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Find the best age to claim Social Security benefits based on calculations and life expectancy. Should I wait or apply early?
Being married can give you an advantage when it comes to Social Security. That’s because a household may be eligible for two benefits.
But being married can also make filing for Social Security a little more complicated. There are certain types of benefits that people get by being married, and it’s important to understand the rules behind them. Here are three important Social Security rules that every retired couple should know.
1. You cannot claim spousal benefits until your spouse enrolls in Social Security.
If you are married, you may be eligible to receive spousal benefits from Social Security. This is true even if you can receive benefits based on your work performance.
Social Security spousal benefits are intended to provide financial support to married people who have no or low lifetime income, often because they are out of the labor force to provide care or are working minimally.
Even if you don’t work at all and don’t qualify for Social Security yourself, you can still receive a monthly spousal benefits check. If you work part-time and earn very low wages, you may receive spousal benefits if your monthly payments are higher than the benefits you are entitled to based on your earnings record.
One thing you should know, however, is that if you’re married, you can’t sign up for spousal benefits until your spouse claims Social Security. This is why it’s important to discuss when your spouse plans to apply for benefits if you’re going to rely on that money for your retirement income.
2. There is no economic incentive to delay payment of spousal benefits.
If you are eligible to receive spousal benefits from Social Security, you should know that there are caps on spousal benefits. And that’s 50% of your spouse’s benefit at full retirement age.
As long as you wait until your full retirement age, you can receive spousal benefits without reduction. This age may or may not be the same as the spouse’s age, depending on the year of each person’s birth. However, once you reach full retirement age, you should start receiving spousal benefits without hesitation, if possible.
If you claim Social Security based on your earnings record, there is a strong incentive to delay benefits beyond your full retirement age. Each time you wait until age 70, your benefits increase by 8%.
However, spousal benefits cannot be increased. Therefore, there is no incentive to delay claims once you reach full retirement age.
3. Claiming early when you are a high earner can affect your spouse’s survivor benefits
If you are the higher earner in your household, the timing of your claim is very important, not only in terms of your immediate income, but also in terms of potential survivor benefits.
Typically, the lower-earning spouse of a marriage is entitled to Social Security survivor benefits if the higher-earning spouse dies. These represent 100% of the monthly benefits that high-income earners are entitled to receive during their lifetime.
As a high-income earner, if you claim Social Security before full retirement age, your monthly benefit will be reduced and your spouse’s survivor benefit will also be reduced. That can be a big problem if you don’t have much saved for retirement and you die much earlier than your spouse.
If you’re married, it’s obvious that there’s a lot to know about Social Security. It’s good to have a variety of options, but deciding when to submit your file can be difficult. That’s why it’s so important to work with your spouse to carefully consider your choices. By running through different scenarios and discussing them together, you’ll be able to find a strategy that works for both parties.
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