Social Security Q&A: How to Maximize Benefits

Dear Gail-

I found your recent articles about different ways married couples can claim Social Security very enlightening. I had no idea these options existed!  I am wondering how they might apply in the case of myself and my wife. I’m 66 and still working (I really enjoy what I do), and she is 62 and has retired, although she seems busier now than when she had a job.

Here’s my question: Since Beth is eligible for Social Security benefits based on her own work record, could she “file and suspend” as you described? That would allow me to collect a spousal benefit on her work record and let her benefit continue to grow.  Meantime, since I’m not claiming my own benefit, wouldn’t it earn extra credits and be worth more when I file at age 70?



Dear Doug,

I see where you’re going with this. The problem is, so do the folks at Social Security.  In a nutshell, it’s not possible.

A “spousal benefit” is one that is based upon the earnings record of your spouse as opposed to your own. If one member of a couple worked in higher-paying jobs or had more time in the paid workforce, a spousal benefit could be considerably higher. (1)

But there are a few things to keep in mind. Let’s review some of the basics:

When Benefits are Reduced

  • You are penalized for starting Social Security prior to your full retirement age (FRA). For instance, someone who has a FRA of 66 will see their monthly check reduced by 25% if they file for benefits at age 62. This is a permanent reduction.
  • The original amount will only increase in years when Social Security beneficiaries receive a cost-of-living adjustment (COLA). The goal of these is to help your original benefit keep pace with inflation.
  • Filing for Social Security prior to your FRA, reduces all types of benefit you’re entitled to- your own, a spousal, a widow’s benefit, or a benefit as a divorced spouse.

When Benefits are Increased

  • On the other hand, you are rewarded for postponing collecting Social Security. Beginning with the month in which you reach your FRA, your check is increased by two-thirds of 1% (8% every 12 months) for each month that you delay starting Social Security. These delayed retirement credits (DRCs) cease once you turn 70, so there’s no advantage in delaying the start of benefits after that.
  • In addition to DRCs, your benefit also receives Cost-of-Living Adjustments.
  • Spousal benefits are not eligible for DRCs. The maximum benefit is 50% of the higher-earning spouse’s benefit at Full Retirement Age.

Qualifying for Spousal Benefits

Now let’s look at the conditions that must be met in order to qualify for a spousal benefit, which is based upon the work record of the higher earner.  Provided the lower-earning spouse has reached full retirement age-- 66 for anyone born in 1943 through 1954-- this is equal to 50% of the benefit the higher-earning spouse would receive when he/she is FRA.

First and foremost, an individual is not entitled to a spousal benefit until the spouse has filed to start Social Security.

Here’s where “File-and-Suspend” comes into play. As I explained in a previous column this is a strategy specifically designed to enable one member of a couple (typically the lower-earning spouse) to qualify for a “spousal” benefit while also allowing the other (generally the higher-earning spouse) to earn delayed retirement credits.

It involves one member of a couple filing for Social Security and then immediately having their benefit checks stopped, or suspended. The fact that this individual has technically “filed” for benefits- even though they’ve instructed Social Security to stop paying them- is enough to allow the other spouse to qualify for a spousal benefit.

Unfortunately, file-and-suspend is not an option for someone until they have reached Full Retirement Age. Since your wife, Beth, is only 62 years old, she is not entitled to this privilege.

However, Doug,  you are. If you dile-and-suspend, then Beth could start receiving a spousal benefit from Social Security. Keep in mind that since she is also entitled to benefits on her own record, the amount would be a combination of her benefits plus the extra she is due as a spouse. Both would be reduced by a fraction of a percent for every month that she is under her FRA of 66.  At exactly age 62, her spousal benefit would be reduced from 50% of your FRA benefit, to about 35%.

As long as your checks are suspended, your benefit will increase thanks to delayed retirement credits and any cost-of living adjustments between now and the month you reach age 70.

More Options at Full Retirement Age

In anticipation of what you might be thinking, at this point Beth cannot apply for only a spousal benefit. This is only possible once she has reached her FRA.

Since you are still working, if you can both wait four years to claim Social Security, there’s another choice: by then you’ll be age 70, the maximum age to file for benefits based upon your own record.  Since Beth will be 66 by then, she could file for only a spousal benefit, allowing the benefit based upon her own earnings history to increase and earn DRCs.  Then when she turns 70, she can switch to that.  

As you can see, there are more choices available to couples once one or both have reached FRA.  However, without knowing the amounts you’re each entitled to, your other income sources and how much income you need, it’s impossible for me to make a recommendation. The smartest thing to do is to make an appointment at your local Social Security office and have someone run the numbers for you on different options.  As I’ve said before, making the wrong decision will impact the income you receive for the rest of your life.

1 The amount that Social Security pays you is the benefit based upon your own earnings record or up to 50% of your spouse’s earnings record--whichever amount is higher. Technically, a spousal benefit is made up of the amount you’re due based upon payroll tax that you, yourself paid while working, plus the extra you’re entitled to based upon your spouse’s earnings record.  In the words of Social Security: “….we will check to see if you are eligible for both your own retirement benefits and for benefits as a spouse. If you are eligible for both, we always pay your own benefits first. If you are due additional benefits, you will get a combination of benefits equaling the higher spouse's benefit.”

Ms. Buckner is a Retirement and Financial Planning Specialist and an instructor in Franklin Templeton Investments' global Academy. The views expressed in this article are only those of Ms. Buckner or the individual commentator identified therein, and are not necessarily the views of Franklin Templeton Investments, which has not reviewed, and is not responsible for, the content. 

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