How Spouses Can Maximize Their Social Security Retirement Benefits

Married couples can strategize the timing of their Social Security retirement benefits to get higher lifetime benefits for one or both spouses.

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For a limited amount of time, some married couples nearing retirement can 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.

On April 30, 2016, however, the ability to "claim and suspend" was eliminated. This means that an individual who files for Social Security must now actually begin collecting retirement benefits before a spouse or child can collect spousal or dependents benefits.

When Both Spouses Are 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 work record of the spouse who dies first.

At any time after each spouse reaches age 62, he or she can claim retirement benefits. If one claims retirement benefits, his or her spouse (once reaching full retirement age) can claim the spousal retirement benefit only, without claiming his or her own retirement benefit. This is called "filing a restricted application." It's only available to those who have reached full retirement age, and only to those who were at least 64 at the end of 2017.

This operates 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.

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.

Here is a look at the rules at work in this situation, along with two options that might allow you to get higher joint lifetime benefits.

Option to Claim Spousal Benefits, Leave Retirement Benefits

One strategy is to claim spousal benefits at full retirement age, allowing your own retirement benefits to grow. If the amount of your spousal benefits is not too much lower than your retirement benefits would be, it might make good financial sense for you to do this. 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).

A few rules to note: If you file for benefits before the full retirement age (currently 66), Social Security will force you to take the highest benefit available to you, so this won't work if you need to file for retirement benefits before full retirement age. Also, an early claim of retirement or spousal benefits permanently reduces the other one. For instance, the reduction in benefits will stick with you if you claim spousal benefits early and then switch to your own retirement benefits. As soon as you claim a Social Security benefit early, the other one is also reduced by the same percentage.

Note that your claiming early retirement benefits does not reduce the amount of your spouse's spousal benefits or your child's dependents benefit amount. (Your claiming early retirement benefits reduces your dependents benefit based on your spouse's work record.) Nor does your claiming early retirement benefits affect the amount of your survivors benefits based on your spouse's work record.

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

At age 62, a spouse may be reluctant to claim reduced retirement or dependents benefits because those reductions are permanent. But you can claim early retirement or dependents benefits, then switch to survivors benefits if your spouse dies.

Claiming your own early retirement or spousal benefits does not affect the amount of your survivors benefits (which are based on your spouse's record). If you have a considerably older spouse who has a higher earnings record, or your higher-earning spouse is in poor health, you could 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.

Note that if your spouse claims early retirement benefits, however, your eventual survivors benefit will be reduced. Also, claiming early retirement benefits will reduce your spouse's or child's survivors benefit based on your work record.

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

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