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Social Security Strategies with Different-Age Spouses

A reader writes in, asking:

“Most articles about Social Security assume that the two spouses are the same age or just a few years apart. But my husband is 13 years older than me. How does the conventional wisdom about Social Security change when there’s a big age difference?”

Which Spouse is Older?

As you might expect, the answer is “it depends.” Most importantly, it depends on which spouse (older or younger) has the higher earnings record.

Married couples generally get a better deal from having the spouse with the higher earnings record delay benefits than from having the spouse with the lower earnings record delay benefits. That’s because:

  • Having the spouse with the higher earnings record hold off on taking benefits increases the amount the couple will receive as long as either spouse is alive (because, if the lower-earning spouse outlives the higher-earning spouse, the lower-earning spouse’s widow/widower benefit will be increased by the fact that the higher-earning spouse waited to claim benefits), whereas
  • Having the spouse with the lower earnings record hold off on taking benefits only increases the amount the couple will receive as long as both spouses are alive.

This is generally true whether the spouses are the same age or not. What changes is simply a matter of degree (e.g., how good of a deal is it?).

For example, consider a married couple Amy and Arthur. Amy has a higher earnings record, and she is 15 years older than Arthur.

  • When Amy reaches age 62, having her delay benefits is an especially good deal (better than it is for the higher earner in a same-age couple) because it increases benefits as long as either spouse is alive, and given that her spouse is 15 years younger than she is, it’s likely that that will be a long time.
  • When Arthur reaches age 62, having him delay benefits is a worse deal than it would typically be for the lower earner in a same-age couple, because it only increases benefits as long as both spouses are alive, and, at that point, given that Amy is already age 77, the couple has a shorter first-to-die life expectancy than a couple who are both age 62.

Now let’s switch things around. This time we have Belinda and Bob. Belinda has the higher earnings record, but she is 15 years younger than Bob.

  • When Bob (the lower earner) reaches age 62, having him delay benefits is a better deal than it is for the lower earner in a same-age couple. That’s because, when he reaches age 62, Belinda will only be age 47, meaning that they have a longer first-to-die life expectancy than a couple where both spouses are age 62.
  • When Belinda (the higher earner) reaches age 62, having her delay benefits is not as good of a deal as it typically is for the higher earner in a same-age couple. That’s because, by the time Belinda is 62, Bob will be 77, meaning that their joint life expectancy is less than that of a same-age couple.

Or, to put it differently, for a couple who are very different ages:

  • The older spouse (whether the higher or lower earner) gets a better deal for delaying benefits than he/she would in a same-age couple, and
  • The younger spouse (whether the higher or lower earner) gets a worse deal for delaying benefits than he/she would in a same-age couple.

Fewer Clever Tricks

One other thing that changes for couples who are many years apart is that there’s less room for clever strategies between full retirement age and age 70. For example, in a same-age couple, provided that the lower-earning spouse has filed for his/her own benefit, the higher earner can file a “restricted application” for just a spousal benefit at full retirement age, thereby allowing him/her to collect something while still allowing his/her own retirement benefit to grow until age 70.

If the spouses are more than 8 years apart, that strategy isn’t an option, because by the time the lower earner reaches age 62 (the minimum age to file for retirement benefits, which the lower-earning spouse must do in order for the higher earner to file for spousal benefits), the higher-earning spouse will already be age 70 and collecting his/her own retirement benefit.

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Social Security cover Social Security Made Simple: Social Security Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less
Topics Covered in the Book:
  • How retirement benefits, spousal benefits, and widow(er) benefits are calculated,
  • How to decide the best age to claim your benefit,
  • How Social Security benefits are taxed and how that affects tax planning,
  • Click here to see the full list.

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Comments

  1. Every couple [who are both eligible for Social Security] should search for and read the information on “Deemed Filing” [here or elsewhere] before filing for SS spousal benefits if the spouse filing for spousal benefits is younger than FRA!

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