Maximize Married Social Security Benefits: Part One

Question: In last week’s column you suggested that I can maximize my social security benefits if I wait until age 70 to start collecting.  I am married and my wife will be able to collect her own social security benefits base on her work experience, although they will not be quite as much as mine.  We have not signed up for benefits yet.  I am turning 66 and my wife is 64, what do you suggest?

Answer:  As I said last week, social security planning for married couples is complex and married couples should seek competent advice before they sign up for benefits.  Because every case involves different ages and earnings profiles, there is no one best cookie-cutter or rule-of-thumb strategy to maximize benefits. 

In your case the best option to maximize your lifetime benefits might be for you to wait until you are 70 to begin to collect.  Before your wife turns 66, you can “file and suspend” for your own social security benefits.  In other words, file for benefits but suspend payments until age 70.  This will allow you to accrue delayed retirement credits between ages 66 and 70 and at the same time allow your spouse to file a “restricted claim” for spousal benefits only.  Your spouse will then start collecting one-half of the amount of the benefit that you were entitled to collect at age 66.  When she turns 70, she can switch to collecting her own benefit amount, which will presumably be more than one-half your benefit amount.

For sake of example, let’s assume that you and your spouse are both eligible to collect $2,000 per month at your full retirement ages of 66. When your spouse turns 66, you file and suspend and your spouse files a restricted claim for spousal benefits only.  You collect no benefits until age 70.  Your wife collects $1,000 per month, one-half of your age 66 (full retirement age) benefits.  At age 70, you begin collecting your increased benefits, and when your spouse turns 70, she switches to her own increased benefits, which at age 70 are worth $2,640, or 132% more than the $2,000 per month full retirement age (age 66) benefits. 

When your spouse turns 70, together you and she will be collecting more than $63,000 per year in Social Security benefits that will be increased each year by cost of living increases and paid for life.  

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Kenneth B. Petersen CFP®, EA, MBA, AIFA® is an investment manager and Principal of Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey.