Spousal Ages and Social Security Benefit Claims
Just because both spouses in a married couple age, they are not necessarily eligible to claim Social Security benefits at the same time. Nor is either spouse required to claim them as soon as he or she is eligible to do so. A recent paper discusses what happens when they claim at different ages.
In “Social Security Retirement Benefit Claiming-Age Combinations Available to Married Couples
,” Brian Alleva of the Social Security Administration’s Office of Retirement and Disability Policy discusses the claiming rules, contingent situations, claiming-age combinations, and benefit amounts available to married couples with a range of respective birth years and own-record benefit levels.
But why engage in such an exercise in the first place? Does it really matter? Alleva believes that it does.
“The claiming strategy they choose directly affects their total monthly benefit amounts,” he writes. “For most couples, in which the higher-earning spouse is the same age as or older than the low earner, the highest possible monthly benefit for the lower-earning or nonearning spouse can exceed the lowest possible benefit by about 45 percent — and in some cases, by more than 70 percent,” Alleva notes.
It’s no mean feat to determine when the optimal moment for each spouse to claim benefits is. How hard is it? Alleva offers an idea. “The sheer number and variety of claiming-age combinations would be overwhelming if a couple were to consider each one individually. For instance, a couple with a nonearning spouse entitled to only the spousal benefit can face almost 6,000 possible month-of-age claiming combinations, depending on their respective birth years. For couples with a lower-earning spouse who is dually entitled to both an own-record benefit and a spousal benefit, possible claiming-age combinations range from almost 10,000 to almost 40,000, depending on the spouses' respective birth years,” he says. It’s hardest of all, according to Alleva, for couples in which the higher earner is older than a nonearning spouse by 2.5 years.
The study presents the benefit claiming rules, formulae, entitlement classes and spousal-benefit claiming contingencies applicable to married couples of various respective ages. It examines claiming-age combinations that were calculated for a series of 21 married couples, each of which included a high earner born in 1955. The couples were distinguished by the low earner’s birth year, which was specified as each year from 1945 through 1965. It calculated the range of potential benefit levels for the low earner based on several alternative assumptions about the spouses' relative own-record primary insurance amounts.
Depending on the spouses’ age gap, initial receipt of own-record and spousal benefits can be separated by many years, says Alleva. If the low earner is 10 years older than the higher, the lower earned may have to wait up to 18 years after initiating his or her own-record benefit to receive the spousal benefit, depending on the higher earner’s claiming choice, he writes. In addition, says Alleva, “the claiming options available to a given couple can produce a wide range of total benefit amounts, demonstrating further that the selection of a claiming strategy matters greatly.”
And it really is even more complicated than that, argues Alleva, pointing out that “an optimal claiming strategy” for a given married couple would account for:
- longevity expectations of each spouse;
- potential survivor benefits;
- the particular scenario for which to optimize.
“The complexity of the array of possible claiming options alone demonstrates the need for care in considering optimization,” says Alleva.