Married couples can maximize their joint lifetime income by coordinating their start dates. A top goal for couples is to boost the benefit for the surviving spouse, who will get 100% of the higher earner's benefit when he dies if she takes the survivor benefit at or beyond her full retirement age. The benefit will include any of the higher earner's delayed retirement credits and cost-of-living adjustments. The widow or widower can claim a survivor benefit as early as age 60, but the benefit will be reduced if the survivor collects before full retirement age. For instance, by claiming at 60, the survivor will get 71.5% of the primary earner's benefit plus any delayed credits.
Wives tend to gain the most from strategies to boost the survivor benefit because they generally earn less than their husbands and live longer. Once her husband dies, the wife can step up, from either her own lower benefit or from a higher spousal benefit, to the even higher survivor benefit.
One of the most important rules of thumb for most married couples: If just one spouse is expected to live well beyond age 80, the couple's cumulative lifetime benefits will usually be highest if the higher earner delays claiming his benefits until 70, according to research by William Meyer and William Reichenstein, principals of consulting firm Social Security Solutions.
Consider this example from Meyer and Reichenstein: Assume Alice and Sam are both 62. His primary insurance amount is $2,000, and his life expectancy is 80. Alice's full benefit is $700 and she is expected to live until she's 90. If they both claim at 62, they'll each get reduced benefits -- $1,500 for him, $525 for her -- until Sam dies at age 80. At that point, Alice steps up to a monthly survivor benefit for ten years. Total lifetime benefits: $635,400.
But say Sam delays until 70 while Alice still claims her benefit early -- at $525 a month. When Sam eventually claims, he'll get $2,640 a month, with his delayed retirement credits, until he dies. Alice will then step up to a $2,640 survivor benefit for the last ten years of her life. Total lifetime benefits: $747,000.
And, says Meyer, delaying by the higher earner makes even more sense if there's a big age difference between the two spouses. "The younger spouse may have a higher survivor benefit for a longer time if the older, higher-earning spouse dies early," Meyer says.
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