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Senior couple planning their joint retirement funds

Don't shortchange your spouse with Social Security filing blunder

by Susan Wright | Contributor
October 9, 2020


When planning ahead for Social Security retirement benefits, many retirees will opt for the highest dollar amount of monthly income. But that is not necessarily the best option. In fact, going this route could actually put a surviving spouse in financial trouble, possibly even leading to a substantial decrease in their future lifestyle.

There are literally hundreds of different combinations when it comes to filing for Social Security benefits – especially if you have a spouse who is also eligible. So, it is essential to understand how these benefits work, and how to maximize them in the event of one spouse’s passing.

Why your Social Security filing strategy can have substantial consequences in the future

How and when you file for Social Security retirement benefits can have a significant impact on the amount that you – as well as your spouse – will ultimately receive over time. When determining the dollar amount of your benefit, there are several criteria involved, such as:

  • Your age at the time your benefits begin
  • The amount of your past earnings
  • Your spouse’s eligibility for Social Security
  • Any other sources of retirement income (such as a pension, interest and/or dividends from investments, etc.)

Eligible recipients may file for Social Security retirement benefits as early as age 62. If they do so, however, the dollar amount of the benefit will be permanently reduced. On the other hand, waiting until your full retirement age, or FRA, will allow you to receive the full amount of Social Security benefit – which is also referred to as the primary income amount, or PIA – that you qualify for.

Year of birth Minimum retirement age for full benefits
Year of birth1937 or before Minimum retirement age for full benefits65
Year of birth1938 Minimum retirement age for full benefits65 + 2 months
Year of birth1939 Minimum retirement age for full benefits65 + 4 months
Year of birth1940 Minimum retirement age for full benefits65 + 6 months
Year of birth1941 Minimum retirement age for full benefits65 + 8 months
Year of birth1942 Minimum retirement age for full benefits65 + 10 months
Year of birth1943 to 1954 Minimum retirement age for full benefits66
Year of birth1955 Minimum retirement age for full benefits66 + 2 months
Year of birth1956 Minimum retirement age for full benefits66 + 4 months
Year of birth1957 Minimum retirement age for full benefits66 + 6 months
Year of birth1958 Minimum retirement age for full benefits66 + 8 months
Year of birth1959 Minimum retirement age for full benefits66 + 10 months
Year of birth1960 or later Minimum retirement age for full benefits67

A spouse may also qualify to receive Social Security benefits – even if they did not work and pay taxes into the program – and they can file as long as they are at least age 62 (or earlier if they have a qualifying child in their care).

The amount of the spousal benefit can be as much as half of the retired worker’s primary insurance amount, based on the spouse’s age at the time they file for Social Security. However, if your spouse is eligible for a retirement benefit based on their own earnings, they will receive whichever of these is the highest. Even so, though, the death of one spouse can have a negative impact on the survivor’s future household income.

Have you considered longevity in your Social Security benefits planning?

Today’s longer life spans can offer the opportunity to enjoy retirement for many years. But longevity can also be a detriment to your retirement income, primarily because you will be forced to face a long list of financial risks for a longer period of time.

According to a study by the Center for Retirement Research at Boston University, most husbands don’t take into consideration the future needs of their wives when claiming Social Security benefits. And this could be a big mistake.

One reason for this is because even though men are oftentimes the higher wage earners, statistically, women live longer than men. This, in turn, can lead to more women than men becoming widowed. And this can lead to a reduction in the survivor’s Social Security income going forward.

In some case, the reduction in future income can lead to a significant change in lifestyle for the survivor, which could mean that a widow must make a change in her living situation, cut back on healthcare expenses (and possibly even forgo the purchase of prescription medication), and/or rely on assistance from loved ones.

How does a surviving spouse’s Social Security income amount change?

Most Americans enter into retirement as married couples – and one spouse – typically the wife – will outlive the other. When a Social Security recipient dies, the amount of the monthly income that continues for their spouse will typically change.

This is because the deceased’s benefit goes away. At that point, the survivor will only receive her amount of spousal benefit, or the amount of the deceased spouse’s retirement benefit – whichever of these is higher.

Research has shown, though, that many husbands don’t consider the prospective drop in Social Security income that will be experienced by their widow when claiming these benefits. Rather, husbands tend to instead respond to more immediate concerns, such as pension incentives and health-related conditions.

With that in mind, it is essential to consider both the likelihood – and the consequences – of widowhood when deciding when to start receiving retirement income from Social Security, as well as various income replacement options for the survivor going forward.

When is the best time to start receiving Social Security?

While there is not just one clear cut answer on when to file for Social Security retirement benefits, there are some key factors to keep in mind that can help you to narrow down the right time frame. These include:

  • Having the higher wage earner wait longer to file for Social Security retirement benefits (particularly if the individual is still working and/or if the income isn’t needed for paying current living expenses)
  • Anticipated life expectancy of both spouses
  • The amount of household dependent benefits from Social Security (if applicable)
  • The potential for increased future expenses of the survivor (such as health care, long-term care, and/or the rising cost of goods and services that are needed)
  • Other income sources that may be available to the surviving spouse

Are you ready to coordinate and maximize your Social Security retirement income?

There are a number of important factors to consider when determining when to take Social Security retirement income benefits. Making a determination should ideally factor in both current and future income needs, as well as any changes to the amount of income when one spouse passes away.

When developing and coordinating a plan, it can be beneficial to work with a retirement income specialist who can show you various options and assist with narrowing down the one that is best for you.

Alliance America can help

Alliance America is an insurance and financial services company. Our financial professionals can assist you in maximizing your retirement resources and achieving your future goals. We have access to an array of products and services, all focused on helping you enjoy the retirement lifestyle you want and deserve. You can request a no-cost, no-obligation consultation by calling (833) 219-6884 today.

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