INmail: Claiming strategy for nonworking spouse

Regina: What’s the best Social Security claiming strategy for a married couple where the husband is 67 and the wife, who has no earnings history of her own, is 65. Does she have to wait until her full retirement age to get the maximum spousal benefit? Or, could the husband claim his benefits now at age 67 and the wife would collect half of his benefit at 65?

MBF: Because the wife has no Social Security benefits of her own, she must wait until the husband claims his benefit to trigger a spousal benefit for her. The amount of her spousal benefit is based on her age at time of claim. The wife’s spousal benefit would be worth 50% of her husband’s full retirement age benefit, which in his case is age 66, if she claims at her full retirement age of 66 and 2 months. If she collects her spousal benefit before her full retirement age, it will be worth less than half of her husband’s full retirement age benefit.

By waiting until 67, the husband has already increased his Social Security benefit by 8%. For every year he postpones collecting Social Security beyond full retirement age, he earns 8% per year in delayed retirement credits up to age 70.

While both spouses are alive, the wife’s maximum spousal benefit is based on up to half of her husband’s full retirement age benefit, not half of a larger amount. But if he dies first, she would be entitled to survivor benefits worth 100% of what he was collecting or entitled to collect at time of
death, including any delayed retirement credits. At that point, her own smaller spousal benefit would disappear.

Mary Beth Franklin, a certified financial planner, is a contributing editor for InvestmentNews.