With a Spouse, Taking Your Social Security Early Might Be Better

By Tom Margenau

March 18, 2020 8 min read

I'm sure you've seen websites, or received mailers from financial planners, that entice you with come-on's like this: "Learn the secrets to maximizing your Social Security benefits." Or, "You may be losing tens of thousands of dollars if you don't know this Social Security secret."

If you open the website, or attend the seminar, here is the "secret" you will learn: delay taking your Social Security benefits until age 70. And the theory is that you will live long enough to make up for the money you lose by not starting your benefits sooner.

That's probably good advice for lots of people. But there are still millions of senior citizens who, for a variety of reasons, choose to take their benefits earlier. For example, both my wife and I started our Social Security benefits at age 62. We were perfectly content doing that. We know that if we live until a ripe old age, we might end up coming out on the short end of the Social Security stick. But we don't care. We've been having too much fun for the past decade spending our reduced Social Security checks.

Besides the "eat, drink and be merry" types like me and my wife, there is another group of people who should seriously think about starting benefits earlier rather than later. And that is retirees who have a spouse potentially eligible for benefits on their record. Today's questions and answers illustrate what I am talking about.

Q: I am 66. I plan to delay starting my Social Security until I'm 70. My full retirement age benefit is $2,600. If I wait until 70, I'd get $3,432. My wife is 62. She wants to file for her Social Security now. She's due a much smaller benefit. It would be about $787 if she files now. I say she should wait until I am 70 and she is 66 and then file on my record, because if she files for reduced benefits now, that reduction would carry over to the spousal benefits she will eventually be due on my record. So, who is right?

A: I think your wife is right. Let's compare the two options. We'll take yours first. In your scenario, no one would get anything until you turn 70 and sign up for Social Security. At that point, you would get $3,432. Then your 66-year-old wife would sign up for her full retirement benefit, which should be about $1,050. At the same time, she would file for spousal benefits on your record and get an additional $250 for a total of $1,300. (A spousal benefit is always based on your full retirement age rate, not your augmented age-70 rate.) So, your wife will get her retirement benefit supplemented to 50% of your $2,600 rate, or $1,300. In other words, in the option you think is best, neither of you would get any benefits until you are 70 years old, at which point you would start getting $4,732 per month in combined benefits.

Now let's look at what your wife wants to do. She wants to start taking her reduced retirement benefits now. So, she would get $787 per month for the next four years. That's $37,776 you guys would forfeit if you do nothing until your 70th birthday. And what happens then? Well, you would get your $3,432 monthly check. And then your wife can claim some extra spousal benefits on your record. You are right that she will suffer a bit of a reduction in her spousal benefits because she took early retirement on her own record. But it's not as much as you think. Here is roughly how they will figure out what she is due. They will take her full retirement rate, or $1,050, and subtract that from one-half of your full retirement rate, or $1,300. The difference, $250, will be added to her reduced retirement benefit. So, her combined retirement and spousal benefits will be $1,037 (as compared with the $1,300 she'd get in your preferred option). In other words, your total combined benefits would be $4,469, not all that much less than the $4,732 in your option.

So, if you guys go with your choice, you'd get an extra $263 per month from age 70 on. But you would have given up the $37,776 in reduced retirement benefits your wife would have been due starting at age 62. It would take you about 144 months to make up that money you would have lost by not letting your wife file now. I think you guys better talk about that.

And one more thought: You should know that even if your wife takes reduced retirement benefits, that decision will have no effect on what she gets as your widow. Assuming you are both over age 66 when you die, she will keep getting her own benefit, and it will be supplemented up to your full age-70 rate. In other words, your wife's spousal rate is based on your full retirement benefit. But her widows rate is based on your augmented age-70 benefit.

Q: I will be 62 next month Even though I'm not working, I have no desire to sign up for my own Social Security now. My full retirement benefit is projected to be $2,750. I'm thinking of waiting until I am 66 before I file. My wife is 69, and she is getting $550 per month in her own Social Security. Can she get anything on my record now?

A: No, she can't. A woman who is currently married to her husband can't get any spousal benefits until her husband applies for his own Social Security. (It's different for a divorced woman. She can get benefits even if her ex hasn't filed for retirement.)

Because of those spousal benefits you guys are giving up, you might want to think about filing for Social Security now. If you did, you'd get 75% of your full retirement age rate, or $2,062. And your wife would get her retirement benefit supplemented up to 50% of your full retirement age rate, or $1,375. In other words, she would get her own $550, and she'd get $825 on your record for a total of $1,375 per month.

So if you wait another four years until you are 66, you will be losing out on $2,887 per month you are not getting now. (That's your $2,062 benefit plus your wife's spousal share of $825.) That's $138,576 you will lose by waiting another four years to file.

If you wait until age 66, you will get your full retirement age rate of $2,750. And your wife will get the same spousal rate she'd be due now, or an extra $825. So all you gain by waiting is the difference between your 100% full retirement age rate and your 75% reduced retirement rate — or 25%. That's about $688 per month. It would take you about 200 months to get back what you lose by not filing now.

Here is something else to consider: If you take reduced benefits, that reduction will carry over to any widows benefits your wife might be due after you die. But since you are seven years younger than she is, that might not be something to worry about.

If you have a Social Security question, Tom Margenau has the answer. Contact him at [email protected] To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

Photo credit: nattanan23 at Pixabay

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