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Today we return to a question we received from Douglas late in 2019. At that time, he wrote:
“My wife is three months older than me. She will take Social Security in March at 66 years old. Her full retirement age (FRA) benefit is $1,145 a month; mine is $2,412 a month.
Can I take spousal benefits when she retires, take my full retirement three months later in June, and allow her to take spousal benefits at that time?”
Following is how we replied to Douglas’ original question.
Part of the plan won’t work
Douglas, part of your plan will not work. It has always been the case that claiming spousal benefits prior to one’s FRA leads automatically to a claim for one’s retirement benefits. So, you will not be able to claim spousal benefits for three months, or any other amount of time, prior to your FRA without triggering your own retirement benefits.
Had you been born in 1953 or earlier, you could have employed the “restricted application” strategy. This strategy would have had you claim spousal benefits at your FRA, assuming your wife had claimed her benefits. Then, you could have claimed your retirement benefit in some future year. If you delayed claiming until 70, your monthly benefit would be 32% larger than it would be at age 66. But those born after 1953 are not eligible for this play.
Considering the above, I presume your plan will be for both of you to claim at your FRAs. If you do that, your wife will receive $1,145 a month plus a small spousal supplement when you claim of $61, for a total of $1,206. Of course, you will get $2,412.
The question remains as to whether your claiming choices are optimal for your situation. I used my firm’s software to explore what the optimal claiming ages are for you two. The answer depends a great deal on your life expectancies.
For normal life expectancies — 82 for you and 86 for your wife — the optimal claiming ages are 66 for your wife and 68 for you. At 68, your monthly benefit would be $2,798. (Note that your wife’s spousal supplement does not increase beyond the $61 shown above.) Given these life expectancies, your benefits will outlive you since they will shift to your wife in the form of widow’s benefits. Extending the time period that you (and your wife) will receive your benefits increases the payoff from claiming at a later age.
This result is even more evident for long life expectancies, such as 88 for you and 92 for your wife. In this instance, we recommend that your wife claim at 66 and that you delay claiming until age 70. At that age, your benefits would be $3,183.
Clearly, Doug’s plans needed some inexpensive professional help.
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I hold a doctorate in economics from the University of Wisconsin and taught economics at the University of Delaware for many years.
Disclaimer: We strive to provide accurate information with regard to the subject matter covered. It is offered with the understanding that we are not offering legal, accounting, investment or other professional advice or services, and that the SSA alone makes all final determinations on your eligibility for benefits and the benefit amounts. Our advice on claiming strategies does not comprise a comprehensive financial plan. You should consult with your financial adviser regarding your individual situation.
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