning spouse is either the same age or older than they lower-earning spouse, and the highest possible benefit can exceed the lowest possible benefit by between 45 and 70 percent. So, it’s important to consider carefully and perhaps seek professional assistance in determining how to maximize the SSA benefit as a couple.

Claiming options

Retirement benefits can be claimed as early as age 62. Once a person begins to claim a benefit, that benefit is frozen at that rate for the rest of their lives. However, if a person delays claiming retirement benefit, that benefit increases incrementally every month until they reach age 70. Consequently, many people choose to wait to claim their benefits until the higher amount accrues. After full retirement age, which may be 66 or 67, depending on what year the person was born, the amount will continue to increase if they don’t take retirement until age 70. After age 70 the amount does not increase. The increase between full retirement age and 70 is called the Delayed Retirement Credit. Spouses are not eligible to receive a portion of their partner’s DRC as part of their spousal benefit.

What happens when a spouse dies

When a spouse dies, several people may be entitled to their Social Security benefits including their current spouse, their surviving children, and their former spouses. If a former spouse was married to the deceased for at least 10 years, is at least 60 years of age or 50 if disabled, has not remarried prior to age 60, or is caring for children of the deceased who are under 16 or disabled, they may be eligible for benefits. This does not decrease the benefits of the surviving spouse. Even if the spouse or former spouse was born after January 2, 1954, they can apply for survivor benefits without applying for their own Social Security insurance benefit. 

A widow or widower at full retirement age or older can receive 100 percent of the deceased worker’s benefit amount; from age 60 to full retirement age they can receive from 71 to 99 percent of the deceased worker’s basic amount; if they are disabled, aged 50 through 59 they can receive about 71 percent; and if they are caring for a child under age 16 they receive 75 percent.

When a person dies, the funeral home will often report the death to Social Security. Survivors must apply for benefits or report the death by calling 1-800-772-1213 (TTY 1-800-325-0778 between 7 a.m. and 7 p.m. Monday through Friday. Or you can also visit your local Social Security office. Appointments are not required but may reduce waiting time.  

You should apply for survivor benefits immediately. If you are already receiving benefits, Social Security will determine whether your benefit will be higher as a widow or widower than the benefits you already receive. They may be able to pay the Special Lump-Sum Death Payment of $255 automatically.

Taxes on Social Security

Under some circumstances, Social Security benefits for survivors may be taxed. The amount to be taxed is based on the individual recipient’s income plus the benefit. If a child is a beneficiary, for example, they may not receive enough income as a beneficiary to owe any taxes.

Social Security calculators to maximize benefits

Social Security offers a number of calculators to help couples make decisions about retirement and how to decide which benefits to focus on. These include a Life Expectancy Calculator, a Retirement Age Calculator, and an Early or Late Retirement Calculator.

While survivor benefits tend to be straightforward, spousal benefits can be very complicated, relying on the couple to really analyze how one decision—such as when each earner claims retirement—can impact the couple’s overall income for years. It may be wise to seek the help of an expert, such as a retirement planner, to ensure you’re getting the maximum benefit. Alternatively, online calculators like SimplyWise’s (which we believe is the best) can be a free and quick way to get your bearings.

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