Social Security strategies for spousal benefits are an important topic that couples should consider when planning their financial futures. Married couples can obtain a higher income from Social Security when considering their options as a couple rather than as individuals. There is an available claiming option sometimes referred to as “double dipping” if one spouse was born on or before January 1, 1954. This “collect now and later” strategy provides some income in the present while securing a higher benefit later.
“Collect Now and Later” Strategy
The “collect now and later” strategy allows you to claim spousal benefits while your own retirement credits accrue on your benefit amount. Typically, a higher-earning spouse considers this approach to maximize benefits at age 70. The higher age 70 benefit is then secured as a survivor benefit.
“File and Suspend” Strategy
In fact, the Bipartisan Budget Act of 2015 eliminated two claiming strategies for many Americans – restricted applications and the “file and suspend” strategy – unless you are a widow or widower or were born before the cutoff date of January 1, 1954.
Why Doesn’t It Work If You Haven’t Reached Full Retirement Age?
If you apply for Social Security benefits before your full retirement age, you automatically qualify and will receive the higher benefit based either on your own earnings record or 50 percent of your spouse’s full retirement age benefit. If you wait until full retirement age to file, and you were born on or before January 1, 1954, you can apply for benefits and choose to start collecting spousal benefits based on your spouse’s earnings record, or your ex-spouse’s if you were married for at least 10 years and haven’t remarried. Your own Social Security benefit will continue to accrue deferred retirement credits until you reach age 70, at which point you can switch from collecting spousal benefits to collecting your own higher Social Security benefit.
Example
Cara, who is 66 years old and still working. Her husband Bob is receiving Social Security retirement benefits. Since Cara was born on or before January 1, 1954, she files for restricted Social Security benefits based on Bob’s earnings record. She collects her spousal benefit while working for the next four years. Then, at age 70, she retires and begins collecting her significantly larger Social Security benefit.
What About Children?
Young children – and grandchildren if they are dependent on you – can also collect benefits on a retired spouse’s earnings record if the parent is receiving benefits or used the “file and suspend” option before May 1, 2016.
Warning
The Social Security Administration reserves the right to limit the total benefits that can be paid to multiple family members. While your own benefits will not be affected if your spouse and child are collecting on your work record, the total benefits paid to your entire family typically cannot exceed 180 percent of your own full retirement benefits.
It’s worth noting that your ex-spouse’s benefits do not affect any benefits you or your current spouse may receive.
Source: https://www.thebalancemoney.com/social-security-strategy-for-marrieds-age-62-2388923
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