Q & A
What is the best way for my parents to maximize their Social Security benefits?
Complete Question: I want to help my parents maximize their Social Security benefits. My father is 73 and collects $2,510/month. My mother is 63 years-old and she has not started collecting yet, but she is planning on retiring soon. Since my father still works, they believe that they can live off of his Social Security and job income until she is 70 and collects her maximum benefit (her full retirement age benefit is $1,700/month). I can see why they want her to wait, but I feel like something’s missing. Shouldn’t she collect a spousal benefit, or would that somehow mess up her increasing her own benefit?
Answer: Even though your parents have the right idea in waiting until age 70 to earn delayed retirement credits because they don’t “need” the income right now, you are correct in that they would be missing out on years of income with this plan. Your mother is entitled to half of your father’s Social Security benefit and it would not have any effect on her benefit. Since he is 73 and gets $2,510, I do not know what his full retirement age (FRA) benefit was, but her maximum spousal benefit is half of that amount. With the information you gave, I can guess his FRA benefit was around $1,800, which means her spousal benefit when she is FRA is $900/month. If she does not take this spousal benefit, that equates to over $43,000 in lost income. The only catch is that she has to wait until age 66 to do this because if she files for a spousal benefit now, Social Security will automatically pay out her own benefit because it is larger than her spousal benefit. When a person reaches full retirement age, they have more filing options; therefore, at age 66, she will have the choice of which benefit she wants – this particular strategy is called “restricted application”.