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Social Security: benefits and options available to married clients

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While individuals have important decisions to make regarding Social Security, married couples have the most options when it comes to claiming and coordinating benefits. For the purposes of determining benefits, the Social Security Administration (SSA) recognizes all marriages, as well as some civil unions and domestic partnerships (depending on state law).

Spousal benefits
A married client is eligible for the higher of their personal benefit amount or a spousal benefit amount. The spousal benefit can be very helpful when one spouse has significantly lower earnings or doesn’t qualify for benefits at all.

Let’s say Pat and Taylor are married clients. Pat’s earnings history provides a good Social Security benefit amount, but Taylor never earned enough credits to qualify for benefits. Taylor may receive up to 50 percent of Pat’s primary insurance amount or PIA (the benefit amount available at full retirement age, which is between 66 and 67 depending on birth year).

  • For Taylor to receive the full spousal benefit, Pat must file first (at full retirement age or older) and Taylor must be full retirement age at the time of filing.
  • If Pat files for benefits early, this will reduce both of their benefit amounts.
  • If Taylor files for benefits before full retirement age (as early as 62), it could reduce the spousal benefit to as little as 32.5 percent of Pat’s PIA, with one exception — filing early would not reduce the spousal benefit amount if Taylor were caring for a qualifying child (a child under 16 or receiving Social Security disability benefits).

Keep in mind that the spousal benefit is based on one spouse’s PIA. In this example, even if Pat waited until age 70 to secure a higher benefit amount, Taylor’s spousal benefit would never be higher than 50 percent of Pat’s full benefit amount at full retirement age.

Social Security will always pay out the individual’s earned benefit first. In our example, Taylor did not qualify for a benefit and had to rely on the spousal benefit. However, if Taylor had qualified for a benefit of $1,000 and Pat qualified for a benefit of $3,000, Taylor’s full spousal benefit would be $1,500. Social Security would pay Taylor’s $1,000 benefit and supplement that with an additional $500 based on Pat’s earnings history to reach the total of $1,500.

Coordination between spouses
In many cases, spouses’ earnings histories are different, but not enough for one spouse to be better off with a spousal benefit. While each client’s situation will be unique, it often makes sense for the spouse with the higher benefit to delay filing for as long as possible (up to age 70) to secure a higher benefit. It may even make sense for the spouse with the lower benefit to claim early and take a reduced amount if that makes it feasible for the spouse with the higher benefit to delay filing.

Maximizing the higher benefit will not only increase income in the later years of retirement, it will ensure a higher survivor benefit if the higher earner dies first. This can be important. Surviving spouses can receive up to 100 percent of the benefit amount the deceased spouse was receiving or was entitled to receive at the time of death, as long as the marriage lasted at least nine months or the death was accidental. Therefore, even if the surviving spouse had filed early, meaning their own benefit amount was permanently reduced, that reduction will have no impact on the survivor benefit when the survivor has reached full retirement age at the time of their spouse’s death.

The importance of professional guidance
Spousal benefits can be complex, and decisions surrounding these benefits require careful thought and planning. When working with married clients, remember that each situation is unique. It is important to start the Social Security conversation early and provide clients with the information they need to make the most of their benefits and how they fit into a retirement strategy. If a client has a complex question, you can add value by helping them navigate the SSA website to find the answers they need.

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