A married couple should coordinate their strategy for claiming Social Security around the higher earner, who will bring in a more significant benefit if they work up until retirement and claim benefits at or after full retirement age.
The higher your earnings, the higher your primary insurance amount (PIA). This is the amount paid to you as a benefit every month once you retire. Social Security arrives at this amount by taking an average of your indexed monthly earnings over the 35 years during which you earned the most money. Working at least 35 years will ensure that a zero earnings year or lower earning years will not pull down your average earnings. You also increase the likelihood that you will be earning more the longer you work, which will boost your average indexed earnings.
Especially in the case of one spouse being the sole breadwinner, it is important for the working individual to work up until full retirement age or as close as possible to enhance their benefit. The spouse may have their own earned benefit but will receive either their benefit or half of the higher earner’s benefit, whichever is higher. This worker’s earnings and subsequent benefits will also be crucial to any dependent children or dependent parents.
Survivor benefits grant the remaining spouse the higher of the two individuals’ earned benefit, which is vital when the household loses one source of income and needs to pay for funeral and burial expenses. To help support a comfortable standard of living, the main earner should work as long as possible to maximize their benefit.
Social Security reduces the benefit you can access if you choose to claim your benefits early. You can start claiming retirement benefits at age 62 but can expect your benefit to be reduced by 30%. This deduction is calculated as follows: 5/9 of one percent reduction for each month before full retirement age, up to 36 months; beyond 36 months, 5/12 of one percent reduction for each month.
If you have dependent children, it can be helpful if the lower earner in a married couple chooses to claim their retirement benefits early, as long as the higher earner continues to wait until full retirement age or age 70 if possible. The reduction in your benefit will be less noticeable thanks to your spouse’s future benefits, but the difference is much more noticeable for an individual taxpayer whose benefit will make up a significant portion of their income and impact their budget. These individuals would benefit most from delaying until full retirement or beyond, provided they have the resources to sustain their lifestyle before they claim benefits.
You can choose to voluntarily suspend your payments between our full retirement age and age 70, which will increase your payout by 8% for each year you go without claiming your benefits. However, this will also halt spousal or child payments tied to your record, so use your discretion before pursuing this option.
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