Deciding when to claim Social Security is one of the most important financial choices you might make in your lifetime. And if you're married, that's not a decision you should be making alone. Here are three crucial things all spouses need to talk about before either or both of you sign up to start getting benefits.
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1. How to maximize benefits between the two of you
The monthly Social Security benefit you're entitled to in retirement is calculated based on your earnings history. But your filing age also helps determine how much money you get each month.
Signing up at full retirement age, which is 67 for anyone born in 1960 or later, gives you your exact monthly benefit without a reduction. But for each month you claim Social Security ahead of full retirement age, your monthly benefits are reduced. And you can sign up as early as age 62. You can also delay Social Security past full retirement age for credits worth 8% per year you hold off, until you turn 70.
If both you and your spouse are entitled to Social Security based on your respective work histories, then it's important to figure out when to sign up so you either get the maximum amount of money between the two of you, or so you're able to make the most of your benefits (even if that doesn't mean getting the most money each month).
You may, for example, decide to have the lower earner of the two of you claim Social Security at full retirement age so you have some money coming in at that point, but have the higher earner delay their claim for boosted monthly checks. Or, you may decide it makes sense for both of you to delay, or for neither of you to delay. The key, either way, is to make sure you're coordinating and on the same page.
2. How survivor benefits might become important
If you and your spouse were relatively equal earners during your careers, then you may not be so concerned with survivor benefits. But if that's not the case, and one spouse is expected to outlive the other, you should make sure you're filing for benefits strategically to leave the surviving spouse with larger monthly checks.
Let's say you and your spouse are each entitled to $2,400 a month from Social Security at full retirement age. In that case, survivor benefits may not be such a big concern.
But let's say you're eligible for $2,400 a month in Social Security at full retirement age and your spouse is only eligible for $1,600. That's a big gap. Your spouse should be entitled to 100% of your monthly Social Security benefit if they outlive you. So that could make the case for you to delay your claim, or at the very least avoid filing for benefits prior to full retirement age.
3. How Social Security fits into your overall retirement plan
Social Security might end up being an important source of income for you and your spouse. But hopefully it's not your only source. It's important to see how those benefits fit into your finances so you can decide when to claim them.
It may be that you're coming into retirement with a $1.5 million IRA. If your spouse, meanwhile, has a $900,000 balance in their 401(k) plan, that's a nice amount of money between the two of you. And it may give you more flexibility to have at least one of you file for Social Security early if that helps support retirement plans you have.
When you're married, claiming Social Security is something you and your spouse need to do jointly. This doesn't mean you have to file at the same time. Rather, it means you need to come up with a filing strategy together that supports your joint and overall goals. And discussing these crucial points is a big part of making that happen.
