When deciding how you and your spouse should approach Social Security retirement benefits, there are a lot of approaches to consider. Unfortunately, many of them can result in you getting significantly less than what's available to you. "It's like a game of chess," says Mari Adam, a certified financial planner based in Boca Raton, Fla. Each decision you make as a couple can impact the monthly Social Security benefits you receive for the rest of your lives. Consequently, even small missteps can shave thousands from the cumulative benefits you receive as a couple. To prevent you and your partner from getting short-changed, consider these five tips for helping married couples maximize their Social Security benefits.
1. Understand the impact of timing
Whether you're single or married, deciding when to start your benefits is critical. But when a couple makes a bad timing decision together, the losses are compounded. This makes it especially important for couples to grasp the basics. "If you start early, you get less on a monthly basis. If you wait longer, you get more on a monthly basis," says Kurt Czarnowski, who worked for Social Security Administration for 34 years and is now principal at Czarnowski Consulting, a retirement planning company. You can choose to start collecting Social Security benefits early (starting at age 62), but your benefits will be permanently reduced from what you would have received if you waited until your full retirement age (age 66 for people born from 1943 to 1954). Claiming benefits at 62 means your monthly benefit is likely to be about 25 percent less than what you would have received at your full retirement age, Czarnowski says. Conversely, if you wait past your full retirement age to collect your benefits, your future monthly payout will increase by up to 8 percent each year until you turn 70.
2. Wait at least until full retirement age to claim benefits
Simply waiting until full retirement age to claim benefits can have a significant impact on a couple's finances over the course of their lives, says Josh Koehnen, a certified financial planner in San Diego, Calif.