My wife is 61 and earns $50,000; I’m 65 and earn $400,000 — should she take Social Security next year?

Published: Nov 30, 2019 1:35 p.m. ET

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Delaying taking your Social Security can get you tens of thousands of dollars in extra benefits.
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Hi Catey,

I’m 65 and my wife is 61. I’m working and plan to retire at 71. My question is should my wife take her Social Security benefits next year and then get 50% of mine added to hers when I retire? Or wait? She makes about $50,000 and I make 8x that amount. Thanks.

Sincerely,
Richard

Hi Richard,

As with many Social Security questions I get, experts say the answer is likely this: wait.

But before we dive in, it’s important to highlight how spousal benefits work, as this is commonly misunderstood. Your wife can indeed start collecting Social Security benefits at 62 based on her own work record (as long as she’s worked for at least 10 years), and she can claim spousal benefits when you begin collecting your Social Security benefits.

The Social Security Administration says: “If you qualify and apply for your own retirement benefits and for benefits as a spouse, we always pay your own benefits first. If your benefits as a spouse are higher than your own retirement benefits, you will get a combination of benefits equaling the higher spouse benefit.”

Or, as Kiplinger’s succinctly puts it: “You can get a maximum of 50% of the amount your spouse would receive in benefits at his or her full retirement age. You cannot get half of your spouse’s benefits plus your own, so it only makes sense to take spousal benefits if yours are less than half of your spouse’s.”

As for when you should start to receive your benefits, “The longer you wait to begin collecting, the higher the benefit will be for both of you,” explains Kimberly Foss, president and founder of Empyrion Wealth Management .

William Meyer, CEO of Social Security Solutions, which provides advice and guidance on Social Security for impending retirees, also advises waiting. “Given the general information provided, the key decision for this couple is making sure the husband, who has a higher earnings history, waits as long as possible. Delaying starting his benefits to get them as high as possible will likely result in the wife receiving his higher amount through survivor benefits if he passes away before her. If she passes away first, he has increased his benefits to create a longevity hedge if he lives longer than he expects.”

He provides three scenarios to showcase what he means, noting that the assumptions for these scenarios are that the husband is getting $2,960 monthly from Social Security (as would be expected with his $400,000 salary) and the wife $1,492 from her annual salary of $50,000, and the husband dies at 85 and the wife at 90.

  • Strategy 1: Both claim as early as possible
  • Strategy 2: He delays to 70 and she starts early at 62 (requested strategy)
  • Strategy 3: He starts at 70 and she starts at age 67 (highest payout)

In these scenarios, strategy 3 would yield over $150,000 more in cumulative benefits than strategy 1 and $12,500 more than strategy 2, Meyer calculates. He recommends they try strategy 3, though he adds that it depends on their personal situation. Bottom line: “If they have outside savings to support delaying, picking up another $12,500 may be worth it.”

Now read: I tested 2 free Social Security calculators and here’s what I found

Catey Hill is MarketWatch's senior content strategist. She writes about how to upgrade your life, and helps readers find great deals on products and services. Follow her on Twitter @CateyHill.

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