In Part 1 I covered information on spousal benefits and using a strategy called “file and suspend” to maximize social security benefits, especially your lifetime joint benefits by timing when you claim. You can click here to see more social security resources. In this article we will cover survivor benefits and an advanced social security claiming strategy called “file and suspend plus.”
A surviving spouse can collect benefits when the primary worker is no longer living. He or she will be eligible for partial benefits if the survivor is at least 60 and will collect 71% to 99% of the full benefit amount. The surviving spouse is eligible for maximum benefit of 100% when at full retirement age (FRA).
Since a surviving spouse may need a survivor benefit for income, many couples also want to boost the value of the survivor benefit, which will include any delayed retirement credits and cost-of-living adjustments. Usually, it’s husbands trying to maximize the survivor benefits for their wives. If a husband predeceases his wife, she can choose between her own benefit, her spousal benefit, or the survivor benefit, depending on which one is highest.
File and Suspend Plus
If both spouses worked during their careers, there are some other advanced strategies to consider. The first is something called File & Suspend Plus. Under this strategy, the higher earner files and suspends, allowing the spouse to collect a benefit. Both spouses collect their higher personal benefits once they turn 70.
For example, Steve is the higher earner and is two years older than his wife Jane. Steve files and suspends at his FRA of 66, which will allow Jane to collect a spousal benefit while Steve’s benefit accrues more credits. Since she’s not at her full retirement age yet, she’ll have to wait two years before she claims, per SSA rules.
When she turns 66, she starts claiming her spousal benefit, which is 50% of Steve’s full benefit. At age 70, Steve starts collecting his maximum accumulated benefit and Jane continues with the spousal benefit.
When Jane turns 70, she switches over to her personal benefit, which has been accruing extra credits the whole time, maximizing their household income. If Steve predeceases Jane, she will be able to switch to her survivor’s benefit, which will be Steve’s maximum accumulated benefit.
The obvious benefit of this strategy is that it maximizes Social Security income at every stage and leaves a potentially larger survivor’s benefit. This example however doesn’t take into account things like age differences, taxes, and life expectancy, which can affect the overall outcome. Be sure to talk to your financial planner or feel free to email me or comment below if you have any questions.
In this example you may be wondering “Why can’t Jane collect her spousal benefit before her full retirement age?” The SSA won’t allow someone under their FRA to collect a spousal benefit before they collect on their own personal benefit. So, if Jane wanted to start collecting at age 62, the SSA would tap into her reduced personal benefit first, which would prevent her benefit from accumulating more credits.
In Part 3 we will cover some more advanced claiming strategies. You can click here to see Part 1 and more social security resources.