You've worked hard all your life for your Social Security benefits. The choices you make as you near retirement age can earn you and your family thousands of extra dollars in benefits.
If you need to think only about yourself, Social Security is relatively simple. Your earnings throughout your career determine how much you're entitled to receive when you retire. Although the benefits calculation is based on the date you reach full retirement age -- which is age 66 for those born between 1943 and 1954 -- you can choose to take benefits as early as age 62 or to defer them to as late as age 70. Choosing to take benefits early will reduce your payments, while deferring benefits increases them. Based on estimates you get every year from the Social Security Administration, as well as your own guess about your life expectancy, you can run the numbers for yourself to come up with how to maximize your own benefits.
If you're married, however, things get trickier, since you have to consider not just your own retirement benefits, but also the survivor benefits your spouse may receive after you die.
More for you, more for them
Couples who are nearing retirement age have several options that can make a big difference in the total amount they receive from Social Security during the rest of their lives. If one spouse earned substantially more than the other spouse during their careers, then using the higher-earning spouse's work history often gives the other spouse a bigger check every month.
In addition, your surviving spouse is entitled to receive benefits after you die. That means the choices you make with your own benefits have an impact on what your spouse will receive after you're gone.
Timing is everything
Last December, our Rule Your Retirement newsletter service ran a special report on making the most of your Social Security. Part of this report looked specifically at the question of how married couples should coordinate their benefits to get the most money.
In general, the longer you expect to live, the more you should look at delaying benefits. Because women tend to live longer than men do, the basic rule suggests they should consider putting off getting their Social Security. But married women may do better taking early payments -- even if they live into their 90s and beyond. Conversely, married men may want to defer their benefits, despite the possibility of a shorter life expectancy.
The reason has to do with how survivor benefits work. When your spouse dies, what you receive depends on when your spouse started taking benefits. If your spouse waited to get payments until after full retirement age, then your survivor benefits will be higher. Therefore, a spouse who takes small payments early may get more money in survivor benefits later on. And if you're going to get bigger payments eventually anyway, then there's less incentive not to get up to eight extra years of small payments up front.
More on Social Security
You'll find many more helpful hints on Social Security in the report, which is available free as part of a 30-day free trial to Rule Your Retirement. The report includes information on how benefits are taxed, how working during semi-retirement affects your benefits, and how you can integrate Social Security into your overall financial plan.
In addition, you'll also get to see everything else our retirement newsletter offers, including investment recommendations and advice on how to structure your portfolio. For instance, editor Robert Brokamp keeps his eyes on good stocks for retirement, with a special focus on high-yielding dividend payers such as Bank of America
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Fool contributor Dan Caplinger tries not to count on Social Security in his planning, but he's still hopeful. He doesn't own shares of the companies mentioned in this article. BB&T, Dow Chemical, and Bank of America are Income Investor recommendations. The Fool's disclosure policy won't retire.