Social Security for Couples: Why It Can Get Complicated

Despite it being such an expansive program, Social Security is relatively straightforward. You work for 40 quarters (or 10 years) and pay into the system. Once you reach the eligible age, you collect monthly benefits for the rest of your life. However, complexities may arise such as when to file for benefits or how the monthly benefit is calculated.

One of the more common complications faced is when a spouse is introduced into the mix. A spousal benefit, while extremely valuable, can make a Social Security filing strategy somewhat complex.

Below are a few factors to consider when filing for Social Security as a couple:

Qualifying for Spousal Benefits

Before you begin thinking about applying for spousal benefits, you should make sure you first qualify. There are three requisites to meet first before being eligible:

1. You have been married for at least one year.
2. You are least age 62.
3. Your spouse is already collecting benefits (As you would have to file under your spouse’s record, not your own.)

How Much Are You Entitled to Under the Spousal Benefit

Generally, you can receive as much as 50% of higher-earning spouse’s benefit as a spousal benefit. Specifically, however, the spousal benefit is calculated as 50% of the higher-earning spouse’s Primary Insurance Amount (PIA). The PIA is the amount that the higher-earning spouse is entitled to at Full Retirement Age, which depending on the year you were born, is between ages 65-67.

For example, if the higher-earning spouse waits until age 70 to file for benefits, the spousal benefit would not be equal to 50% of the age 70 benefits, but rather 50% of the Full Retirement Age benefit.

Divorcees

You may still be eligible to file for spousal benefits even if you are divorced, albeit with a few rule changes. First, you need to have been married for at least 10 years to be eligible. Secondly, divorcees do not have to wait for the higher-earning divorcee to file for benefits to file for their own spousal benefit.

Timing

While in general, waiting to file until age 70 will give you the highest benefit, it may not necessarily be the best course of action depending on your situation. Factors such as health, longevity, cash flows, etc. may influence when the higher-earning spouse files and in turn, when the other spouse can file for spousal benefits.

For example, both spouses may end up filing their own benefits and spousal benefits at age 70. Another example would be having the lower-earning spouse file for benefits as early as 62 and the higher-earning spouse waiting until age 70 to file.

Conclusion

There are various intricacies in the Social Security system that can make filing more complicated than it first appears. Consulting with a fee-only financial advisor to guide you in determine the best filing strategy will help you navigate this area to maximize your benefits.

Weingarten Associates is an independent, fee-only Registered Investment Advisor in Lawrenceville, New Jersey serving Princeton, NJ as well as the Greater Mercer County/Bucks County region. We make a difference in the lives of our clients by providing them with exceptional financial planning, investment management, and tax advice.