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Social Security Filing Strategies for Couples

For married couples, filing for Social Security comes with several options. Depending on the situation of the couple, there are different strategies that couples can employ to maximize their life-time benefits. We’ll cover each of these in more detail below but, for now, here is a brief overview to get you started. social security filing strategies for couples

First, for couples that have a long life expectancy, the best strategy is to wait as long as possible before filing. Because waiting to file (up until age 70) increases the monthly size of your Social Security payments, a couple that expects to live a long time can earn more over the course of their retirement by waiting to file.

Because Social Security allows a surviving spouse to claim the benefits of their deceased partner, a second strategy involves one spouse filing early, and the second spouse waiting to file later. This strategy works best when one spouse earns significantly more than the other. This way, each spouse is ensured to bring in the maximum amount possible, even if one of them passes away suddenly or earlier than the other.

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Finally, couples who do have a shorter life expectancy are advised to file early. In this case, filing early means they bring in less money each month, but the extra years of collecting benefits gives them a better chance of earning more in the long run.

Filing for Social Security when Married

For most, Social Security is a confusing concept. Sure, we understand that working and paying into a system means that, after a certain point, we are entitled to get money back. But the specifics of how and when we can start drawing is hazy to many.

It’s even more confusing for married couples. This is because married couples have several different strategies to choose from when filing for Social Security benefits, and how and when you file can make a big difference in the overall amount of money you receive over the rest of your life.  

If you’re not sure how Social Security can work for you and your spouse, it pays (literally) to take the time to educate yourself on your different filing options. In this article we will cover three different possible avenues a married couple can take, depending on their incomes and overall life expectancy.

Before we begin, though, it’s probably a good idea to review why these scenarios are possible.

For a single individual, filing Social Security is relatively straightforward – you reach a certain age and you file to receive benefits. Of course, nothing is ever that simple, right? How much you receive depends on a number of factors, one of them being how long you wait before you actually file (more on that later).

For married couples, however, the options change a little because each person in the marriage has the option to file at different times. In addition, Social Security allows for spousal benefits, where one person can actually file for and claim the benefits of the other spouse. This is where the different scenarios become possible. 

Let’s look at each one.

Social Security Filing Strategies for Couples - Scenario One

Our first scenario involves couples that are each earning a similar income and also have a decently long life expectancy.

In this scenario, it is generally considered wise to wait as long as possible for filing. To understand why, it’s first necessary to understand how your age can determine your overall benefits.

Most people equate retirement with Social Security, and while they are related to each other, they are definitely not the same thing. The ages at which you decide to retire and file for Social Security do not have to match. In many cases, it is better to wait for Social Security because you can end up getting more money. 

The government defines “full” retirement at around age 66 or 67, depending on when you were born. This “full” retirement age, however, is not the same age as when you can start collecting Social Security benefits. 

In fact, Social Security is available for anyone who meets the requirements starting at age 62. This means that you can collect Social Security while still working, for several years, in fact.

While this sounds good now, the problem is that the longer you wait to file for Social Security, the more you will get each in your monthly payment. If you file for Social Security before retirement age, your benefits are significantly reduced. Sure, you’re making extra money now when you’re still working, but once you retire your income will drop significantly, and filing early means there’s no way to increase those benefits.

On average, each year you wait to file brings with it an 8% increase in benefits. So, waiting until you are 63 means you will earn 8% more each month. Waiting until retirement at 66 or 67 means a much larger amount comes to you.

If you wait until you turn 70 to file, you will get even more. After 70, benefits level out and do not increase anymore, which means there is no reason to wait past that age.

This is why having a longer life expectancy is important. If you expect to live for a very long time after you retire – to the average age of 80 or longer – then waiting as long as possible to start collecting Social Security means that you will live a much more comfortable lifestyle, bringing in much more each month than if you had filed earlier.

For example, the average monthly Social Security payout for someone who earns an average $50,000 a year and files at age 62 is $1,499. This same person, by waiting until retirement at 66, could instead earn $2,092. If he or she decides to wait until 70, the payout could be as much as $2,650!

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As you can see, waiting simply brings in more money. For married couples with an average to above-average life expectancy, this difference becomes very important. 

There are kids and grandkids to visit, trips to take, items to cross off a bucket list, etc. – things that you are going to want to be able to do without having to worry about pinching every penny. This discrepancy becomes even more pronounced when you consider that these benefits are doubled for married couples. Imagine trying to enjoy your remaining decades on $2,500 a month versus $5,000 a month! 

So, waiting a few years could literally mean a difference of thousands of dollars, each month, which turns into hundreds of thousands of dollars over the rest of your lives. This becomes a very important factor to consider when you start to think about years and years of continued living after retirement.

Social Security Filing Strategies for Couples - Scenario Two

Another scenario that could impact a married couple’s decision of how and when to file for benefits also takes in the very real possibility of income discrepancy. In a marriage where one spouse makes considerably more than the other, it’s important to know how much each spouse is entitled to, so you can make the best decision about how to maximize benefits.

The reason for this is because the Social Security Administration allows one spouse to collect the benefits of the other spouse, should that spouse die first. In practical terms, this means that it is possible for the spouse who earns less in benefits to actually collect their spouse’s higher monthly payment, once that spouse passes away.

How can this help? This strategy is most effectively used when the lower-earning spouse has a much longer life expectancy.than the higher earner. By using this filing advantage, the longer-living spouse is still able to bring in more money and have a more comfortable life all the way through retirement.

The catch, though, is that the benefit amount is frozen at whatever amount it was when originally filed. It will not go up, even if the surviving spouse is older when he or she files for this eligibility.

Let’s look at an example. Spouse A filed at the early age of 62, and now receives a monthly benefit of $1,500. Spouse B waits to file until age 66 and gets $2,000 a month from Social Security. 

When Spouse B passes, Spouse A is able to claim and start receiving the higher amount of $2,000. However, even if Spouse A is now 70 by this time, that amount of $2,000 will not change; it is frozen at what it was when Spouse B filed for it.

But what if Spouse B had waited longer before filing? What if, like the scenario mentioned earlier, Spouse B had waited until turning 70 to file for Social Security, and is receiving a check of $2,500 per month at the time of death? If this were true, then Spouse A would be eligible to receive that much higher of an amount every month.

For this reason, waiting as long as possible for the higher-earner to file for Social Security might be the smart move. This way, the surviving spouse is able to collect more over his or her remaining years. 

Social Security Filing Strategies for Couples - Scenario Three

The third and final scenario we’re going to look at involves a situation where the couple makes a similar income, just like what we saw in scenario one. Unlike the people in scenario one, who were planning on retiring and then enjoying many long years together, this third couple has done the calculations and realize they are probably not going to live as long. 

This could be due to a number of reasons – a history of illness in the family, early lifestyle choices that have caused a significant decline in health or disabilities that have impacted your ability to live a longer life.

Regardless of the reason, knowing what you can expect out of your retirement years is very important in planning for your future. As mentioned above, the average life expectancy for an American citizen is right around 80 years old (it’s actually 79.4). If you seriously think that your life expectancy is going to come up short of that, then it does you no good to wait too long before filing for benefits.

Sure, waiting to file gives you more each month, just as we showed earlier. However, if you wait too long and end up passing away early, you end up getting less in total benefits than you would if you would have filed earlier.

For example, let’s say a person lives to the age of 75. If this person filed for Social Security at the age of 62, and received $1,500 per month (like the example above) for the remaining 13 years of life, that comes out to a lifetime benefit of $234,000. 

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If the same person waited until the age of 70 to file, those monthly benefits increase to $2,500. While this is better each month, the total amount of Social Security brought in over the next five years is only $150,000 – a full $84,000 less! 

Each year that this person waits to file brings less money in over the course of the benefits. In fact, a person needs to live into his or her 80s before the long-term benefits of waiting until 70 to file become worth it!

As you can see, Social Security isn’t the easy, straight-forward idea you think it is. For married couples, there are several strategies to consider. Your specific situation goes a long way into determining who should file, and at what age. If you would like more help or assistance with filing for Social Security, contact us today.

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About the Author

Aurtho Clint Haynes, CFPThis article was written by Clint Haynes, CFP®. Clint is a Certified Financial Planner® and Founder of NextGen Wealth. You can learn more about Clint by reading his full bio here.

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