Can Your Spouse Work Longer to Boost Your Spousal Social Security Benefits?
Many men have told me that they plan to postpone starting their own Social Security until age 70. They think this is genius! They think it will increase their own benefits by 25% AND that it will increase the benefits their spouse will be able to draw in spousal benefits.
It’s a sweet sentiment, but it’s not quite accurate. Delaying his benefits will increase the amount in his monthly check. However, while he’s alive, it doesn’t increase the wife’s amount. The most she is eligible to draw is 50% of the amount he was eligible for at his full retirement age.
So Does It Help Me or Hurt Me?
The bottom line is when your spouse chooses to draw Social Security doesn’t affect you very much while he’s alive. If he chooses to draw early, it doesn’t hurt you. If he chooses to draw later, it doesn’t help you. Again, this is only the case “while he is alive.” If your spouse predeceases you, you are then eligible for Survivor or Widow Benefits. This type of benefit is based off of the amount he was drawing at his death. If he maxed out his benefits by working until age 70, and you didn’t start drawing any type of Social Security benefit prior to your full retirement age, you will benefit from your spouse having worked longer.
It’s a Gamble
Typically, I don’t recommend delaying Social Security until age 70. In the above scenario, I would argue that by delaying Social Security for 4 years, the husband gave up a ton of money. If his monthly payment was about $2,000 per month then he would have given up close to $100,000 by delaying.
When I tell my clients this, 9 times out of 10 I know how they will respond. He’ll say, “Yes, but my payment is $300 more each month.” Unfortunately, this is taking a risk. Many people die before they break even. The government knows this, that’s why they pay you more to delay taking it at your full retirement age. This is a type of insurance, and insurance inherently is a gamble. Personally, I don’t like to gamble. I never recommend delaying Social Security. Yes, that extra money is enticing! But the statistics show that most people don’t live long enough to break even.
You’ve Got Options
Let’s circle back to that $100,000 we talked about earlier. Say you took that and invested it aggressively. The return from that will be higher than you would receive from the government. Once he passes, that money is in your husband’s estate.
Does An Age Difference Matter?
I’m having fun with these scenarios, so I’ll give you another one. Say you married a much younger man. This could throw a wrench in your retirement planning. In order for you to draw spousal Social Security off of your spouse, he has to be drawing his own benefits. If he decided to wait to draw, you’ll have to wait too. Say you were a stay-at-home mother and you didn’t accumulate enough work credit to qualify for benefits off of your own work record, would that be an exception? Unfortunately, no, you’ll still have to wait to draw as a spouse.
What to Do When It’s Time to Claim Widows Benefits
It’s sad to think about, but at some point one of you will pass away. Spousal Social Security benefits automatically turn into Widows benefits… except when they don’t! It should happen automatically, but please, please, please, don’t take that for granted. Monitor your payments and make sure they increase. The Social Security Administration has a HUGE burden, and mistakes do happen. If your spouse dies, the death will be reported to the SSA by the funeral home. You won’t have to do anything. Spousal Benefits then become Widows benefits. You won’t be able to draw both. If your benefit doesn’t increase, you will have to notify the SSA.
A widow is eligible to get up to 100% of what he spouse was drawing at the time of his death. BUT in order to get the full 100%, she must wait until her full retirement age to draw benefits. A widow is able to draw as early as age 60 (widows on SSDI can draw at age 50), but the amount will be permanently reduced. To see the increase in benefits by age, check out my free Social Security and Medicare Cheat Sheet at www.TheMedicareFamily.com.
There are some scenarios that we didn’t cover in this blog. That’s because we’ve touched on them in previous blogs. Check them out below.
Sylvia Gordon and her sister, Rebecca, run Gordon Marketing, one of the nation’s largest Medicare FMO/NMA offices. They have a team of over 100 that train and support independent insurance agents in all 50 states. You can find Sylvia’s weekly posts on LinkedIn and the sisters' Youtube channel posts 2 training videos each week. Contact Sylvia at firstname.lastname@example.org or 800-388-8342.