There are a number of benefits to being married in retirement. For one thing, you get the company of someone else at a time when you're not busy working every day and you may have a greater need for company. Also, if both you and your spouse have savings, you can pool that money and stretch it by sharing expenses like housing and transportation.
Another perk of being married in retirement is that both you and your spouse may each be eligible for a monthly Social Security benefit. That gives you access to even more income, and more financial flexibility.
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Now when it comes to Social Security, you get options as to when to claim benefits. You're allowed to sign up for those monthly payments as early as age 62. But filing brfore full retirement age will cause your monthly benefits to be reduced.
You can also delay your filing past full retirement age for a booster monthly benefit. However, once you turn 70, you can't grow your benefit any more.
If you're married, it's important to coordinate your Social Security filing strategy with your spouse. And you may be wondering if it pays for both of you to claim Social Security at the same time. The quick answer is, it could, but maybe not. So it's a good idea to review your options carefully before committing to a decision. Here are some strategies to consider.
1. File early to get your money sooner
If you and your spouse have a nice amount of money saved up, then you may decide that you'll each claim Social Security as soon as you're able to -- meaning, at age 62. And if you're the same age, that would have you filing for benefits at the same time.
Here's why this could be advantageous. If you're able to live on your combined benefits, you can leave your nest egg alone a few extra years and grow that money. That could be an especially good thing if you have your savings in a Roth IRA or 401(k), since it means enjoying a few more years of tax-free gains.
However, you'll then need to consider the flipside -- that both of your monthly benefits will be reduced for life. If you're not super confident in your savings, this strategy may not be suitable for you.
2. File together at full retirement age
If you and your spouse have the same full retirement age, you may decide to claim Social Security at that point. Doing this means you won't face a reduction to your monthly benefits, leaving you with a higher combined payday for the rest of retirement.
Of course, once again, the amount of savings you have should be factored into your decision. If you feel you don't have as large a nest egg as you would've wanted, then it could be a good idea for at least one of you to delay Social Security past full retirement age for a larger monthly payday.
3. Have the lower earner claim first and the higher earner delay
Staggering your Social Security claims could be a smart move for you and your spouse. And one common strategy is to have the person who's getting the smaller Social Security benefit file first, and then have the person who's in line for the larger benefit delay his or her claim.
This does a couple of good things for your finances. First, it gives you access to one benefit sooner so there's less strain on your nest egg. Second, it allows one set of benefits to grow for higher guaranteed payments. And the reason it's common for the higher earner to be the one to delay is that that person's payments will increase more than the lower earner's will during the period in which the claim is being postponed.
That said, you don't have to go this route. You may decide you want to claim the higher benefit first so there's more money coming into your household sooner. From there, you could delay the lower benefit so that it perhaps catches up to the higher benefit by the time your delayed retirement credits are factored in.
All told, you have plenty of options for claiming Social Security when you're married. So your best bet is to run the numbers on different strategies and see what they mean for you and your spouse.
It's also a good idea to consult a financial advisor on when to sign up for benefits. They may be able to offer valuable insight that leads you to a more financially sound decision.
