Making an informed choice about when to claim Social Security benefits is crucial for a secure retirement. That's because the age when you get your first check will impact the monthly income you receive from the Social Security Administration.
In many cases, the advice is to wait and claim benefits as long as you can -- even until the age of 70. However, there is one circumstance where delaying that long absolutely never makes sense.
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Don't delay your Social Security benefits claim in this situation
If you are claiming Social Security spousal benefits on your spouse's work record, you absolutely should not delay your claim until 70. Unlike with other retirees, you don't need to do a break-even calculation to see if you're better off delaying benefits. It's a no-brainer that delay doesn't make sense for you.
There's a very simple reason for that. When you claim benefits based on your own work record, you can earn delayed retirement credits if you wait to start your checks until after your full retirement age. These delayed retirement credits increase the amount of your benefits by two-thirds of 1% per month.
If you have an FRA of 67, delaying until 70 can thus result in a 24% benefits increase. That's a big jump up. Studies have also demonstrated that those who delay have a greater chance of getting more lifetime benefits.
When you are getting spousal benefits, though, it's a very different story. Your spousal benefit can equal up to 50% of your higher-earning spouse's primary insurance amount or standard benefit. It can go below that amount if you claim your benefits prior to your full retirement age, as you'll face early filing penalties. But it cannot go above that amount.
If you delay claiming your spousal benefits after your FRA, your checks do not get bigger. The most you can get is still that 50% of your spouse's standard benefit. Since you will not see one extra dime as a result of putting off your Social Security benefits beyond the age of 70, there is absolutely no reason to wait. You will be giving up checks that should be yours, for no financial gain at all.
Claiming Social Security is a lot more complicated as a married couple
As you can see, it's really important to know the rules for how Social Security spousal benefits work if you are married. Otherwise, you might make a mistake and delay with the hopes of increasing your benefit, only to lose out on income.
This is just one of many complexities associated with claiming Social Security when you are married. Many other special rules apply as well, which can impact the optimum age for both higher-earning and lower-earning spouses to decide when a benefits claim makes sense.
To make sure you're maximizing the Social Security income you receive as a couple during your retirement, it's important to take the time to research your options and to coordinate a claiming strategy with your spouse that makes good sense. This can pay off for you when you bring in more Social Security income to help you have a secure retirement.
