When deciding how and when to claim Social Security, married couples may have some advantages. Each individual in a marriage can claim at different dates and may be eligible for spousal benefits. In order to make the most out of Social Security benefits it is important to strategize. Social Security is enormously complex. When to file for Social Security and determining your optimal claiming strategy are two of the most important financial decisions you will make in your lifetime. Here are three solid tips that may help married couples boost their lifetime Social Security benefits.
Tip #1: Maximize Lifetime Benefits
A married couple with similar incomes and ages may maximize their lifetime benefits if they both delay claiming them. The longer you defer your benefits, the larger the monthly benefits will grow. Your benefit could increase by up to 8% each year you delay Social Security from age 62 to 70. This strategy may be favorable to those couples with a normal to high life expectancy and who have similar incomes. In addition, those who are planning to work until age 70 or have extra funds to provide any needed income during the deferral period would also see a benefit from utilizing this strategy.
Tip #2: Claim Early Due to Health Issues
Once you turn age 62, benefits are available to claim and full retirement age is based on your birth year. A married couple with a shorter life expectancy, due to health issues or family history, may want to claim their benefits earlier. These couples are also planning on a shorter retirement period. This is always a tough topic to discuss with your spouse but asking each other how long you each expect to live can determine if this is a strategy you want to consider.
Tip #3: Maximize the Survivor Benefit
Your spouse may receive your monthly Social Security payment when you pass away as a survivor benefit, if it is more than their own monthly amount. However, if you begin taking Social Security before your full retirement age, you are permanently limiting your partner’s survivor benefits. This issue is commonly overlooked when retirees decide to start collecting Social Security at age 62. When you delay your claim until your full retirement age, or until you are age 70, your monthly benefit amount will grow and so will your spouse’s benefit after your death. When the spouse’s Social Security monthly benefit is greater than their partner’s, and they are in good health, this is a strategy to be considered.
When creating a Retirement Income Plan, Social Security benefits are an essential element for most people. When and how you decide to claim your benefits should be a joint discussion with your spouse as it will have an impact on both of your outcomes. Remember to consider how long you may live, if you can financially afford to defer benefits and how your decision may impact your survivors when claiming Social Security.
Making correct decisions could mean tens of thousands of extra retirement dollars. In most cases, you only get one chance to make the right choice because you don’t get a “re-do” if you make the wrong decision. To discuss your claiming strategy for Social Security with Dechtman Wealth Management, give our office a call at 303-741-9772 or schedule a complimentary Social Security Analysis by clicking here.
