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This week’s question comes from Liz:
I am 63, and my husband is 69. When I reach 66 and 2 months and claim my Social Security benefits, will my husband be able to claim benefits? He did not work enough to earn his own benefit.
How spousal benefits impact claiming
Thanks for your question, Liz. First, let me answer your query. Then, I will try to help you make the best claiming decision
A spouse cannot claim a spousal benefit until the primary beneficiary claims his or her benefit first. Your husband will be able to claim his benefit when you claim yours, but he will have to wait until you claim.
However, claiming both benefits at your full retirement age (FRA) of 66 years and 2 months might not be the best strategy.
To help you understand this, let me start with a simpler situation and then discuss your case. We ran the simpler scenario through our algorithm to see what the optimal choice would be, keeping in mind that there is a trade-off between loss of immediate benefits and higher benefits in the future.
If you were a single woman, the optimal age to begin claiming your benefit would be 68 if you expect a normal life expectancy. (If you expect to live longer than a normal life expectancy, a further delay in claiming would be appropriate.)
However, when we add your husband’s spousal benefit into the analysis, the situation changes.
If you delay claiming, he cannot claim either. And because he is 69, his spousal benefit does not increase if he delays further. Each year you delay between now and 70 your benefit increases, but his spousal benefit does not increase beyond his FRA of 66.
Since his benefit does not increase and he cannot claim until you do, you should claim your benefit now at age 63. That is, unless the earnings test applies to your situation.
You will be subject to the earnings test if you earn more than $17,640 a year. The total benefit that you and your husband receive will be reduced by $1 for every $2 earned above this amount. Your benefit will be adjusted at your FRA age because of this penalty, but there is no adjustment for the loss of spousal benefits. This is a permanent loss. The size of this loss depends on how much you earn, and it will determine when you should claim.
Your husband’s spousal benefit is what makes claiming at 63 the best option — but a reduction in his benefit due to the earnings test would make claiming at 63 less compelling. For instance, If your earnings are high enough to wipe out his spousal benefit, then claiming at your FRA would be best option. At that point, the earnings test no longer applies.
Thus, the best time to claim is between now and your FRA. It depends on the size of the loss of his benefit.
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The questions I’m likeliest to answer are those that will interest other readers. So, it’s better not to ask for super-specific advice that applies only to you.
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.
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