Even if you've saved consistently for retirement, there's a good chance Social Security will wind up serving as a major source of income for you down the line. You've probably read that it's important to maximize your benefits and file for them at the right time. But as you devise your own personal Social Security strategy, here's one equally important thing to do: Loop in your spouse.
Couples have an advantage
Being a couple can work to your advantage when it comes to filing for benefits, which is why it always pays to coordinate your filing decision with your spouse. Eligible seniors get an eight-year window to file for Social Security that begins at age 62 and ends at age 70. (Technically, you can file after age 70, but there's no financial reason to wait past that point).
Right in the middle of that time frame is full retirement age, otherwise known as the age at which you can claim the full monthly benefit your work history entitles you to. That age, depending on the year you were born, is either 66, 67, or somewhere in between.
Here's why that's important: If you file for benefits before full retirement age, you'll automatically reduce them in the process, and if you claim them after full retirement age, you'll boost them by 8% a year up until age 70. Many seniors, however, rush to take benefits as soon as possible because they need the money. If that's the scenario you're facing but you're married, you might be in luck
Just because you file for Social Security doesn't mean your spouse has to. Therefore, if you find that you need money in your early 60s, and you and your spouse each worked, you can have the lower earner of the two of you claim benefits at 62 while the higher earner leaves his or her benefits alone to grow. This way, you get immediate cash, but you also preserve that crucial income stream.
Depending on your need, you might also do the opposite -- have the higher earner claim benefits early while the lower earner's benefits grow. There are plenty of combinations to play around with, but the key is to get on the same page with your spouse so that you're making a wise joint decision.
Another thing to keep in mind is that if you didn't work but your spouse did, you can collect benefits based on his or her work record. In fact, your spousal benefits might equal up to half of what your partner's benefits are at full retirement age. But you can't claim spousal benefits until your husband or wife actually files, so that's something you'll need to discuss, as well.
Survivor benefits can be a lifeline
Another thing to keep in mind about Social Security is that the program pays survivor benefits to spouses whose partners pass away. If you're a lot older than your spouse and you expect him or her to collect survivor benefits after you pass, then you'll need to think carefully about when you file. If you claim benefits before full retirement age, you'll reduce your payments and, in turn, reduce the amount your spouse is eligible to collect once you pass. On the other hand, if you wait until after full retirement age to file, your spouse will be entitled to a larger survivor benefit for the rest of his or her life.
Surprisingly, a large number of U.S. couples are loathe to discuss money matters, but if you want to get the most out of Social Security, you'll need to sync up with your spouse. Once you have that conversation, you'll be better positioned to maximize what could be your single largest retirement income stream to the fullest.