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Help Me Retire: I’ll be 71 this year and my wife will be 63 – how should we claim our Social Security benefits?

Dear MarketWatch, 

I am going to be 71 in June. I started getting my Social Security in June last year.

My wife turns 63 in August. She wants to wait until her full retirement age to file for her Social Security. Would it be better for her to file for Social Security earlier, even though she may get reduced payments starting now? 

See: ‘We are not sure how prepared we are for retirement – we are 60 and 61, and don’t know how much longer we can work, have $360,000 in retirement savings and a pension

Dear reader, 

There are what feels like a million factors that go into choosing when to claim Social Security. For starters, a person’s financial circumstances – people who don’t have a lot saved for retirement tend to start claiming retirement benefits earlier because they need the money. Others who have multiple retirement income sources, such as pensions for example, may delay when they claim their Social Security benefits so that the benefits can continue to “grow” so to speak. 

I can’t tell you definitely whether your wife should claim now or later – there is more information you need to analyze before making that decision. But I can give you a list of some considerations to make that may help you in deciding when it is best for her to claim. 

Want more actionable tips for your retirement savings journey? Read MarketWatch’s “Retirement Hacks” column

First, you should both look carefully at your current cash flow and estimated expenses in the near and far future to see if you need that extra income sooner rather than later. If you don’t need that money right away, that’s one reason why she may not be wrong to want to wait. 

Read: Not sure when to claim Social Security? Consider these 4 things before you do

But, like I said, there’s more to Social Security than that. People also use longevity as another measure for whether they should claim benefits earlier or later. No one knows for sure how long he or she will live, but there are indicators that could help estimate a person’s lifespan, such as family history or current medical conditions. 

Read: Want to live to 100? Here’s what the latest longevity research says

For example, if you’re 62 years old, financially stable and you expect to live to 90, you may want to hold off on claiming Social Security because even if you claim at 70 (when you’d receive your maximum benefit), you still have 20 years to reap the benefits. But if you’re 62, and you only expect to live to 72, claiming earlier may make more sense because at least you’ll get to enjoy the money you’re owed from the decades of hard work you endured. If you waited until 70, you’d only get two years’ worth of benefits. 

As spouses, you might want to compare both of your benefits and see if it makes sense for her to wait. At her full retirement age, or FRA, your spouse is entitled to her own benefit or one-half of your Primary Insurance Amount, which equates to whatever you were owed at your own FRA – she gets whichever is greatest. This option is only available if the spouse whose benefits are being used for calculations has already begun claiming, so in your case, this is a possibility. 

Let me be clear about that – when people say you can get 50% of your spouse’s benefit as part of spousal benefit, it isn’t the amount your husband or wife is receiving right now. If they claimed before FRA, you’d actually be getting more than 50% of their current benefit, but if they claimed after (like you did), they’d technically be getting less than 50% of their spouse’s benefit. In your wife’s case, she wouldn’t receive 50% of what you get, she would get 50% of what you would have received had you claimed at FRA. 

Yes, spousal benefit calculations can be quite complex – so take your time in reviewing your wife’s options, if this is something that is applicable to you. 

Also see: My husband claimed Social Security and I haven’t yet. How will that impact my benefit?

All of this is moot if her benefit would be more than yours – these complicated rules only apply if your spouse’s benefit would be less than one-half of the other’s primary insurance amount. 

But keep in mind, when one spouse dies, the surviving spouse gets the larger of the benefits (not both spouse’s benefits as some may think), so it’s important that you strive to get as much as you can in a scenario that makes sense for your current financial needs and standing, as well as the future for either of you. 

There used to be a rule that individuals who reached FRA could choose to receive the spousal benefit first and delay their own retirement benefits until whenever they wanted, but that now only applies to people who were born before Jan. 2, 1954, the Social Security Administration said. Anyone born after that can only choose to claim once

Also, don’t forget, you should make accounts through the Social Security Administration’s website, which will let you see estimated benefits now versus in a few years as well as ensure your earnings history is correct. You can do that here

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