Social Security Strategies For Couples

For couples approaching retirement, few decisions carry more weight than when to claim Social Security. The choice between an earlier, smaller benefit and a later, larger one has a material impact on retirement spending. For couples, that decision must be made twice and each spouse's decision affects the other's. With so many variables in play, it's easy to feel lost before you even begin.

Fortunately, despite all the moving parts, the options couples have for claiming Social Security are actually less complicated than most would think. There are three basic options for a healthy, financially stable couple: both delay, one person delays, or neither delays. Though we aren’t big fans of rules of thumb, there are some general guidelines for which of these options make sense for couples depending on their personal situation.

The first option is for both to delay. This option only makes sense for a couple when both are in extremely good health. This means they are both likely to live long enough to at least break even on the payments they missed out on by delaying. Keep in mind, they must both live long enough to benefit from the increases, or else they would likely be better off if only one person had delayed.

The second option where one delays and the other does not is, in my experience, the option that makes sense for most people. This is because the odds of both members of a couple being in good enough health to benefit from delaying are pretty slim. Generally speaking, whoever has the higher benefit should be the one who delays because that will maximize both the higher earner’s retirement benefit, as well as the survivor benefit.

If both members of a couple are in poor health or don’t have other financial assets to draw from, they may consider taking their benefits before their Full Retirement Age, which for anyone born after 1960, is age 67. In the case of poor health, claiming benefits early provides income that might otherwise be lost if the couple had waited until their Full Retirement Age.     

Rules of thumb can be useful starting points, but they may or may not apply to your particular situation. With so many moving parts, decisions about claiming Social Security can be overwhelming for couples, but can often be made easier by understanding your three basic claiming options. If you aren’t sure how different Social Security claiming strategies will impact your retirement, you may want to seek the help of a financial professional.

Paul Ruedi is the CEO of Ruedi Wealth Management in Champaign, Illinois.