This was originally published on Monday, June 22, 2015, in the Pacific Daily News. Click here to subscribe to the PDN.
Q: My wife and I are about the same age and we want to retire together. I have read somewhere that you can maximize how much Social Security benefits as a couple. How do I do that?
A: Married couples have a few more choices when it comes to filling for Social Security benefits. Married couples can take advantage of situations that could possibly increase their benefits. Social Security benefits are available to you and your spouse at 62 years of age but you can delay taking your benefits until you are 70. I know that sounds like a long time to wait for money that you earned to come back to you but the life expectancy of men and women is early to mid-80s. I have mentioned this in past articles but delaying your benefits can make a big difference. There are several strategies I know, but you can also talk to a financial adviser on your specific case:
• Claim and suspend Generally a spouse has to be collecting Social Security benefits before the other spouse can claim spousal benefits. There is a way that you can file your benefits but suspend it for a later date and let your spouse start collecting his/her spousal benefits. First you must have reached your full retirement age. If you are born in 1943 through 1954 your full retirement age is 66. From 1954 to 1960 it gradually rises until, for all those born after 1960, the full retirement age is 67. If you file for spousal benefit before your full retirement age your benefits will be much lower. An early filing could also trigger the Social Security to process both your benefits and your spouse’s. You will get both benefits but lose the ability to increase your benefits that you plan on delaying.
Your spouse has to be at least 62 years old. By filing your benefits and suspending them, your future payment will continue to grow. This strategy works best when the person with the higher income continues to work and the spouse with the lower income retires. You can maximize how much you get by suspending your benefits until you are 70.
• Maximize your survivor benefit If your Social Security payment is higher than your spouse he/she can receive your monthly payment as his/her survivor benefit. If you start receiving benefits before your full retirement age you are limiting how much your partner receives as survivor benefits. By delaying till you reach your full retirement age or till you are 70, you are increasing how much you leave to your spouse. Many people do not realize this when they start collecting their Social Security payments at 62.
This strategy is best if your monthly Social Security benefits at full retirement age is higher than your spouse’s. It also works best if your spouse is healthy and will likely live longer than you.
• Claim now and then claim more later If you and your spouse want to retire together and you both have reached your full retirement age and you have similar incomes you can take advantage of this strategy. It works when the person with the lower income files for the individual benefit, which can be done at age 62. Once the other spouse reaches full retirement age he or she files for spousal benefits until age 70, when that spouse starts to claim full maximum benefit. This strategy works well if you don’t mind getting a little upfront or need money sooner rather than later.
Of course the best way to maximize your benefits is to wait till you are both 70 years of age and receive your maximized benefits. But sometimes, depending on your retirement plans, your health, or other factors you may need that money sooner. Before making any decisions, it is wise to sit with a financial counselor to see which plan suites your needs and lifestyle.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at email@example.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.