The #1 Social Security Mistake Many Married Couples Make
If you’re married and approaching retirement, deciding when to claim Social Security is one of the most important financial decisions you’ll make. For couples, the decision can become even more complicated because of Social Security spousal benefits. One common mistake can permanently reduce the benefits a lower-earning spouse receives—and in some situations, the difference can add up to more than $100,000 over a lifetime.
In this article, I'll explain how Social Security spousal benefits work, the filing mistake some married couples make, and one strategy that may help you maximize your benefits.
How Do Social Security Spousal Benefits Work?
Let's start with the basics. At full retirement age, a spouse may be eligible for a Social Security benefit based on their own work history or a spousal benefit based on their spouse's work history.
The spousal benefit can be up to 50% of the higher-earning spouse's full-retirement-age benefit. You don't receive both benefits added together. Instead, Social Security pays your own retirement benefit first and then adds a spousal benefit if you qualify for a higher amount.
That's why it's important for each spouse to understand their own estimated Social Security benefit before deciding when to claim.
Start With Each Spouse's Full Retirement Age Benefit
Before making a claiming decision, determine how much each spouse is projected to receive at their full retirement age (FRA).
Full retirement age is 67 for those born in 1960 or later. You can review your estimated benefits through your Social Security account and look at how your benefit changes depending on whether you claim at age 62, full retirement age, or as late as age 70.
For couples planning retirement, the important numbers are:
Your estimated benefit at full retirement age
Your spouse's estimated benefit at full retirement age
Each spouse's full retirement age
The difference in your ages
When each spouse expects to stop working
Once you know those numbers, you can begin evaluating whether spousal benefits will play an important role in your retirement plan.
When Do Spousal Benefits Matter?
Consider three examples for Tom and Mary.
Example 1: Both Have Similar Benefits
Suppose Tom's estimated Social Security benefit at full retirement age is $3,000 per month. Mary's estimated benefit is also $3,000. In this situation, spousal benefits aren't particularly important because Mary's own retirement benefit is already greater than half of Tom's benefit.
Half of Tom's $3,000 benefit would be $1,500. Mary's own $3,000 benefit is significantly higher.
Example 2: Mary Has a Lower Benefit But Higher Than Half Tom's Benefit
Now suppose Tom's full-retirement-age benefit is $3,000 per month, while Mary's is $2,000. Half of Tom's benefit is $1,500. Mary's own benefit of $2,000 is still higher than the potential $1,500 spousal benefit.
Again, spousal benefits don't provide an additional benefit in this example.
Example 3: Mary Has a Much Smaller Benefit
Now let's change the numbers. Tom's full-retirement-age benefit is $3,000 per month. Mary's benefit is $1,000 per month. Half of Tom's full-retirement-age benefit is $1,500. In this case, Mary's potential spousal benefit is higher than her own retirement benefit. This is where Social Security spousal benefits become particularly important.
The Social Security Spousal Benefit Mistake
Here's where couples need to be careful. Some couples assume that the lower-earning spouse can simply claim their own Social Security benefit at age 62 and then switch to the full spousal benefit later when the higher-earning spouse begins collecting benefits.
That's not how it works.
If the lower-earning spouse claims Social Security early, the reduction can affect the eventual spousal benefit as well.
Let's return to Tom and Mary. Tom's full-retirement-age benefit is $3,000 per month. Mary's own full-retirement-age benefit is $1,000 per month. At full retirement age, Mary's potential spousal benefit would be 50% of Tom's $3,000 benefit:
$3,000 × 50% = $1,500 per month
But suppose Mary decides to claim her Social Security at age 62. Her own $1,000 benefit would be reduced because she's claiming before full retirement age. This decision will also reduce her future spousal benefit.
Mary's eventual spousal benefit would be about $975 rather than $1,500—a differenc $525 per month. That's more than $6,000 per year.
Over 20 years, the difference could exceed $125,000.
The exact numbers will vary from couple to couple, but the example illustrates why the timing of Social Security benefits deserves careful attention.
Three Important Rules About Social Security Spousal Benefits
1. The Higher-Earning Spouse Must File First
The lower-earning spouse cannot receive a spousal benefit until the higher-earning spouse has filed for their benefit. This means the ages at which each spouse claims Social Security can interact with each other.
2. The Spousal Benefit Is Based on the Higher Earner's Full-Retirement-Age Benefit
The maximum spousal benefit is based on up to 50% of the higher earner's full-retirement-age benefit. It isn't based on a higher amount simply because the higher earner delays their own benefit until age 70.
For example, if Tom's full-retirement-age benefit is $3,000, Mary's maximum full spousal benefit is based on $3,000—not on whatever larger amount Tom might receive by delaying his own benefit.
3. Claiming Early Can Reduce the Spousal Benefit
If the lower-earning spouse begins benefits before full retirement age, the eventual spousal benefit is also reduced. That's why the decision to claim at 62 shouldn't be made simply because the money is available.
The couple needs to consider how that decision affects their lifetime Social Security income.
A Potential Strategy for Maximizing Spousal Benefits
So, what should a married couple do?
There isn't one Social Security claiming strategy that works for every couple. Your ages, earnings histories, retirement plans, health and longevity assumptions, cash-flow needs, and other sources of retirement income can all affect the decision. However, if maximizing the spousal benefit is a priority, one strategy to consider is having the lower-earning spouse wait until full retirement age before claiming.
In the Tom and Mary example, Mary could wait until age 67 rather than claiming at 62. At age 67, she could begin with her own $1,000 benefit.
Then, when Tom eventually begins his benefit, Mary would switch to the higher spousal benefit—$1,500 per month in this simplified example.
The important point is that waiting can preserve the opportunity for the full spousal benefit.
Don't Make Social Security a Two-Person Decision Made Separately
One of the biggest mistakes couples can make is treating Social Security as two completely independent decisions. It isn't. When you're married, the claiming decision of one spouse can affect the benefits available to the other.
That's why I recommend looking at Social Security as part of your overall retirement income plan, rather than simply asking: "When should I start my Social Security?" A better question is:
"How should the two of us coordinate our Social Security benefits to support our retirement income plan?"
That distinction can make a significant difference.
Social Security Is One Piece of Your Retirement Roadmap
Social Security claiming decisions shouldn't be made in isolation. For many couples, Social Security is only one part of the retirement-income puzzle. You also need to consider your retirement savings, spending, taxes, pensions, investment portfolio, and the timing of withdrawals.
The goal isn't simply to maximize one particular Social Security benefit. The goal is to develop a retirement income strategy that works for both spouses and the retirement you want to create.
If you're approaching retirement and aren't sure when you and your spouse should claim Social Security, getting a second opinion before you file can be valuable.
At Socrates Financial Planning, I help couples close to retirement clarify their goals, master their finances, and build confidence as they move to the next chapter.
I provide advice-only retirement planning for a flat fee. You do not pay expensive ongoing assets under management fees. Instead, you get an informed second opinion and clear direction for your retirement plan.
Schedule a free introductory call
Important Disclosure
Socrates Financial Planning is a Registered Investment Adviser in the state of Michigan. This article is for informational purposes only and does not constitute individualized investment, tax, Social Security, or financial advice. Social Security rules and individual circumstances vary. You should consult appropriate financial, tax, and/or Social Security professionals regarding your specific situation.
