Your Social Security decisions could affect your spouse

One of the biggest retirement-related decisions you’ll make is when to start collecting Social Security. And your decision doesn't just affect you; it could affect your spouse as well. This isn’t a choice to take lightly — Social Security is one of the most valuable retirement assets you have.

In fact, using the estimated 2024 average individual benefit of $1,907 per month, finding a similar benefit paying the same amount for as long as you live — with inflation adjustments and survivor benefits for your spouse — would cost about $500,000.¹

So, before you claim, you’ll want to understand your options and how your choices may affect your and your spouse’s retirement.

Why your Social Security decision matters

Social Security benefits replace about 40% of pre-retirement income for a median earner when claimed at full retirement age, according to the Social Security Administration (SSA). And since benefits are unaffected by market movements, they can provide a guaranteed source of income in retirement to help you meet your basic needs.

Social Security benefits also address two key retirement risks:

1. Inflation
2. Living longer than you expect

That’s because Social Security is a lifetime benefit that typically adjusts for inflation each year. And since your spouse may be able to receive survivor benefits, it can provide for them should they outlive you.

Social Security basics

Your Social Security retirement benefit is based on your highest 35 years of earnings as well as the age at which you begin taking it. There are three important ages to know:

1. 62 — when you can begin to receive benefits
2. 67 — when you can receive your full retirement benefit (known as full retirement age, or FRA)²
3. 70 — when you can receive your maximum benefit (known as maximum benefit age)

While you can claim as early as age 62, claiming before your FRA permanently reduces your retirement benefit by up to 30%. Conversely, delaying Social Security benefits past FRA permanently increases your benefit by as much as 24%.

What to consider before you claim

Your income needs — If you need income and can’t defer retirement or reduce expenses, you may need to take Social Security early. After all, that’s what Social Security is for — to provide a safety net when you need it most.

Your employment — If you haven’t reached FRA and are still earning a meaningful income, you should generally wait to take Social Security. If you take Social Security early and your earned income exceeds a certain amount, your Social Security benefits are temporarily lowered until you reach FRA.

Your life expectancy — The better your health and the longer you expect to live, the more it may make sense to take Social Security later. Your Social Security benefit acts as longevity insurance: It ensures you’ll receive a minimum income amount (with cost-of-living adjustments) no matter how long you live.

Your spouse — There are two potential benefits for spouses:

1. Spousal benefit: paid while both spouses are living
2. Survivor benefit: paid after one spouse passes

The greater the difference in earnings history between you and your spouse, the more relevant these two benefits become to your and your spouse’s claiming decisions.

Social Security spousal benefits

Spousal benefit

A spousal benefit may be available to the lower-benefit (LB) spouse when the LB spouse reaches 62 (minimum one year of marriage to qualify). To qualify for a spousal benefit, one spouse’s FRA benefit must be less than half of the other spouse’s FRA benefit. This spousal benefit then serves as a top-up to their own benefit that, when combined, equals up to 50% of the higher-benefit (HB) spouse’s benefit at FRA.

 There are several important rules to be aware of for spousal benefits:

• For the LB spouse to receive the spousal benefit, both spouses must file for their own retirement benefit.
• The age at which the HB spouse claims their benefit doesn’t impact the amount the LB spouse receives — the spousal benefit is based on the HB spouse’s benefit at FRA regardless of when the HB spouse claims.
• If the LB spouse claims Social Security benefits before their FRA, both their own retirement benefit and the spousal benefit are reduced.
• An LB spouse receiving a top-up reaches their maximum benefit amount at their FRA. Spousal benefits do not receive delayed retirement credits, even if you or your spouse delay past FRA.

If one spouse qualifies for a spousal benefit, we generally recommend the HB spouse claim Social Security at age 70 to maximize their benefit and the LB spouse to claim at FRA.

Survivor benefit

With a survivor benefit, the surviving spouse receives up to 100% of their deceased spouse’s benefit or their own, whichever is higher.

Unlike with spousal benefits, the HB spouse’s claiming decision impacts the amount of the survivor benefit.

• If the HB spouse claims early, the survivor benefit is reduced.
• If the HB spouse delays their benefit beyond FRA, the survivor benefit is increased.

So, deferring Social Security benefits is one way the HB spouse can provide for the LB spouse if the LB spouse outlives them.

Additionally, unlike with spousal benefits, you can claim your own retirement benefit and switch to your survivor benefit later (or vice versa) to maximize the higher benefit amount.

To qualify for a survivor benefit:

• You must have been married at least nine months.
• You must currently be unmarried or have remarried after age 60.

Divorced spouses

Divorced spousal benefits largely work the same as spousal benefits. The key difference is that your ability to claim divorced spousal benefits is not dependent on when your former spouse claims their benefit. However, your former spouse generally must be age 62 or older for you to claim.

If you’re eligible for a divorced spousal benefit, we generally recommend deferring your higher maximum benefit — your retirement benefit at age 70 or your divorced spousal benefit at FRA — to the maximum benefit age.

To qualify for a spousal benefit on your former spouse’s record:

• You must have been married at least 10 years.
• You must currently be unmarried.

Divorced survivor benefits

You can receive survivor benefits on your former spouse’s record if you were married at least 10 years and you’re currently unmarried or you remarried after age 60. Divorced survivor benefits work the same as survivor benefits, and our guidance on when to claim them is the same.

Social Security claiming guidance

We recommend you claim at the age expected to maximize the likelihood of meeting your retirement and legacy goals, assuming:

• You (and your spouse, if married) are planning for an above-average life expectancy (age 84 or higher). As a starting point, we generally recommend planning to age 91 for men and 93 for women, adjusting as needed for known medical conditions and family history.
• You have other income sources to meet your needs, for example, a pension or your own retirement savings.

If you or your spouse have good reason to plan for an average to below-average life expectancy, or you have no other income sources to meet your needs, it may make sense to claim earlier than outlined in our general guidance.

How Edward Jones can help

This guidance serves as a starting point only. Your Social Security decisions should be specific to your situation.

Visit ssa.gov to obtain your current Social Security statement. Then you can work with your financial advisor to run your specific numbers to understand the impact of claiming at different ages.

These strategies can be complex. It’s important to work with the SSA for a full discussion of your benefits and options before finalizing your claiming decision.