Social Security spousal benefits options

A reader from California contacted me recently about how to switch from receiving Social Security benefits as a spouse based on his wife’s earnings record to his own maximum retirement Social Security benefits when he turns 70 next year. It’s a subject near and dear to my heart as my husband and I just executed a similar claiming strategy.

Matthew said his wife, who was born in 1954, started collecting Social Security in 2020 when she reached her full retirement age of 66. At that point, Matthew, who was born in 1953, was able to file a “restricted claim for spousal benefits” and collect half of his wife’s full retirement age benefit amount while his own retirement benefits continued to grow by 8% per year between his full retirement age and age 70. He plans to file for his own maximum retirement benefit when he turns 70 next year.

Matthew and his wife are among the dwindling group of married couples (and in some cases, eligible divorced spouses) who can exercise this valuable claiming strategy because he was born before the Jan. 1, 1954, deadline that allowed him to file a “restricted claim” for benefits as a spouse while his own retirement benefits continue to grow up to age 70.

Some individuals who were born in 1952 or 1953, who are married (or were married) and haven't yet turned 70 or claimed Social Security may be able to execute a similar maneuver to maximize their lifetime benefits. Nearly 8 million Americans were born in 1952 and 1953, and about 75% of them are still alive today, according to a special report by 24/7 Wall Street based on Census Bureau data.

For married couples, one spouse must claim Social Security, as Matthew’s wife did, to trigger a spousal benefit for the other spouse. In the case of ex-spouses who were married at least 10 years before divorcing, who are currently single, and who were born before the Jan. 1, 1954, deadline, each can file a restricted claim for spousal benefits against their former spouse — even if that former spouse hasn't yet claimed benefits.

People who were born after Jan. 1, 1954, can't do that. Whenever they file for Social Security, they'll be paid the highest benefit to which they are entitled at that age, whether on their own earnings record or as a spouse. They don’t get a choice.

My husband Mike and I did something similar in 2020 when I turned 66. I filed for Social Security when I no longer had to worry about earnings restrictions that can reduce benefits for workers who claim before their full retirement age. Then Mike filed a restricted claim for spousal benefits on my earnings record.

We both applied for benefits online, which was fortunate since Social Security offices were closed to the public in March 2020 due to the Covid-19 pandemic. Those offices just reopened this month.

Mike filed a new application for his own retirement benefits in December, four months before his 70^th birthday. He received a letter from SSA confirming that he'll receive his first maximum retirement benefit payment this month.

Matthew had some questions about what to do next. Could his wife step up to a larger Social Security benefit when he claims Social Security at 70 if half of his new benefit amount is larger than her current benefit?

“Spousal benefits are always based on a worker’s full retirement age benefit amount,” I responded.

“Even though you plan to wait until 70 to claim your Social Security, your wife’s maximum spousal benefit would be worth 50% of your age 66 benefit, not half of your age 70 benefit,” I wrote. “If that amount is larger than her own retirement benefit, she would receive an increased benefit once you file for your own Social Security.”

Matthew thanked me, calling my response extremely helpful. “Your point about spousal benefits being based on the worker’s full retirement age rather than larger age 70 amount is such an important one, and is likely misunderstood by many,” he wrote.

Matthew also wondered what would happen to his wife’s Social Security benefit if he died first.

“Should you die first, your wife would step up to a larger survivor benefit, worth 100% of what you were collecting at time of death — including any delayed retirement credits,” I replied. “At that point her smaller retirement benefit would disappear.”

And that's why coordinating claiming strategies is so valuable to eligible married couples, allowing them to maximize Social Security benefits over their joint lives, including survivor benefits for the remaining spouse.

(Questions about new Social Security rules? Find the answers in Mary Beth Franklin’s new 2022 ebook at Maximizing Social Security Benefits)