Most people think of Social Security as primarily helping retired workers. But millions of spouses and other family members get money from Social Security as well, and spouses in particular have a huge stake in making sure that they get every dollar of spousal benefits that they deserve.
To help you navigate the often complex world of Social Security rules, we asked three Motley Fool contributors to share their Social Security knowledge about spousal benefits. See what you can learn from their guidance, and it might just help you get more in benefits than you were expecting to receive from Social Security.
As with your investments, one smart strategy to maximize your Social Security spousal benefits is to think long-term -- as in really long-term -- regarding survivor benefits for your spouse.
In this instance, the smartest thing you and your spouse can do is strategize the start dates of your benefit claims to maximize the survivor benefits for the spouse expected to live longest. Understandably, there is no magic 8-ball that tells us our expiration date, but life-expectancy data shows us that women live five years longer than men on average, making survivor benefits a particularly important feature for wives.
Here's how these cumulative benefits could come in handy. Let's say a couple claimed their Social Security benefits at age 62, the earliest age at which they're eligible. Although they'll receive more immediate income, their benefits will be smaller than what they would have received at full retirement age, which is currently 66. This also means the surviving spouse's benefit will be reduced.
However, if the lower-earning spouse were to claim benefits 62 in order to generate some form of retirement income, while the higher-earning spouse let his or her benefits grow until age 70, so long as the surviving spouse waits until at least full retirement age before claiming survivor benefits, then that person will be entitled to 100% of the benefit of the higher-earning deceased spouse. For a lower-earning spouse, this could be a big step up from his or her own benefit or spousal benefits, and it could result in a larger cumulative benefit for the couple than they would receive if they both claimed benefits at age 62.
One smart strategy to maximize your Social Security spousal benefits is to wait until your full retirement age to claim them. Unlike Social Security benefits based on your own work record, which max out at age 70, Social Security spousal benefits max out at your full retirement age.
If you were born between 1943 and 1954, your full retirement age is 66. If you claim spousal benefits at age 62, your monthly spousal benefits will be reduced by 30% compared with what you would receive by waiting until your full retirement age.
By claiming early, you do get four extra years of checks, but if you plan to claim only spousal benefits, it makes sense to wait, as the breakeven point for claiming early versus claiming at your full retirement age is 76. So, if you expect to live past age 76, it makes sense to claim at your full retirement age, as you will receive more in lifetime benefits.
Based on the Social Security Administration's life tables, of those who made it to age 62, 81% of women and 72% of men will make it to age 76. So, for the majority of Americans claiming only Social Security spousal benefits, it makes sense to wait to claim if you want to maximize your spousal benefits over the course of your life.
The dream of every Social Security recipient is to somehow take advantage of both their own benefits and any spousal benefits they're entitled to. Although you can't double-dip, there's a strategy known as "File as a Spouse First" that can help you get more from your spousal benefits.
Here's how it works. When you reach full retirement age, you file an application for benefits with the Social Security Administration, but you specifically restrict your application to cover spousal benefits only. That has two main effects: It allows you to start getting a stream of income from Social Security to help cover your financial needs, but it also allows you to rack up delayed-retirement credits that you can later claim for your own retirement benefits.
It's important to note that you can't use the FAASF strategy before you reach full retirement age. Even if you only want your spousal benefit, the SSA deems you to have made a simultaneous request for your own retirement benefits if you haven't yet reached full retirement age. That feature is another good reason to consider not taking early Social Security benefits, as it can dramatically increase the total you get from Social Security over your lifetime.