Wisdom Wealth Strategies Logo

Married? Strategies for Maximizing Combined Social Security Benefits

Get the latest expert financial tips and advice + access to our free financial checklists.

It’s a hot topic in the media lately! It seems that every financial journal or newspaper has recently run a story titled “Get More out of Social Security” or “Max your Benefits.” In this post, we’ll attempt to simplify the two most common claiming strategies, “file-and-suspend” and “claim some now, claim more later.” To avoid confusion, we’ll name our spouses John and Mary for the duration of this post.

File-and-Suspend: The goal of the file-and-suspend strategy is to maximize combined benefits over a couple’s lifetime. It is particularly effective when one spouse has a long work history and high earnings and the other spouse either has low earnings history or didn’t work long enough to earn sufficient credits to qualify for retirement benefits. File-and-suspend works like this: Mary is at her full retirement age of 66, but isn’t ready to retire. John, on the other hand, is age 66 and does wish to retire. Mary files for her own retirement benefit and immediately requests that the benefit payments be suspended. Mary earns delayed retirement credits of 8% per year for every year she waits to start her benefits between the ages of 66 and 70. After Mary files and suspends her benefit, John files for spousal benefits and begins to collect a total of up to 50% of Mary’s full retirement age benefit. The benefit John receives is actually made up of his retirement benefit and a portion of benefits attributable to Mary’s record. To utilize the file-and-suspend strategy, one member of the couple must be at or over full retirement age. In addition, the spouse who will be collecting a benefit must be at least age 62. Keep in mind, however, that claiming benefits before full retirement age on a spouse’s record or on one’s own record will result in a permanent reduction in benefits of 5/9 of 1% per month for the first 36 months and 5/12 of 1% for each additional month. View the Social Security Administration’s helpful chart to see how claiming early affects your benefits.

Claim Some Now, Claim More Later: Couples who wish to use the “claim some now, claim more later” strategy must each have a fully qualified Social Security record of their own. In addition, one member of the couple must be at least age 62. The other spouse must be at or over full retirement age. An example using John and Mary: Mary is at her full retirement age of 66. John is 62. John applies for his own retirement benefit. Mary applies for benefits on John’s record and limits the scope of her application to only a spousal benefit. Mary is only eligible to restrict the scope of her application after her full retirement age. At any time prior to full retirement age, she is deemed to have filed for her own benefit first (as in the file-and-suspend example). Mary’s own benefit continues to accrue delayed retirement credits and increase at a rate of 8% until she claims on her own record at age 70.

Understanding and taking advantage of these strategies may make a meaningful impact on your long-term financial outlook. If you’re nearing retirement and wish to evaluate your options, start by gathering your Social Security benefits information. You’ll find your record and excellent tools on the Social Security Administration’s website, www.SSA.gov. Want to go deeper? We’re here to help.

Download our Free Financial Planning Worksheets

Join our mailing list to receive your 2024 Tax & Financial Planning Guide, as well as your Net Worth Statement and Spending Plan.