How to Maximize Social Security Benefits for a Married Couple

Editor's Note: This story originally appeared on The Penny Hoarder.

Here is the scenario: You and your spouse are approximately the same age, and are asking yourselves and your financial guru about Social Security benefits. Chief in your minds is how to maximize Social Security benefits for a married couple.

You are approaching the age when you need to make decisions about taking Social Security payments. Neither of you are required to take such payments at any age, but you could certainly use one of the monthly payments for the expenses you have.

It is fairly common knowledge among people who are near or at the age when they can begin to accept Social Security payments that the longer they wait, the more they will receive in their monthly payment. In your situation, you probably know which spouse is in line to get the most money. That would be the one of you who made more money and thus contributed more.

So, let’s say you two have decided one of you needs to start taking Social Security benefits now. But which one of you? Do you take the higher earner’s benefits now and then add the lesser amount later, or do you let that greater amount grow and take the lesser amount now? How do you maximize Social Security benefits for a married couple?

It’s a complicated question with a complicated answer. There are several points to consider before making the decision of whose benefits to claim first.

The Most Beautiful Part of Social Security

As federal entitlement programs go, Social Security is one of the most successful and most popular. Many senior citizens rely on their Social Security payments as their sole income, while others use it to supplement income from investments and savings. It’s a good idea to devise a retirement budget, considering all of the money you will have coming in — and how much will be going out.

But where Social Security best serves American citizens is in its treatment of married couples who likely have two Social Security accounts to consider.

Thanks to the creation of spousal benefits, married couples can employ some fairly complex mathematical equations to determine how best to maximize their benefits over time. Spouses who are going to hit full retirement age at the same time have an easier time with those complex mathematical equations because they are comparing oranges to oranges. This article will explain spousal benefits a bit later.

Terminology: A Reminder

There will be multiple references to “full retirement age,” the age for receiving full Social Security retirement benefits. That age is 67 for workers born in 1960 or thereafter, but from 66 to 67 for those born earlier. The Social Security Administration website provides exact details.

Once you turn 62, you can begin receiving Social Security benefits, but once you start, you are locked into the amount for that age — though you have 12 months to change your mind and halt payments. The longer you wait to start receiving benefits, the more money you will receive monthly, and these increases continue up to the age of 70.

So now, let’s start figuring out which spouse should take Social Security benefits first when both spouses are approximately the same age.

Deciding Factor: Health

If one spouse earned much more money in their career than the other, that spouse’s monthly Social Security payments will be significantly higher. But a couple must decide if the higher amount is needed for living expenses, because that higher amount is only going to grow up to age 70 as long as you don’t take the benefits early.

If your budget can allow you to wait, there are two other key determining factors to consider when deciding who should accept Social Security first: each spouse’s personal health prospects and each spouse’s desire to continue working past the age of 62.

Here is how health plays a role: If a spouse dies before they reach their full retirement age and have not started taking Social Security benefits, the surviving spouse will receive what the deceased spouse would have received at their full retirement age.

If a spouse dies after their full retirement age without taking benefits, the surviving spouse gets the full retirement benefit plus a Delayed Retirement Credit. If a spouse takes benefits before their full retirement age and then passes away, the surviving spouse gets the lower monthly amount rather than the larger full retirement amount.

This effectively encourages citizens who have reached 62 years of age to hold off taking their Social Security benefits at that first opportunity. It also requires couples to take a bit of a gamble.

Deciding Factor: Work Intentions

Now let’s consider work intentions. If one spouse wants to continue working past age 62, he or she should not take Social Security benefits, because every dollar earned over a certain amount each month decreases their Social Security benefits. The amount you can earn each month is dependent on when the working spouse will (or did) reach their full retirement age.

However, if one spouse wants to continue working and not take their Social Security benefits yet, they are still contributing tax dollars to their Social Security account and their eventual monthly Social Security payments will be that much larger.

This stipulation has become increasingly significant as life expectancy among men increases. Some people who need their Social Security payments do not want to retire completely, so they are allowed to make up to a certain amount a month without cutting into their monthly benefits.

Now, About Those Spousal Benefits

Marriage is often touted as a great financial decision (two can live as cheaply as one; the married status for filing taxes), but it really comes in handy when it is time to collect Social Security benefits.

There are several factors involved, but the basic benefit is that when one spouse files for benefits, the other spouse may receive up to half of the first spouse’s benefits as well. The spousal benefit is only for those spouses who are also at least 62 years old, which works for the scenario this article is based upon.

Spousal benefits are also reduced if the first spouse takes his or her benefits before full retirement age.

The federal website for the Social Security Administration has a wealth of information, and the Consumer Financial Protection Bureau offers a helpful benefit calculator. There are also more than 1,200 SSA field offices around the country with knowledgeable staff able to help you navigate your Social Security decisions with a focus on maximizing your benefits.

At least in the case of Social Security, the federal government really wants citizens to receive what they deserve as long-time members of the American workforce.