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Today’s question comes from Paul:
I plan on not taking my benefits until 66 years and 8 months, my full retirement age (FRA). My wife is a little older; her FRA is 66 years 6 months. Am I correct that she is eligible to receive the greater of either her own benefit or 50 percent of mine, whichever is greater? If so, can she collect the 50 percent of mine before my full retirement age?
When can a spouse claim?
Paul, it’s nice that you do not need to collect your benefits now, because with delayed claiming your benefits will increase every month you wait until age 70. You are correct that she will receive half your benefit if she does not claim her benefit before her FRA. However, the story is more complicated because she cannot receive your spousal benefit before you claim.
From what you’ve said, your wife is older than you, and you expect her benefit to be less than half your benefit. Under these circumstances, you want to carefully coordinate when you and your wife take your benefits.
A sample scenario
Since I don’t have your entire situation, I can’t tell you exactly what you should do. But I ran a similar case through our algorithm to see what an optimal claiming strategy might look like.
In my example, your benefit is $1,800 and your wife’s benefit is $750. The optimal strategy is for your wife to claim her benefit at her full retirement age (FRA). At that point, she will receive $750 because she is claiming at her FRA.
Since she cannot receive a spousal benefit until you claim, this is the amount that she will receive until you claim. Once you claim your benefit, she will receive a supplement to her benefit that will bring hers to half of yours, $900.
You should wait until your FRA to claim your benefit. At that point, your combined benefit will be $2,700 (= 1,800+900).
Life expectancy matters
What I have described is the optimal strategy if you both expect to live a normal life expectancy — which is currently 82 for men, and 86 for women. While none of us knows how long we will live, there is an advantage for you to delay claiming your benefit if you think that you or your wife may live longer. For instance, if the expectation is that your wife will live until 92, then it is best for you to claim your benefit at 70 instead of FRA.
The reason you might want to further delay your claiming is that the surviving spouse receives the higher of the two benefits. Since you are the higher-earning spouse, delaying your claiming will benefit the survivor.
(Note: Our reports provide optimal strategies under three different life expectancy scenarios.)
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I hold a doctorate in economics from the University of Pennsylvania and taught economics at the University of Delaware for many years. I now do the same at Gallaudet University.
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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 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.