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This week’s question is from Kendra:
I’m 62 and still working, and my domestic partner is 63 and still working. We are trying to decide whether it makes financial sense to marry or stay single. Of particular concern is Social Security. What are the benefits and disadvantages of marriage at our age regarding Social Security?
How marriage can increase — or reduce — your benefit
Kendra, if you two marry, your joint Social Security benefits most likely will either remain unchanged or increase.
Marrying will not reduce your joint retirement benefits. Your own Social Security retirement benefits are based solely on your own earnings record. So, getting married would have no direct impact on your retirement benefits.
A marriage could impact your retirement benefits indirectly insofar as it affects your decision about when to retire. A marriage that leads you to retire earlier than you would if you remained unmarried might reduce your retirement benefits due to a shorter earnings history.
On the other hand, getting married might increase your joint Social Security benefits through the use of spousal benefits or survivor’s benefits.
A married person is eligible for spousal benefits if their own retirement benefits at full retirement age (FRA) are less than one-half of their spouse’s retirement benefit at their FRA.
To illustrate, let’s suppose that your partner’s FRA benefits are $2,000 a month. If your retirement benefits are less than $1,000, you qualify for a spousal supplement. If they equal or exceed $1,000, you would not qualify.
The spousal supplement is coordinated with your retirement benefit. For example, if you have no retirement benefits, your spousal benefit in this example would be $1,000 at your FRA. As your retirement benefit increases from $0 to $1,000, the spousal supplement at your FRA is reduced dollar for dollar, eventually falling to zero.
Thus, if your FRA retirement benefit was, say, $800, then your spousal supplement at FRA would be $200. Claiming these benefits prior to your FRA reduces both, but at slightly different rates. A spousal supplement does not increase beyond your FRA. (Those born prior to 1954 may have an additional spousal benefit option, which is discussed here.)
Marriage and survivor’s benefits
Next up: survivor’s benefits. While the spousal supplement depends on the difference at FRA in the retirement benefits for you and your spouse, a survivor’s benefit depends on the relative size of the actual benefits you two receive.
Getting married would make the lower-benefit spouse eligible for survivor’s benefits if he or she outlives the higher-benefit spouse. In this instance, the lower-benefit spouse can switch from their own benefit to the higher benefit of their deceased spouse. Clearly, the advantage of this switching opportunity grows as the gap in retirement benefits increases.
My firm’s software can shed light on the gain in Social Security benefits that a marriage might offer you and your partner. While you would need three analyses, you would need to purchase only one for a case like yours. A married person’s report and two single person’s reports would allow you to see the Social Security advantages of marrying.
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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. In 2009, I co-founded SocialSecurityChoices.com, an internet company that provides advice on Social Security claiming decisions. You can learn more about that by clicking here.
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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 Social Security Administration 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.