When you’re married, you typically coordinate a wide variety of financial decisions with your spouse. But one of the most important choices you’ll have to collaborate on is when to apply for Social Security benefits.
Working together to decide when to start receiving retirement checks is crucial, as there are special rules built into the benefits package for married couples. Because of them, a spouse’s decision about when to get their first Social Security check can have a profound impact on their partner.
It may sound confusing, but the bottom line is that there are three big rules every married couple should know. Here is what they are.
1. Your decision to apply for benefits sooner could affect survivor benefits
In most cases, older married couples have two Social Security checks going into the household. Each partner receives their own check. But when a person dies, their payments stop. This can lead to a sharp reduction in total household income.
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The good news, however, is that the remaining spouse is entitled to survivor benefits. As a result, they can keep the higher of the two payments either person was receiving. If the lower earning spouse receives a retirement benefit of $1,500 and the higher earner receives $1,800, the last surviving spouse may continue to receive the $1,800 after their partner dies.
Unfortunately, if the higher earner has made a decision — like applying for early benefits — that cuts their Social Security check, survivor benefits are also cut. This could have a devastating impact on the widow or left-behind widow. Therefore, it is crucial to consider how your partner will fare if you were the spouse who earned the most during your career. If you decide to start receiving Social Security checks as soon as possible rather than waiting as long as possible to maximize survivor benefits, it could create serious financial hardship if you die first.
2. Your spouse cannot apply for spousal benefits unless you have started yours
When you are married, you have the choice of claiming either your own pension benefits (assuming you are entitled to them) or get spousal benefits.
Spousal benefits are based on your partner’s work history and are up to 50% of your partner’s primary insurance amount (the standard benefit available at full retirement age). There’s only one problem: they won’t be available until the major earner whose spousal benefits are based on work history has claimed his own retirement benefits. In other words, if a husband wants to claim spousal benefits based on his wife’s earnings history, his wife should start her retirement benefits first, or vice versa.
Sometimes it still makes sense for the higher earner to defer a claim for benefits, even if that means spousal benefits can’t start. After all, as mentioned above, waiting would increase survivor benefits. But in other circumstances, the higher earner may want to start checks as soon as possible to make spousal benefits available.
This might make sense, for example, when a spouse has not worked enough to collect pension benefits. In this circumstance, the couple would have Nope Social Security checks come in until the highest earner claims it — but once that’s happened, two checks could start coming in.
3. You Cannot Accumulate Deferred Retirement Credits on Spousal Benefits
Finally, if you are claiming spousal benefits, be aware that claiming them before full retirement age may reduce them. But delaying a claim beyond FRA will not increase them.
Although your own pension benefits increase if you wait longer to claim them until age 70, no deferred pension credit can be earned on spousal benefits. As a result, monthly Social Security checks do not increase if you wait to apply for spousal benefits after FRA.
Understanding these three rules can help you coordinate with your partner so you can decide together when each person should claim benefits to get the maximum combined Social Security income over your lifetime.
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