Let’s examine two very common spousal Social Security cases.
Case 1: The No or Low Income Spouse
If you are the primary earner, but your spouse has at least 10 years of employment under his/her belt, he/she has two choices upon retirement:
1. Claim a Social Security benefit based on his/her own earnings record
2. Collect a spousal benefit that will provide 50% of the amount of your Social Security benefit, at their full retirement age.**
**less than 50% if taken as early as age 62
Your spouse is automatically qualified to receive the benefit that provides him/her with the higher of the two amounts. Prior to reaching full retirement age, Social Security saves you the trouble and automatically makes this determination on your spouse’s behalf.
TIP: To maximize your spouse’s benefit, you may want to encourage them to elect the spousal benefit at their full retirement age (based on your income), and delay receiving his/her own retirement benefits.
The plus side of deferring their own retirement benefits is that they will receive income, and still continue to earn delayed retirement credits until age 70. Depending on the situation, this could potentially allow them to shift to a higher income stream at age 70.
Case 2: The Surviving Spouse
Surviving spouses can elect to start receiving their deceased spouse’s Social Security income as early as age 60. However, the surviving spouse still has the option to defer receiving this income until his/her own full retirement age. As in the earlier case, delaying this income will lead to higher Social Security income later.
TIP: If you decided to start receiving a widow's or widower's benefit at age 60, but will qualify for your own retirement benefit that's more than the survivor benefit, you can easily switch to your own retirement benefit as early as age 62 or as late as age 70.
As you can easily see, married couples can dramatically improve their Social Security income stream by mapping out how and when they should each begin collecting benefits. If you time things accurately, both you and your spouse can fully take advantage of what Social Security has to offer.