How Spouses Can Maximize Their Social Security Retirement Benefits

“Claim-and-suspend” is a Social Security strategy that can mean higher benefits.

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Married couples are often able to strategize the timing of their Social Security retirement benefits to get higher lifetime benefits for one or both spouses. Here are the various options that spouses can use to strategize the highest possible joint Social Security benefits depending on their particular situation.

If Only One Spouse Is Eligible for Retirement Benefits

Although their numbers are shrinking rapidly, there are still many married women who did not do enough paid work outside the home during their lifetime to have earned Social Security retirement benefits. (This happens with men, too, of course; but the number of men in this situation is smaller, so we’ll assume a no-retirement benefit wife/retirement-benefit husband example.)

The wife in this circumstance is eligible for dependents benefits (spousal retirement benefits) only when her husband claims retirement benefits, and survivors benefits when the husband dies. If she claims dependents or survivors benefits before her full retirement age, she gets a reduced benefit. The husband, in this case, is eligible only for his own retirement benefits. He would have no dependents benefits (spousal retirement benefits) based on his wife’s work record, and no survivors benefits if she were to die before him.

A married couple with only one retirement benefit is faced with two Social Security rules that together might seem to make a difficult choice for the couple:

• If the husband delays claiming his retirement benefits until after full retirement age (up to age 70), both his retirement benefits and the wife’s survivors benefits (if she outlives him) will go up. Conversely, if the husband claims benefits early, both his retirement benefits and the wife’s survivors benefits will be permanently decreased.

• The wife cannot claim dependents benefits (the spousal benefit) until the husband claims his retirement benefits.

What would be a tough choice between these two approaches has been eliminated by a special “claim-and-suspend” rule enacted by Congress in 2000. Now, the husband can claim his retirement benefits at full retirement age, allowing the wife to begin collecting dependents benefits (if she’s at least age 62 or caring for their minor or disabled child). The husband can then immediately “suspend” his retirement benefits, meaning that he does not actually collect them. In return, his benefits will continue to grow (up to age 70) until he “unsuspends” and actually begins collecting them. Also, for the entire time his retirement benefits are suspended and growing, his wife’s potential survivors benefits are also growing.

Both Spouses Eligible for Their Own Retirement Benefits

In most couples now reaching retirement age, both husband and wife have earned some Social Security retirement benefits. That means that each one is also entitled to dependents benefits (spousal retirement benefits) based on the other spouse’s work record, as well as survivors benefits based on the other’s work record.

At any time after each spouse reaches age 62, he or she can claim retirement benefits. As soon as one claims retirement benefits, the other (once reaching age 62) can claim the spousal retirement benefit. And when one spouse dies, the other can claim survivors benefits, as early as age 60 (or earlier if disabled or if caring for the deceased spouse’s minor or disabled child). All this operates, though, under one basic principle: You can claim only one benefit at a time. Most people simply claim the highest benefit currently available to them. But that’s not always the best way to maximize benefits. Here is a look at the rules at work in this situation, along with some options that might allow you to get higher joint lifetime benefits.

“Claim-and-Suspend” Retirement Benefits

One spouse’s dependents benefits are up to 50% of the other spouse’s full retirement benefits. For many people, their spousal benefits are higher than their own retirement benefits. Traditionally, this has most often been the case for women, who may have worked less outside the home and tend to be paid less than men even for similar work.

If a spouse who was a higher earner waits until after full retirement age to claim retirement benefits, those benefits will increase up to age 70. But the lower-earner spouse cannot claim dependents benefits until the other spouse claims retirement benefits; and dependents benefits can climb no higher than 50% of the retirement spouse’s benefits at full retirement age (in other words, there is no increase in dependents benefits if the high-earner spouse delays claiming retirement benefits).

A special Social Security regulation, called “claim-and-suspend,” gives people a way around these two counteracting rules. It lets the higher-earning spouse claim retirement benefits at full retirement age—which allows the other spouse to claim dependents benefits— and then permits the higher-earning spouse to “suspend” the retirement benefits claim. While the retirement benefits are suspended, the other spouse can collect dependents benefits; at the same time, the higher-earning spouse’s retirement benefits continue to grow (up to age 70) until he “unsuspends” and actually collects them. This also has the benefit of increasing survivors benefits if the higher-earning spouse dies first.

Claim Dependents Benefits, Leave Retirement Benefits

Another strategy is to claim lower dependents benefits at full retirement age, allowing your retirement benefits to grow. At full retirement age, a spouse can claim either full retirement or full dependents benefits (if the other spouse has claimed retirement benefits). Usually, people simply claim the higher of the two. But that’s not always the best decision.

If the amount of your dependents benefits (spousal benefit) is not too much lower than your retirement benefits would be, it might make good financial sense for you to file what’s sometimes called a “restricted application” that claims only dependents benefits, which allows your retirement benefits to grow. You can later switch to your own retirement benefits, which will be 8% higher—and will remain so for the rest of your life—for each year you delayed past full retirement age (up to age 70).

Claim Early Retirement or Dependents Benefits, Wait for Higher Survivors Benefits

Claim early retirement or dependents benefits, then switch to survivors benefits. At age 62, a spouse may be reluctant to claim reduced retirement or dependents benefits because those reductions are permanent. Plus, an early claim of either of those benefits permanently reduces the other one, too. But the same is not true for survivors benefits; claiming your own early retirement or dependents benefits does not affect the amount of your survivors benefits (based on your spouse’s record). (Though if your spouse claims early retirement benefits, your eventual survivors benefit will be reduced.)

So, if you have a considerably older spouse who has a higher earnings record, or your higher-earning spouse is in poor health, you might want to claim your early retirement or dependents benefits (whichever is higher) now, relying on the fact that you will be able to switch to full survivors benefits in the not-too-distant future.

This article was excerpted from  Social Security, Medicare & Government Pensions, by Joseph Matthews (Nolo).

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