Q&A: How Might I Optimize Social Security Benefits for My Wife and Me?

NWIC_logo 4QUESTION:  I heard some advice while playing golf with friends, but I really don’t have an understanding of what might be best for us to do regarding Social Security. Specifically,

  1. If my wife were to begin collecting her Social Security retirement benefits at age 62, would I collect half of her amount as well; I am 64? Regardless, wouldn’t it make sense for my wife to begin collecting Social Security at 62 anyway, because once I begin collecting my Social Security, the one-half spousal amount that my wife would receive from mine would be more than the relatively small amount she would receive from her past earnings?

  2. If my wife were to begin collecting her Social Security at age 62 but when I begin collecting for my Social Security benefits at age 66 or later, at that point can she then receive half of my amount?


ANSWER:  These are excellent questions. We will tell you, however, waiting until FRA (full retirement age) for both will lead to the maximum benefit. Unfortunately, once you claim benefits before FRA you are locked into a lower percentage for claiming purposes. In other words, if your wife starts to collect her benefit at 62 she will only get  approximately 75% of her benefit (the calculation is based on when you claim and when you are considered full retirement and then you multiply the amount of months you take it early by a percentage!) and then when she switches to yours she will only get approximately 35% of your full benefit not 50%. “Each person’s payment is computed based on that person’s age when that person’s payment begins, regardless of the other spouse’s age or payment.”

Here’s where it gets tricky because if your benefit at 64 is greater than your portion of your spouse’s benefit at 62, you would have to claim your benefit. Social Security always looks at what your greatest benefit would be and thus it creates a permanent reduction in benefits. Furthermore, if you continue to work then for every $2 you make above $15,480 for 2014 your benefits are reduced by $1.

There are several strategies couples can use to maximize their total benefits if they wait until at least one reaches FRA. Contact us if you would like us to run some strategies for you.  Also, the longer you wait to receive benefits the higher the survivor benefit would be for your wife. Regardless of when she starts collecting she would be entitled to 100% of what you were receiving including delayed retirement credits if you waited past 66. Bottom line, the magic age in all of this is full retirement age or in both of your cases 66.

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