Social Security is the foundation of most retirement income plans. But for married couples, the benefit calculation is more complex than most people realize, and the planning opportunities are more significant.
The spousal benefit rules, survivor benefit rules, and the interaction between the two create a set of decisions that can add or subtract tens of thousands of dollars from your lifetime household income. Getting them right requires understanding how the system actually works.
The Basics: What Is a Spousal Benefit?
A spousal benefit allows a married individual to claim a Social Security benefit based on their spouse's earnings record rather than their own. The maximum spousal benefit is 50% of the higher-earning spouse's full retirement age (FRA) benefit.
You are eligible for a spousal benefit if you are at least 62 years old and your spouse has already filed for their own benefit. The spousal benefit does not increase if you delay beyond your full retirement age (unlike your own benefit, which grows 8% per year from FRA to age 70). So there is generally no advantage to delaying a spousal benefit past your FRA.
The Survivor Benefit: The Most Overlooked Planning Variable
When one spouse dies, the surviving spouse keeps the larger of the two benefits and loses the smaller one. This means the claiming decision of the higher-earning spouse has permanent consequences for the surviving spouse.
Consider a couple where the husband has a $3,000 per month FRA benefit and the wife has a $1,200 per month FRA benefit. If the husband claims at 62 (receiving $2,100) and he dies first, the wife's survivor benefit is $2,100. If he delays to 70 (receiving $3,720) and he dies first, the wife's survivor benefit is $3,720. The difference is $1,620 per month for the rest of her life.
Women statistically outlive men by several years. In many couples, the lower-earning spouse will spend years or even decades as a widow. The claiming decision of the higher earner is, in many cases, really a decision about the survivor's financial security.
The Coordination Strategy for Couples
The most common optimal strategy for couples with a significant earnings gap is:
The lower-earning spouse claims early (at 62 or FRA) to bring income into the household while the higher-earning spouse delays to 70 to maximize both their own benefit and the future survivor benefit.
This strategy works because the lower earner's benefit is less valuable to delay (smaller absolute dollar increase) and the household needs income during the delay period. Meanwhile, the higher earner's delayed benefit provides a larger survivor benefit and a higher lifetime income if both spouses live to average life expectancy.
This is not the right strategy for every couple. It depends on the age gap between spouses, the earnings gap, health status, other income sources, and the need for current income. But it is a useful framework for thinking about the coordination problem.
Divorced Spouse Benefits
If you were married for at least 10 years and are currently unmarried, you may be eligible for a divorced spouse benefit based on your ex-spouse's earnings record. The rules are similar to the spousal benefit: you can receive up to 50% of your ex-spouse's FRA benefit, and your ex-spouse does not need to have filed for benefits (as long as they are eligible).
This is a benefit that many divorced individuals do not know they have. It does not reduce your ex-spouse's benefit in any way.
The Bottom Line
Social Security is not a simple decision. For married couples especially, the interaction between spousal benefits, survivor benefits, and individual benefit timing creates a planning problem that deserves careful analysis.
The stakes are high. A suboptimal claiming strategy can cost a couple $50,000 to $100,000 or more in lifetime benefits. Getting it right requires running the numbers for your specific situation.
Book a complimentary retirement brainstorm session and let's make sure your Social Security strategy is optimized for your household.
Jason Rindskopf is the founder of Two Waters Wealth Management and creator of the SMART Retirement Blueprint®. He works with high-achieving professionals and couples in the Charlotte, NC area who are within 10 years of retirement or recently retired.