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Social Security claiming strategies

Q&A: Spousal and survivor benefits operate by different rules

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Dear Liz: I believe you provided bad information to the woman inquiring about Social Security spousal benefits for her husband.

You suggested to her that since she was the higher income spouse, that she wait until age 70 to maximize the benefit her husband could receive. I used to think that was the case as well, and was planning my Social Security start date accordingly.

However, a few months ago I found out that this is not true. The maximum spousal support is based on the full retirement age of the spouse or deceased spouse, not the maximum amount received if the deceased spouse waits longer to take Social Security. This is true for both spousal benefits when the higher wage earner is alive and for survivor benefits. After finding this information out, I filed to start receiving immediately, since I’m at my full retirement age.

Answer: Many people confuse the rules for spousal and survivor benefits, as you’ve done. This is why it can be so important to discuss your claiming strategy with an expert before you make a decision that stunts the survivor’s future income.

Spousal benefits are available when the higher earner is still alive. Spousal benefits can be up to 50% of the higher earner’s benefit at full retirement age. Spousal benefits don’t get bigger if the higher earner delays filing beyond his or her full retirement age, and they don’t shrink if the higher earner applies before full retirement age. (If the spouse applies before his or her own retirement age, however, the spousal benefit typically will be reduced because of the early start.)

Survivor benefits are a different story. These are the benefits that kick in once the higher earner has died. Survivor benefits are up to 100% of what the higher earner was actually receiving. In other words, survivor benefits can be stunted if the higher earner starts a retirement benefit early and will get bigger if the higher earner delays applying.

This is why financial advisors often recommend the higher earner wait to file until their benefit maxes out at age 70. Not only is the higher earner likely to maximize their lifetime benefit by waiting, but the delay also increases the checks the survivor will receive.

If you regret your decision to start benefits, you could opt to suspend your application. You wouldn’t get back the delayed retirement credits you lost after starting your benefit, but those credits would be applied going forward so your benefit amount could continue to grow.

Another option, if it’s been less than 12 months since you applied, is to withdraw your application. This would require paying back all the benefits you’ve received so far, but it would reset the clock so that you could earn all the delayed retirement credits you missed.

Q&A: Claiming Social Security when the higher earner is younger

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Dear Liz: I am three years younger than my spouse. I have been the primary breadwinner with significantly higher earnings over our 31 years of marriage as he was a stay-at-home dad for many years. Taking my spousal benefit will be much higher for him than his own, even if he waited until he was 70. Do I have to have filed myself in order for him to be able to claim a spousal benefit, or can he claim it when he turns 67 even if I do not file for another three years (when I turn 67)?

Answer: Your spouse won’t be eligible for a spousal benefit until you apply for your own. He could, however, get his own benefit for a few years and then switch to yours once you apply.

The ability to switch from one benefit to another is typically limited. If you were already receiving your benefit, for example, he wouldn’t be able to choose between his own and a spousal benefit when he applied. He would be “deemed” to be applying for both, and get the larger of the two.

One more thing to consider: Since you’re the higher wage earner, it’s important for you to maximize your own benefit because it’s the one that determines how much the survivor will get. Usually the best course is to wait until your benefit maxes out at age 70, but other factors, including health and potential spousal benefits, should also be factored in. Consider using a Social Security claiming calculator or talking with a financial planner to determine the best strategy for your individual situation.

Q&A: Spouse gets the larger of two Social Security benefits, not both

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Dear Liz: Your recent column on the divorced couple where the ex-wife can apply for Social Security benefits has me wondering about my own benefits. I’m 60 and my husband is 79. Can I get his Social Security benefits, and if so, when should I apply? I am working and have worked all my adult life. He has an ex and was married to her for 11 years, so she is getting his and he is getting his. Do I qualify for his and also my own?

Answer: To repeat, Social Security is typically “either/or,” not “both.” When you apply for Social Security, your own retirement benefit will be compared with a spousal benefit based on your husband’s earnings record. You’ll get the larger of the two benefits. The spousal benefit can be up to 50% of your husband’s benefit at his full retirement age, not the amount he’s currently getting.

You can apply as early as age 62, but that means accepting a permanently reduced benefit. Also, early benefits will be subject to the earnings test, which withholds $1 for every $2 earned over a certain limit, which in 2025 is $23,400.

You won’t face the earnings test if you apply after reaching your full retirement age, which is 67. If you delay filing, your own benefit will continue to grow. It maxes out at age 70.

Figuring out the best time to apply can be complicated. AARP has a free calculator that may help, or you can use the more sophisticated paid versions at Maximize My Social Security.

Q&A: Waiting to apply for retirement benefit or not

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Dear Liz: I am recently divorced but was married for 20 years. My ex is 12 years older and he waited until 70 to start collecting Social Security benefits. I am 62 and self-employed. My retirement benefit is greater than half of his (but not by much). It is my understanding that after his death I can collect his full benefit, provided I am at least 67 when I apply, even if I start taking my own benefit now at 62. Is that correct?

Answer: Yes, but he could live a long time. Starting your own benefit now means you’ll get much smaller checks for years, perhaps even decades, compared with what you’d get by waiting. Plus, any benefit you take before your full retirement age would be subject to the earnings test, with $1 withheld for every $2 you make over a certain amount ($22,320 in 2024).

You may not have much choice, but if you do, waiting to apply is usually the best option.

Two out of five regret taking Social Security early

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Sad lonely pensive old senior womanA substantial number of people file for Social Security benefits as soon as they’re eligible. Many live to regret their decision.

Two out of five early retirees wish they had waited, according to a recent survey by the Nationwide Financial Retirement Institute, an arm of Nationwide Mutual Insurance. Here’s why, according to an article in the AARP Bulletin:

When you look at the differences in their monthly payout, you can understand their remorse. Those who took their benefit early report an average monthly payment of $1,190. Those who collected it at their full retirement age have an average $1,506 monthly payment. And those who delayed collecting their benefit report an average monthly payment of $1,924 (or $734 more than the early payout). The difference between the lowest and the highest monthly checks over 20 years comes to a whopping $176,160.

I suspect the longer folks live, the more they’re likely to regret rushing to grab their benefits. And this is an especially critical issue for women, since we tend to live longer and often have smaller Social Security benefits than men.

Financial advisors typically understand the huge potential benefits of waiting a few years to start Social Security checks, and many recommending tapping other resources, including retirement funds, if that’s the only way to delay. But many people apply for Social Security without ever checking in with an advisor. Many rely on friends and family for advice–not the best course with something as complicated as Social Security claiming strategies. The worst reason for starting early? The unfounded fear that Social Security will “go away” if they don’t grab their checks now. That can be a costly misconception.

I have a lot of posts on this blog that can help you make better claiming decisions; just type “Social Security” into the search box above. Here’s a link to one post that has important information, as well as links to recent research that underscores the importance of waiting to claim.