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Social Security - Delayed Retirement Credits Example

Mark, retired, turned 66 in early 2017. Husband has chosen to defer his primary insurance amount of $2,000 per month and wait until he reaches age 70. The benefit of waiting is to receive a guaranteed 8% increase in retirement benefits each year until age 70. His wife, Julie, turns 66 in a couple of months and is not sure she wants to begin or delay her benefits. Wife’s primary insurance amount is $1,600 per month.

 Q: Is having both spouses defer their retirement benefits the best solution?

Maybe. It would depend on answers to other questions such as “can they afford to have no benefits coming in at all for either of them for 4 years?” or “Do either one of them have health issues that may  shorten their life expectancies?” Certainly the income amounts will be greater if both delay their benefits, and the survivor benefits available to each spouse may be greater, but there may be lost opportunities to have both current income and growth in one of their benefits (see next question).


Q: Can Wife file for spousal benefits and let her own retirement benefits grow?

 Perhaps a better solution is for one of the spouses to file Restricted Spousal Benefits that will allow them to receive 50% of their spouse’s primary insurance amount while their own retirement benefits increase by 8% a year for 4 years. For instance, if Wife files for retirement benefits at age 66, she will receive $1,600 per month. Husband is eligible to file for restricted spousal benefits on Wife’s PIA ($1,600). Husband can receive 50% of Wife’s PIA amount, which is $800 ($1,600 X 50%) per month. Husband will receive $ 800 per month for 4 years ($38,400) while his primary insurance amount of $ 2,000 increases to $2,640 ($2,000 X 1.32%) per month at age 70. Beginning at age 70, they’re combined monthly benefit will be $4,240 ($2,640 plus $1,600) per month, and they received $38,400 in social security benefits in the 4 preceding years.


A spouse may receive spousal benefits only if other spouse is receiving his or her retirement benefits. For instance, if Husband began receiving benefits early at 64, the spouse would be eligible to file for spousal benefits up to 50% of the Husband’s Primary Insurance Amount. But Wife is subject to the same early filing reductions and would have her 50% spousal benefit reduced further if she were to file for spousal benefits before she reaches her FRA.


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