Smart Social Security Strategies for Spouses


There are some unique Social Security benefits available to spouses.  Knowing some details will help you maximize the benefit available to you.

Let’s look at a hypothetical couple based on the 1950’s American household where Bob is the main bread winner in the family.  Bob and Mary are 62 years old. 

Even if Mary never had a job outside the home that contributed toward Social Security, she’ll receive ½ of Bob’s Social Security retirement benefit amount when he applies for benefits.   If she did contribute to Social Security, but her own benefit is still less than ½ of Bob’s, her benefits are combined.   Note that Mary’s benefits don’t reduce Bob’s.  His benefit is calculated on the average of his highest 35 years of earnings, regardless of whether his wife files for benefits or not.

Just because Mary can receive benefits at age 62, that doesn’t mean that it’s the best financial choice for her.  There are several reasons to delay receiving benefits.

The first reason is that taking benefits before Mary’s Full Retirement Age (FRA) of 66 reduces her benefit amount by 25%, and that lower payment is permanent.  Benefits are reduced by about 6% per year below your FRA.  Payments increase about 8% for every year you delay benefits past your FRA, up to age 70.

The second reason to delay benefits is if Mary is working.  If she earns more than $15,120, her benefits are reduced by $1.00 for every $2.00 above that amount.  If she expects to earn $20,000 this year and if her monthly benefit is $600, she’ll be paid $4,760.00 instead of $7,200.00 for the year.  Fortunately, whatever benefits are withheld due to income are recalculated back into her benefit once she reaches her FRA.  After reaching her FRA, Mary can earn as much as she wants without reducing her benefits.

A third reason to delay is if Bob and Mary earn over $44,000 per year (including investment income), up to 85 percent of their monthly benefit is taxed.  Many people are working later today so delaying benefits as long as possible may make sense.

Divorced Spouses

What happens if Bob & Mary were divorced before age 60?  If Mary doesn’t remarry by age 62 she can collect benefits based on her ex-husband’s earnings if they were married for at least 10 years.  This in no way reduces or impacts Bob’s benefit amount. If Bob remarries and divorces again before age 60, his second wife can have her benefits calculated on Bob’s earnings too.  Both ex-spouses benefit from Bob’s earnings and none of the three people’s benefits are affected by anyone else’s benefits. 

Widows and Widowers

Had Bob died earlier Mary could have started collecting as early as age 60, or even as early as age 50 if she was disabled.  Even further, she would have been eligible to receive benefits at any age if she was caring for a child who was under age 16 or disabled. 

Today’s American household looks quite different than the 1950’s, and it’s not unheard of that Mary earns more than Bob.  In that case, the roles in these examples are reversed - Social Security is gender neutral. 

Doing some research and having a strategy will help you find the Social Security benefits you’re qualified to receive.