(Special to the 10/20/12 AZ Republic by Dr. Harold Wong)
My previous article on October 6, 2012, “Complete a Detailed Analysis before Taking Social Security”, covered the basics of determining how much Social Security Retirement Benefits (SSRB) you can get. It focused primarily on strategies and issues affecting Baby Boomers who are single and whose Full Retirement Age (FRA) is 66. This article will focus on the much more complex situation of married couples whose FRA is 66. My thanks to Social Security planning discussions with Andrew Atchison, co-founder with Seth B. Stewart of www.PlanMyBenefit.com,
As the previous article covered, there are 2 major concepts around which all SSRB strategies revolve. The Primary Insurance Amount (PIA), which is the full SSRB received when one begins benefits at FRA. For those born in years 1943-1954, FRA is 66; in 1955 (66 and 2 months); in 1956 (66 and 4 months); in 1957 (66 and 6 months); in 1958 (66 and 8 months); in 1959 (66 and 10 months); in 1960 and later (age 67).
Married Couples have choices: Each can take SSRB as early as 62 (but at a reduced amount) or wait until 70. Each spouse is entitled to either SSRB based on their individual work history or half of the other spouse’s benefit. This provision was put in to cover the stay-at-home wife who never had enough work history to be eligible for her own SSRB. Please remember that it was not until the Baby Boom generation that most women worked for many years.
If your spouse is FRA: he or she can apply for retirement benefits and then request to have payments suspended. That way, you can receive spouse’s benefits and you can continue to earn delayed retirement credits until age 70. If you took SSRB at age 62, you would receive 25 percent less than at age 66. If you waited, for every year after 66 you would get 8% simple interest until 70. This means you would receive 8 percent more SSRB at age 67; 16 percent more at 68; 24 percent more at 69; and 32 percent more at age 70.
If you have reached your FRA: and are eligible for a spouse’s benefit and your own retirement benefit, you may choose to receive only spouse’s benefits, If you do that, you can delay receiving your own retirement benefit until a later date to take advantage of delayed retirement credits.
If you do not qualify on your own work earnings record: such as not working long enough to qualify, but your spouse is receiving SSRB, you qualify for a portion of your spouse’s PIA. You would get 37.5 percent at age 62; 40 percent at 63; 43.35 percent at 65; 46.65 percent at 65; and 50 percent at age 66 or any older age.
If you have a child: You can receive the spouse’s benefit no matter what your age is if you are caring for his or her child who is also receiving Social Security benefits. You would receive these benefits until the child reaches age 16. At that time, the child’s benefits continue, but your spouse’s benefits stop unless you are old enough to receive retirement benefits (age 62 or older) or survivor’s benefits as a widow or widower (age 60 or older).
If one of your spouse’s children also qualifies for benefits: there is a limit to the amount paid to family members. The total depends on the benefit amount and the number of family members who also qualify on the same record. Generally, the total amount your family can receive is about 50 to 80 percent of your spouse’s full SSRB.
Conclusion: there are many different SSRB strategies for married couples. A future article will cover some case studies, particularly for those divorced and widowed.