A Smart Social Security Strategy

Q: We don't need Social Security until we're both 70 years old. My full retirement benefit (FRA) at age 66  is $2,500 per month. My wife's FRA Social Security  benefit is $2,000 per month. I'm two years older than she is. Our plan is that at age 68, I'll file and suspend. That will allow my wife, who will then be 66, to file for a spousal benefit of $1,250 -- 50% of my $2,500 full retirement benefit.

At age 70, she'll switch to her own retirement benefit. And I'll start collecting my benefit when I turn 70.

Does this appear to work? Assuming that we live a long life, does this strategy maximize the total amount collected? Does the fact that my wife's FRA benefit is greater than her spousal benefit affect this plan? -- BA via email


A: Go to the head of the class. You've really paid attention to the Social Security rules!

Yes, assuming you live a long life this plan will maximize the amount of Social Security you collect. In fact, this is a good plan even if only one of you lives a long time because it maximizes the survivor's benefit no matter which of you collects it.

If you die first, your widow will receive 100% of your Social Security benefit, including any extra credits you gained from delaying your application until you were 70. And of course if you survive her, you'll continue collecting your larger benefit.

Or to put it another way, the bigger of the two Social Security benefits survives no matter which spouse dies first.

Your strategy would be a good one even if your wife's benefit on her own record were smaller than her spousal benefit.

As you clearly understand, your wife can't file for a spousal benefit until you have applied for Social Security. By filing and then immediately suspending your application, you enable her to start collecting as a spouse when you're 68, but still keep your own benefit growing for another two years. And since she'll be 66 when she files for her spousal benefit, she'll get the maximum: 50% of the amount you're entitled to collect at 66, plus any annual inflation adjustments since that date.

 Please send your questions to [email protected].  I'm sorry I can't respond personally to every email. Questions are only addressed online.

(c) Lynn Brenner, All Rights Reserved

Comments

[Karen McGee]

Reading your blog for first time. I have tried some of your strategies and find SS will not acknowledge my requests. I am divorced after 20 yrs of marriage. He was the larger earner. I am 67 (started collecting SS @ 65). They are pulling from my SS and giving me approx $20 more from his. I have asked to have my SS limited to his only so I can grow mine. The SS office says that is not possible. Can you help me explain this better?

[Lynn Brenner]

Lynn replies:

Unfortunately, the Social Security office staff person you spoke with is right. The reason you can't do this is that you started collecting your benefit at 65.

Only people who have waited until their full retirement age to apply for Social Security have the option of taking only one benefit and letting the other grow.

Your full retirement age was 66. When you filed at 65, you locked in a combination of your own benefit and the benefit you're entitled to based on your former spouse's work record.

[BeeCR]

Lynn, in the above example, the husbands FRA benefit @ 66 =$2500. If the wife files for spousal benefit when he is 68, his benefit @ that age would be >$2500. For the sake of discussion, say it's $3000. Wouldn't her spousal benefit thus be 1/2 of the $3000 ($1500). rather than 1/2 of the $2500 ($1250)??