There are certain ways in which you can plan out the timing of your Social Security retirement benefits in order to receive more benefits over your lifetime. This is especially true and useful for married couples. Here are some of the options that you should know and be familiar with for you and your spouse to receive the highest amount of retirement benefits possible.
Retirement Benefits for Only One Spouse
In certain situations, there may be only one spouse eligible for retirement benefits because the other did not work enough during their lifetime to qualify. In this situation, the spouse that does not qualify for these benefits can qualify for other benefits such as dependents benefits—also called spousal retirement benefits—and survivors benefits. If these other benefits are claimed before retirement age, the amount of the benefits paid out will be reduced. In this case, the other spouse is only eligible for retirement benefits and would not be able to qualify for dependents benefits or survivors benefits.
There are two regulations in Social Security that may make receiving benefits for a married couple with only one retirement benefit qualifying spouse a little more difficult.
- If the qualifying spouse delays claiming their retirement benefits until after full retirement age (up to 70 years old), both their retirement benefits and their spouse’s survivors benefits will increase. However, if the qualifying spouse claims their retirement early, both the retirement and survivors benefits will go down.
- The spouse that does not qualify for retirement benefits cannot claim their dependents benefits until after the qualifying spouse claims their retirement benefits
Previously, these two options were made simpler by the “claim-and-suspend” rule that was enacted by Congress in 2000. However, beginning April 30, 2016, this claim-and-suspend option has been eliminated. For anyone filing claims on or after April 30, the qualifier must begin receiving retirement benefits before dependents benefits can be dispersed.
Retirement Benefits for Both Spouses
For couples nearing retirement age in which both spouses are eligible for retirement benefits, both spouses are also eligible for dependents benefits and survivors benefits. However, these benefits can only be claimed one at a time. Most couples usually claim their highest benefit available, but this is not always the best way to earn the most from your benefits. Although the claim-and-suspend rule is no longer an option, there are still other methods available to maximize the amount you earn for retirement.
One way to earn more during retirement is to claim lower dependents benefits once you reach full retirement age. This will allow your retirement benefits to continue to grow. If the amount of your dependents benefits is not that much different from your retirement benefits, then it would make more financial sense to only receive dependents benefits after retirement age, and wait to start receiving your retirement benefits. You can later switch to your retirement benefits, which will be eight percent higher for each year you delayed receiving your benefits up to age 70.
Another way to maximize your potential retirement benefits is to actually start receiving your retirement and dependents benefits early. If your spouse is considerably older or sickly, it may be a good idea to claim your retirement benefits early because you may be able to switch to full survivors benefits not too far off in the future. Claiming your retirement and dependents benefits early does not affect how much you receive for survivors benefits, so in certain situations, this may be your best option.
Knowing and understanding your options for retirement benefits will help you to maximize the amount of your claim once you reach retirement age. For more information on Social Security benefits including retirement and dependents benefits, contact The Law Offices of Bill LaTour today.