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Social Security for Married People: At Least One Spouse Should Usually Claim at 62 or 70

Many retirees make suboptimal Social Security decisions.

For example, for the higher earning spouse in a married couple, claiming as early as possible could typically be described as “unlikely to be the best decision.” But how the decision actually plays out will depend on how long each spouse lives, the investment returns they earn on their portfolio, and a few tax considerations.

But sometimes married couples will even choose a Social Security strategy that cannot possibly be the best approach, because there is another strategy that works out better in every single possible scenario. Strategies in which both spouses claim retirement benefits somewhere near the middle of the 62-70 range are often in this can’t-possibly-be-ideal category.

How About an Example?

Consider a married couple: Bob and Jane, both retired and both age 60. Bob has a slightly higher earnings history, so his primary insurance amount (that is, the size of the monthly retirement benefit he would receive if he claimed his retirement benefit at his full retirement age) is higher than Jane’s. Specifically, Bob’s PIA is $1,200 while Jane’s is $1,000.

Let’s compare two strategies:

  • Strategy A: They both claim their own retirement benefit at their full retirement age of 66.
  • Strategy B: Jane claims her retirement benefit when she reaches age 62. Bob files for his benefit as Jane’s spouse when he reaches age 66. Bob files for his own retirement benefit at age 69.

Under Strategy A, Bob and Jane receive nothing until they reach age 66. From then on, they will receive $2,200 per month (Bob’s PIA, plus Jane’s PIA). After either spouse dies, the surviving spouse will receive $1,200 per month.

Under Strategy B, Bob and Jane will receive $750 per month starting at age 62 (Jane’s retirement benefit, reduced to 75% of her PIA for claiming 4 years prior to her full retirement age). Four years later, Bob reaches his full retirement age of 66 and he files for his benefit as Jane’s spouse ($500, calculated as 50% of Jane’s PIA), giving them a total of $1,250 per month. Three years later, Bob reaches age 69 and he files for his own retirement benefit ($1,488, calculated as 124% of his PIA, due to having delayed 3 years beyond full retirement age), giving them a total of $2,238 per month (Jane’s $750, plus Bob’s $1,488). After either spouse dies, the surviving spouse will receive $1,488 per month.

Which Strategy Comes Out Ahead?

  • By the time they reach FRA, under Strategy A they will have received nothing. Under Strategy B, they will have received $36,000 (Jane’s $750, times 48 months).
  • By the time they reach age 69, under Strategy A, they will have received $79,200 ($2,200 per month, times 36 months). Under Strategy B, they will have received $81,000 ($36,000 received by age 66, plus 36 months of $1,250 per month).
  • From age 69 onward, while both spouses are still alive, under Strategy B they will receive $38 more per month than they would receive under Strategy A.
  • After either spouse dies, under Strategy B, the surviving spouse will be receiving $288 more per month than under Strategy A.

In other words, Strategy B starts off with a big lead. Strategy A almost catches up from age 66 to 69, but it never quite makes it. And, after that point, Strategy B’s lead begins to grow again.

What’s the Takeaway Here?

When the higher-earning spouse holds off on taking benefits, it increases the amount the couple receives as long as either spouse is still alive. When the spouse with the lower earnings record holds off on taking benefits, it only increases the amount the couple receives as long as both spouses are still alive. As a result, it only rarely makes sense for each spouse to do an equal amount of “waiting” past age 62.

Instead, a good starting point for planning is to consider a strategy in which the lower earner starts at 62 and the higher earner starts at 70 (generally using either the “file and suspend” or “restricted application” strategies between FRA and 70, if applicable). Then, if you need more early cash flow than the 62/70 strategy provides, consider having the higher earner take somewhat earlier. Alternatively, if you can get away with less early cash flow, and you’re concerned about longevity risk, consider having the lower earner wait past age 62.

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