It's very important for married couples to be on the same page financially. This holds true in the context of everything from buying a home to saving for college to planning for retirement.
In the context of retirement, figuring out when to claim Social Security is key. And when you have a situation where one spouse is entitled to Social Security but the other never worked, it's important to understand how the program's spousal benefits work.
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However, if you and your spouse are both eligible for Social Security benefits in retirement, and you've always had similar incomes, it means you're likely looking at comparable monthly benefits. That gives you a prime opportunity to work together on a claiming strategy that helps you make the most of that money.
Here are three potential Social Security strategies couples with similar incomes can use.
1. Have one person file early while the other waits
Claiming Social Security ahead of full retirement age reduces your monthly benefits for life. But if you and your spouse are both looking at similar benefits, it could pay for one of you to file early.
You can begin receiving Social Security once you turn 62. If you have a nice amount of retirement savings, you may decide that it makes sense to get that money early so you can either stop working in your early 60s, or use the money to travel while your health is still optimal.
Meanwhile, if only one of you is filing for Social Security early while the other waits for full retirement age to arrive, you'll still enjoy one set of benefits without a reduction. That may be more than enough income for you, depending on what you expect your lifestyle to look like.
2. Have one person file at full retirement age while the other delays
You may be approaching retirement feeling less than confident in your IRA or 401(k) balance. If that's the case, it could pay for both of you to wait at least until full retirement age arrives to sign up for Social Security. In fact, it could make sense for one of you to claim benefits at full retirement age while the other delays their claim at least another year or two for larger checks.
Getting one set of benefits sooner could make it so you don't both have to work longer. And boosting one set of benefits is a great way to make up for a lack of savings -- or, a great way to preserve your savings, even if you have a nice amount.
3. Have both spouses delay their claims
You and your spouse may have lofty goals for retirement. Perhaps you're looking to take two international trips each year, or to own a beach house on top of the house you raised your family in.
If you feel that you'll have higher income needs in retirement, then it could make sense for both you and your spouse to delay Social Security beyond full retirement age. If full retirement age is 67 for you, you have an opportunity to each score a 24% boost to your monthly benefits.
Once you turn 70, you can no longer accrue delayed retirement credits from Social Security that result in boosted monthly checks. But if you both delay until that point, it could leave you with a lot of options for the rest of your lives.
The decision to claim Social Security is a tricky one, whether you're going it alone or figuring out what to do along with your spouse. Make sure to think through different filing strategies carefully if you and your spouse have similar incomes -- and similar benefits -- so you can make the most of that key retirement income stream.
