Social Security Benefits for Married Couples
When should married couples apply for Social Security benefits? Before answering this question, you first need to understand the rules governing Social Security.
If benefits start at full retirement age, you are entitled to the larger of 100% of your benefit based on your earnings or 50% of your spouse's benefit. However, if you elect benefits before full retirement age, your spouse's benefit will be reduced by a larger percentage than your benefit was reduced. After your death, your spouse receives the larger of his/her benefit or 100% of your benefit, provided he/she is over full retirement age. If not, your spouse receives between 71.5% and 100% of your benefit. Thus, the larger your benefit is, the larger your spouse's benefit may be after your death.
For individuals turning 62 this year, full retirement age for Social Security purposes is 66. If benefits are claimed at age 62, that individual would receive 75% of full retirement benefits. For each year past age 66, benefits increase by 8% per year, for a maximum benefit at age 70 that is 132% of full retirement benefits. These amounts have been actuarially calculated, so that if you live to the average age, the benefits are approximately the same for a single individual, no matter when you start those benefits.
However, for married couples, benefits are not actuarially the same. Typically, the man is older than the woman, has higher earnings than the woman, and will not live as long as the woman. Because the surviving spouse can elect to receive 100% of the other spouse's benefit, it typically makes sense for the man to wait until age 70 to claim Social Security benefits, in order to provide his wife with the highest benefit possible after his death. On the other hand, there is usually no reason for the woman to wait beyond ages 62 to 66 to start Social Security benefits, provided she can claim benefits on her own earnings record. While the wife's benefit may be lower when her husband is alive, she will receive his higher benefit after his death.
A spouse who can't claim benefits on his/her own earnings record can claim spousal benefits, but he/she must wait until his/her spouse starts benefits or reaches full retirement age. Spousal benefits are reduced when taken at age 62, but do not continue to grow after full retirement age. However, a worker can apply for Social Security benefits at full retirement age, allowing his/her spouse to collect benefits, and then suspend his/her own benefit, reapplying at a later date.
Keep in mind that these strategies are based on individuals living an average life expectancy. If you and your spouse live well beyond that age, it will typically pay for both of you to delay benefits until age 70. However, if you both die young, it would make more sense for both of you to claim benefits at age 62.