How Younger Spouses Can Get the Most from Social Security
Q. I was born in 1953 and will turn 62 this August. My projected Social Security benefit is $1,488 at age 62 and $1,974 at 66. My total family benefit ceiling is $3,508. My wife was born in 1970 and has never paid Social Security payroll taxes. She will begin working part-time this year but will probably never earn enough credits to claim her own retirement benefit. Our daughters are 14 and nearly 13.
I'm figuring that it is most advantageous to start my benefit at 62. I'm wondering if I will receive the Family Maximum Benefit or a lesser amount? Is my spouse eligible to receive benefits by caring for our minor children under my benefit? If I visit a Social Security office, will I get accurate information? —Michael
A. Let me take your questions one at a time.
First, I'm betting my definition of "most advantageous" might differ from yours. To me, it's not just about putting the most dollars in my pocket but about insuring myself against living to a very old age (so I don't run out of money) and making sure my wife will have the largest possible benefit when I'm gone.
Because your wife is nearly 17 years younger than you— and women typically live longer than men anyway— she is likely to outlive you by at least 20 years. Because she has no earnings record to speak of, you need to think about how she can receive the highest possible income in her old age.
The most effective way for you to do this is to delay claiming Social Security until you’re 70 in 2023. Of course, it may be that your family needs immediate Social Security income. But if you can wait until 70, your retirement benefit will be 76% higher than at age 62 and 32% higher than at age 66. This is due to early retirement reductions for claims prior to your Full Retirement Age (FRA)—66 for you—and delayed retirement credits between age 66 and 70. And these percentages are in “real,” inflation-adjusted terms.
When you die, your wife stands to receive your entire benefit for the rest of her life. That's likely to be essential income, since, as you've said, she's unlikely to qualify for Social Security on her own earnings record. So, if it was me, I'd break a leg trying to make sure she would be getting the maximum retirement benefit for all of those years.
Now, with apologies for possibly treading on uncomfortable ground, if you are still alive in 2032, she may want to begin taking reduced spousal benefits when she is 62, which is also as soon as she can. The benefits would be higher if she waited until she reached her FRA, which in her case is age 67 (unless Congress raises the FRA, which is possible). This would be in the year 2037, when you would be 84.
Your remaining life expectancy, according to actuarial projections, will be only a few years at this point. And it's a safe bet that your wife will immediately switch to a widow's benefit when you pass away. So she is almost certainly going to receive more total spousal benefits by claiming reduced benefits early than by waiting five years to claim a larger benefit.
The Family Maximum Benefit (FMB) is the total amount of benefits that you and your family members are entitled to receive based on your earnings record. But these benefits will most likely come into play when you're no longer around. The FMB will include a widow's benefit to your wife and, if your kids are still minors or disabled, and in her care, children's benefits.
As for the accuracy of information provided by Social Security, I have never seen an independent study of this matter. Not surprisingly, the agency defends its record for providing accurate information. But, with something like three million requests for help every week, even a 1% error rate would mean that 30,000 people would be misinformed each week. To avoid being one of them, I'd seek information from multiple Social Security sources—online, over the phone and in person.
Best of luck.
Philip Moeller is an expert on retirement, aging, and health. His book, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” will be published in February by Simon & Schuster. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.
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