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Retirement

Social Security Strategies for Couples: Claim Now, Claim More Later

by James Clemensen

In a previous article on accessing Social Security entitlements we looked at the file and suspend strategy, which rewards spouses who delay receiving full benefits. Next up is a strategy called claim now, claim more later, which requires communication and cooperation between husband and wife as they strive to achieve the greatest lifetime cumulative payments.

We’ve already established that there is a high probability that Social Security is going to be there when you need it, but it is still one of those factors in life that is largely beyond your individual control. Even so, couples that are planning for a meaningful retirement should take these strategies into consideration.

We urge you to consult with your wealth advisor before making any Social Security decisions, as there is much more to consider than we can cover in this article or series of articles.

File and suspend is typically best for married couples where the lower earning spouse has a retirement benefit that is less than one-third of the higher earning spouse's benefit; claim now, claim more later is best when a couple has more equal individual retirement benefits.

How the claim now, claim more later strategy works

Instead of suspending payments, the claim now, claim more later strategy restricts them so they can continue growing, to be collected at a later date. A lesser spousal benefit is claimed in the interim; hence the name claim now, claim more later.

It works like this:

• The lower earning spouse claims his or her retirement benefit
• The higher earning spouse (at full retirement age) restricts his or her own larger retirement benefit and takes the lesser spousal benefit in the interim
• The higher earning spouse claims his or her own retirement benefit once it has maximized at age 70; the amount is unaffected by any spousal benefits already received
• The lower earning spouse may then access spousal benefits based on the higher earning partner’s work history if it is greater than his or her own retirement benefit

Basic examples of claim now, claim more later

Below are five examples of how this strategy can be used to maximize benefits. The sixth example represents the possible result if a husband and wife simply take their full benefit at age 66.

Claim now, claim more later versus file and suspend

Claim now, claim more later would typically be a better choice because when Jack files and suspends, only $1,321 in spousal benefits is available to Jane — much less than the $2,400 that would be available when the couple combines Jane’s $1,600 retirement payment with Jack’s spousal benefit of $800 (half of his wife’s amount).

Combining two Social Security strategies

File and suspend can be combined with claim now, claim more later in a third scenario:

• The higher earning spouse files for, and suspends, his or her retirement benefit
• The lower earning spouse, at full retirement age, restricts his or her own larger retirement benefit and takes the lesser spousal benefit in the interim
• Both the higher earning and lower earning spouse claim their own retirement benefit once it has maximized at age 70, unaffected by the previous benefits received

How we can help

There are a number of ways a married couple can go about collecting Social Security benefits; depending on the projected longevity of the husband and wife, income tax, other income and investments, and other factors, the traditional claiming of benefits at the full retirement age of 66 may not always be the best choice. Always consider these issues with your wealth advisor before making important decisions.

Having a plan that specifies when to start benefits, clearly communicated goals, and cooperation between the two parties is a great place to start. We can help you begin with a vision and goals for your post-work years, and then design a strategy to help make them a reality.

James Clemensen, CFP®, Wealth Advisor, CliftonLarsonAllen Wealth Advisors, LLC
[email protected] or 612-373-1404

Published: 2/20/2015