What Are the Best Social Security Spousal Claiming Strategies
Category: Social Security
February 11, 2024 — The File and Suspend gambit is finished, and now the Restricted Benefit (Deemed Filing) is gone too. So what are the best Social Security Spousal Claiming Strategies that remain? Are any legal claiming approaches left that allow couples to maximize their Social Security benefits? The good news is there is still some room to maneuver.
Different situations. Every couple has a different set of circumstances. Perhaps one person has a much higher earning record than the other. The ages of the couple might be very far apart. They might have accrued very high retirement savings, or there is a sizable pension. On the other hand, they might have been forced into retirement early, and do not have much saved. All of these difference situations can mean different Social Security claiming strategies.
Different earning records. If one spouse has maximized their Social Security contributions for 35 years, it usually makes sense for that person to wait until age 70 to claim. The 8% bonus they will get for every year they wait past Full Retirement Age would be significant. But if they need more money before that, it could be a good strategy for the spouse with the lower earning record to claim at Full Retirement Age, or even age 62. That way there is some income coming in, without giving up much. The 8% a year bonus for waiting on the lower earning record won’t be that meaningful.
Different ages. If one member of the couple is significantly older than the other, that can affect when to file for benefits. If the older member claims that might provide enough income to get by and let the younger’s benefit increase. One thing to remember is that when one member of the couple dies, the survivor gets the higher of either their own benefit or their spouse. So if one member is likely to live a long time, it makes sense to choose a strategy that gives them the highest possible benefit.
Life expectancy. This factor should be considered, since if both people don’t expect to live past age 80 they should probably claim early. That age is usually a pretty good estimate for the breakeven point between claiming early vs. later. On the other hand, if one member of the couple expects to live to be 100, that might be a good reason for at least the higher earner to wait.
Might not pay to wait on the spousal benefit. This applies because the spousal benefit is capped at the Full Retirement Age level, and does not increase after that, even if the other spouse waited until age 70 to claim. Also, if your spousal benefit is going to be higher than what you would get for waiting, claim it at your Full Retirement Age (when it reaches its maximum).
Social Security Claiming Strategy Is Important
The ideas above represent just some of considerations that should be taken into account before filing for Social Security. Too many people file just as soon as they are eligible for benefits, and leave money on the table. The decision is more complex than it first appears. You can go to Social Security.org and get a lot of useful information and facts about what your benefits might be at various claiming points with their Retirement Calculators. Your decision is worth time discussing with your financial advisor, your spouse, and any other experts you might have. Make sure that whoever helps you understands all of the factors in your situation that might affect your decision (ages, earning history, retirement savings, other income and assets, life expectancy). Too many experts have patent answers that might not apply to you.
These Great Filings Strategies Are Gone, Baby Gone
File and Suspend was a great tactic when it was available, but was stopped by The Bipartisan Budget Act of 2015. This strategy allowed beneficiaries to “file” for their SS benefits, and then immediately “suspend” them. By filing, the person’s spouse could then receive spousal benefits. By immediately suspending his own benefits, the original spouse can continue to accrue an 8% per year increase up to the year when benefits are maximized, age 70. This tricky rule didn’t make much sense, cost Social Security a lot of money, but greatly benefited many couples.
Restricted Benefit (Deemed Filing). This claiming strategy was slightly different. It applied to people who turned 70 on or before Jan. 1, 2024. it allowed you to file for a spousal benefit if your spouse was receiving benefits. But, if your earning record meant a higher benefit at age 70, you would get that one. With the new law this strategy is no longer available – when you apply you will receive the higher of the two benefits (spousal or your own), and that is it.
What strategies are you using?
As discussed, filing for Social Security benefits is not an easy, cut and dried decision. What strategy did you take, or what are you considering. Please share in the Comments section below.
For further reading:
5 Myths About Social Security That Could Wreck Your Retirement
Filing for Social Security Is Not That Simple
What Is Your Social Security IQ?
Comments on "What Are the Best Social Security Spousal Claiming Strategies"
Pat R says:
I am actually glad to see some of these loopholes closed up. I would prefer this which always favored married people over singles who actually have many of the same expenses of couples to be end than to have SS cut in the future for all. Treat each individual the same and don't give preferential treatment to someone because they are married!
Kate says:
Just another twist on this (at least a few years ago when I faced this situation), if a spouse is on disability...that disability benefit will be converted to the person's Social Security benefit at full retirement age. The disabled person won't have the option of deferring until age 70. If someone in a couple is receiving disability, it's worth double-checking the current rules.
Admin says:
Kate's comment is a good illustration of the complexity of the claiming decision and how everyone's situation is a little different. My wife was able to take advantage of the Restricted Benefit before it was closed out. But because her earning history wasn't very high, the difference between the spousal benefit and what she got for waiting until age 70 was negligible. I was not old enough to take advantage of File and Suspend, that one was too good to be fair to everyone else.
Lisa says:
I appreciate and agree with Pat R’s comment. I was surprised to learn of these strategies for couples when attending various pre-retirement sessions. As a single (divorced) person, I was rather annoyed since a lower income spouse or non-working spouse already is eligible for benefits. I would just appreciate rolling back the taxes on SS income that Reagan passed to pay for his tax cuts for the rich.
Mike C says:
@Lisa. Here's a brief summary of SS changes by Pres: https://www.gobankingrates.com/retirement/social-security/what-happened-to-social-security-under-each-president/
Key points of note: Truman/Kennedy made it easier to qualify; broadest expansion under Ike; biggest benefit increase under Johnson with Medicare; COLA established under Nixon; Ford made changes focused on shoring up protections for kids. First and only actual CUT of SS benefits under Carter. Noting the blowback Carter got, under Reagan, they moved the retirement age out to more closely align with updated life expectancy, made self-employed folks pay taxes to more equally reflect what was paid on behalf of an employee, and established a 50% tax on SS for folks in the highest brackets. Under Clinton, that was expanded to 85% - and the really bad part of that is it's not indexed, so...... what started under Reagan as a tax on the Rich, got expanded amounts under Clinton and ignored indexing, so it now catches a much broader number of retirees. Clinton also denied disability benefits to those with drug or alcohol dependency; WBush expanded Medicare by creating Part D; Obama reduced the subsidy to Part D for higher earners and redirected a good bit of Medicare to pay for the ACA; and Trump stopped collecting student loan debt from those on SS unless they had other income to pay it from.
We hear a lot about SS being the "3rd rail" but every Pres except HWBush and Biden have had legislation that modifies it somehow, Carter being the only one who openly decreased it, although clearly the Reagan tax made folks in high tax brackets pay some taxes on it - effectively reducing their benefit, and Clinton broadly expanding that effectively reduces benefits for anyone not in the 10% tax bracket.
When Pols start talking about increasing benefits, rolling the Clinton era changes back to the Reagan era tax - 50% of SS for those only in the highest tax brackets - would be much more beneficial than any benefit increase they talk about. But we absolutely don't want to undo that provision, unless the goal is to let the gazillionaires keep all their SS under the idea of they paid in they should get back.