October is Retirement Security month, when we encourage Americans to focus on saving for their co-called “golden years.” Saving for retirement is, of course, important, but equally important is how Social Security income fits into each couple’s retirement future. After all, statistics show that, savings aside, more than half of all retirees will rely on Social Security as a major source of their retirement income.  

For a couple, developing a Social Security (SS) claiming strategy can be challenging because there are several key factors which, together, influence the best claiming option for each partner. Those key factors are:

● Personal benefit disparity (difference between each partner’s personal SS benefit)

● Age disparity (gap in age between partners)

● Status of the couple relationship (for spousal and/or survivor benefits)

Personal Benefit Disparity

If both partners are eligible for Social Security retirement benefits from their own lifetime earnings history and their benefit entitlements are reasonably similar, then the last two factors above are not significant in the couple’s claiming decision. In that case neither partner will be eligible for a benefit from the other, so each can choose the claiming option which best suits their personal objectives. But if only one partner is eligible for an SS retirement benefit, or if both partners are eligible for an SS retirement benefit but there’s a significant difference between benefit amounts at full retirement age, then the partners’ age difference and the status of their relationship are important.

Age Disparity

If both partners are reasonably close in age, the spousal benefit available while both are living is an important factor. Eligibility for a spousal benefit is determined by comparing each partner’s SS retirement benefit entitlement at full retirement age (FRA) – if there’s a significant difference a spousal benefit may be paid. Spouse benefits cannot be paid until the partner with the higher benefit starts collecting and, if there is a large enough difference between each partner’s FRA benefit entitlement, the payment for the partner with the smaller benefit will be increased by a “spousal boost.” The spousal boost adds money to the smaller (or non-existent) benefit so the payment can be as much as 50% of the other partner’s FRA amount, or as little as 32.5% if taken before the spouse’s FRA (the spousal boost reaches maximum when the receiving spouse attains full retirement age). The size of the boost depends on the amount of difference[1] between the partners’ FRA benefit amounts and the age at which the spouse benefit is claimed.[2]

Status of Relationship

If either partner is, or will become, eligible for a spousal or survivor benefit from the other, then the legal status of the partner relationship is of paramount importance. Social Security will not pay spousal or survivor benefits unless the relationship is a legal marriage. To Social Security, a legal marriage is a union which was solemnized by a recognized authority such as a clergy or other official so designated. So-called “common law marriage” is not considered a marriage for Social Security’s purposes unless the relationship was established in a State which recognizes such unions as a legal marriage. Social Security goes by State rules for marriage definition, and only eight states (CO, IA, KS, MT, NH, SC, TX, UT) currently recognize common law relationships as “marriage.[3]

Don’t Forget about Survivor Benefits!

If there is a substantial difference in the age of the partners, it’s statistically probable that the older spouse will die first and, thus, the survivor’s Social Security benefit is of paramount importance. The rules for survivor benefits are much different from those relating to the spouse benefits available when both partners are living. A surviving spouse is entitled to 100% of the amount the deceased spouse was receiving at death, if the survivor claims the benefit at or after full retirement age.[4] Indeed, regardless of the difference in age, if one partner in the marriage has a personal benefit which is less than the other and the partner receiving the larger benefit dies first, the survivor is entitled to the higher benefit instead of their own smaller benefit. For that reason, each couple should consider the life expectancy of both partners in deciding when to claim (see this). The longer the partner with the higher benefit waits to claim (up to age 70), the higher the survivor benefit will be for the other partner.

Summing it All Up

To summarize: if the partners have similar SS retirement benefits at FRA, each partner should claim based upon their individual requirements, considering their own life expectancy and need for the money. However, if there is a large difference in age or FRA benefit amounts:

● The partner with the smaller (or non-existent) SS retirement benefit should claim no later than FRA, or as soon thereafter that they become eligible.

● The partner with the higher benefit should consider that their own benefit will continue to grow for as long as they delay claiming, up to age 70 when their benefit will reach maximum.

● The partner with the higher SS retirement benefit should also consider that whenever they claim:

a. The benefit amount they get when they claim will become the basis of their surviving spouse’s eventual benefit.

b. While both are living, their partner cannot claim a spousal benefit until at least age 62.

c. Their surviving spouse cannot claim a survivor benefit until at least age 60 (50 if disabled).

Does all this still seem complicated? Well, it is – which is why the AMAC Foundation’s Social Security Advisory Service offers free guidance on Social Security matters such as how couples should approach their benefit claiming options. Email questions to ssadvisor@amacfoundation.org or call us at 1 (888) 750-2622.

[1] The partner with the higher FRA (full retirement age) benefit must be entitled to more than twice the FRA benefit of the other partner.

[2] Age 62 is the minimum age for claiming a spousal benefit.

[3] Six other states (PA, OH, IN, GA, FL, AL) previously recognized common law relationships and still recognize such relationships established prior to the date it was abolished in the State.

[4] Survivor benefits can be claimed as early as age 60 (or 50 if disabled), but claimed before FRA the survivor benefit is reduced by up to 4.75% for each full year early, to a maximum of 28.5%.