Determining when to collect Social Security benefits is easier than it's typically made out to be by the experts. Namely, if you need the income and claiming benefits will facilitate an earlier retirement, then it often makes sense to take them even if you haven't reached full retirement age -- which, at present, is 66.
There is, however, one wrinkle that comes into play for married couples -- and particularly if both spouses qualify for benefits of their own. In this case, you might want to consider a slightly more nuanced strategy in which one spouse elects to receive spousal benefits while simultaneously continuing to accumulate his or her own delayed retirement credits.
Three things to keep in mind
Before getting to the specific strategy, there are three things to keep in mind.
The first is that the size of your monthly benefit is directly related to the age at which you elect to receive them -- click here to learn about the two other major factors that influence the heft of your Social Security check.
If you begin receiving benefits at the earliest possible date -- that is, in the first month after turning 62 -- then they will be 25% less than had you waited until full retirement at 66.
Alternatively, if you hold off until turning 70, then you'll benefit from delayed retirement credits, which add 8% to your monthly check for every full year past your 66th birthday. The net result could be an impressive 32% boost to your monthly check.
The second thing to keep in mind is that the same is true for spousal benefits.
If a married individual waits until turning 66 before claiming the spousal share, then the benefits will be 50% of the primary beneficiary's check. However, if the nonworking spouse claims them early, then that spouse's monthly take could be reduced by as much as 30%.
Finally, the third thing to keep in mind is that spousal benefits are not mutually exclusive with your own.
If both you and your spouse have extensive work histories, then you can choose if and importantly when your benefits stem from your spousal share or from your own work history.
The "claim now, claim more later" strategy
This brings us to the "claim now, claim more later" strategy, which married couples use to increase their combined Social Security benefits both in the short term and over the long run.
Here's how it works. When one spouse (the "primary beneficiary") applies for Social Security benefits, the other spouse (the "spousal beneficiary") becomes eligible to receive spousal benefits.
If the spousal beneficiary is at least full retirement age, then in the background his or her own benefits can continue to accumulate delayed retirement credits. When the latter are maxed out at age 70, in turn, then the spousal beneficiary can switch to those.
For example, let's say Bob and Mary Jane have been married for 40 years. Bob is 62 years old and Mary Jane is 66. Both have worked the entire time, with Bob earning an average of $50,000 a year and Mary Jane earning an average of $75,000.
Assuming that Bob has already elected to receive benefits on his work history and that Mary Jane would like to retire as well, then she can apply for spousal benefits tied to Bob's work history. Then, after allowing her own benefits to continue to grow, she can switch to them at age 70.
The net result is that Bob and Mary Jane can have their cake and eat it, too. That is, Mary Jane can collect Social Security spousal benefits starting at age 66 while allowing her own to grow.
Suffice it to say, it's an attractive strategy. And it's one I'd advise all married couples to at least consider whether it will work for them.
