Effectively navigating Social Security benefits can be crucial for couples approaching retirement to ensure long-term financial stability.
At a Glance
- The “file and suspend” strategy ended in 2016; however, couples can still maximize benefits through other tactics.
- Strategically delaying benefits until age 70 can significantly boost retirement income.
- Consideration of survivor benefits is essential, particularly if the higher-earning spouse has health concerns.
- Factors like working during retirement or government pensions can affect Social Security payouts.
Key Changes to Social Security Strategies
The once-popular “file and suspend” Social Security claiming strategy was eliminated in 2016 for couples, as was the optional choice between spousal and retirement benefits for those born after January 2, 1954. While these changes limit some past benefits, couples can still adopt new strategies for maximizing their Social Security income. With thorough planning, couples can align their claiming strategies to sustain their financial well-being in retirement.
Filing decisions regarding when to claim benefits can significantly impact the financial outcomes for couples. Factors such as age, health, and tax implications must be considered when forming a strategy to maximize benefits. One approach involves delaying benefits until the age of 70, which increases both retirement income and survivor benefits. This method can offer substantial advantages, especially for the higher-earning spouse.
The Importance of Survivor Benefits
Careful planning around survivor benefits can provide substantial support after a spouse’s passing. Jim Blair notes, “The higher earner’s benefit is what’s going to be paid if someone survives the other.”
The surviving spouse can receive up to 100% of the deceased’s benefit amount, making it crucial to consider health issues when planning. Strategies may involve the higher-earning spouse delaying their benefits to ensure these benefits are maximized.
Strategic planning should also take into account various financial circumstances. Options like early claiming or delaying benefits can serve different purposes depending on a couple’s situation, such as one spouse providing caregiving or managing a disability. While early claims can reduce benefits, delaying can lead to increased payouts. Coordinating with a spouse’s earnings record or using voluntary suspensions can further enhance retirement income opportunities.
Considerations for a Stable Retirement
A smooth transition into retirement involves evaluating how Social Security interacts with other income sources. Factors such as continuing work during retirement, paying Medicare premiums, or receiving a government pension can reduce benefits. However, the “reset” rule allows benefit repayment within 12 months to reset the benefit amount if finances change. Regular discussions between spouses about these aspects can help ensure comprehensive retirement planning.
Katie Brockman of the Motley Fool website highlights the importance of Social Security: “A whopping 60% of current retirees say their benefits are a major source of income, according to a 2024 poll from Gallup.”
Addressing Social Security as a key component of retirement planning can significantly impact financial stability, ensuring a secure retirement for couples.
When planning for #retirement, it’s important for women to know the factors that could impact their monthly payment. Find out more here: https://t.co/wGsudMd3cA
— Social Security (@SocialSecurity) September 14, 2024
Sources:
- https://www.aarp.org/retirement/social-security/info-2024/benefits-couple-strategies.html
- https://investor.vanguard.com/investor-resources-education/social-security/strategies-for-married-couples
- https://www.ssa.gov/oact/quickcalc/spouse.html
- https://www.fool.com/retirement/2024/12/23/1-important-conversation-to-have-with-your-spouse/
