No double dipping on Social Security retirement benefits

Married couples can use a combination strategy, but you can't both file for spousal benefits while delaying your own

By Mary Beth Franklin

Dec 9, 2014 @ 12:01 am EST

This the season of holiday parties and the dreaded social faux pas of double dipping your crudit� in the ranch dressing. (You know, dip, bite, and dip again. Ew!)

Let that be a reminder to you: no double dipping on Social Security claiming strategies either.

I am always delighted to share the many rules and strategies of maximizing Social Security benefits with new readers and audiences. Inevitably, one of those novices will raise the very logical question of why married couples can't both file and suspend their benefits and then both file restricted claims so they can each collect spousal benefits while their own retirement benefits continue to grow up to age 70.

It's a great idea, but the Social Security rules don't work that way. When it comes to collecting retirement benefits, each person is entitled to one Social Security election. (Survivor benefits are another story).

You can claim reduced retirement benefits as early as age 62. The Social Security Administration will pay the largest benefit to which you are entitled — whether on your own record or as a spouse — reduced for claiming early. You cannot choose which benefit to collect if you claim before your full retirement age.

But if you wait until your full retirement age of 66, you have more options.

At 66, you could “file and suspend,” which would trigger benefits for a spouse or a minor dependent child while your own benefit continues to earn delayed retirement credits worth 8% per year for every year you postpone collecting beyond your full retirement age up to age 70.

Or, if you are at least 66 years old and your spouse has already claimed benefits (or has filed and suspended to trigger a spousal benefit), you can file a restricted claim for spousal benefits and collect half of your spouse's full retirement age benefit while your own benefit earns delayed retirement credits up to age 70.

But one person can't do both.

However, depending on their age differences and benefit amounts, a married couple could employ a combo strategy where one spouse files and suspends at 66 and the other spouse, who is also at least 66, files a restricted claim for spousal benefits only.

Let's assume both spouses are 66 years old and they are each eligible for a Social Security benefit of $2,000 per month at their full retirement age. The husband could file and suspend at 66. He would collect nothing initially, but would trigger a spousal benefit for his wife.

The wife, who is also at least 66, could file a restricted claim for spousal benefits and collect half of her husband's full retirement age amount — $1,000 per month — for the next four years, increasing the household's income by a total of $48,000 over that period. The cumulative amount would actually be larger as annual cost-of-living adjustments would boost her initial benefit amount.

At 70, each spouse could switch to their own retirement benefit, now worth $2,640 per month thanks to four years of delayed retirement credits. (The amount at age 70 would actually be higher as intervening cost-of-living adjustments would be applied, too). That means the couple's combined Social Security income would be more than $63,000 per year. That's a significant amount of guaranteed, cost-of-living adjusted retirement income that they can't outlive.

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