Q & A
Should I file for my own benefits or spousal benefits?
Complete Question: My husband and I are both 64 years old. We are currently working, but not at the same income level we used to so we thought it would be beneficial for one of us to start taking a Social Security benefit. We are trying to decide the best way to do this without too much of an impact on our future benefits. Since his benefit is higher than mine, we already know that my spousal benefit is higher than his. Based on this, we decided it would be best if I were the one to file. However, we do not know if it would be smarter for me to take my spousal benefit or my regular benefit at this time. Any suggestions?
Answer: That’s a great question and it is good to hear that the two of you are thinking about your future benefits, as well as your current financial situation. Unfortunately, you do not have a lot of options here. When you file for Social Security, they will first look to see if you are eligible for benefits on your own record. If you are eligible for both your own benefits and spousal benefits, Social Security always pays your own benefits first. If your spousal benefits are actually higher than your own benefit, you will receive a combination of the two. However, at age 64, your spousal benefit will be significantly reduced, so there is a good chance your own benefit will be higher.
If you do not know which benefit would be higher and want to determine what your spousal benefit would be right now, first find out what his benefit is supposed to be at age 66 (full retirement age) and cut that in half. Then reduce that amount by another 16.67% (rounded and assuming you are exactly 64 years old – every month you wait will increase your benefit). This means that if his expected benefit at full retirement age is $1,000, then your spousal benefit at age 64 would only be $416/month. So if your own benefit is anything higher than this calculated amount, Social Security will pay you your benefit and you will not have the option to take a spousal benefit at this time.
There is something else you need to consider when making this decision. If for some reason you expect to get the spousal benefit because it is higher than your own, your husband MUST file for his benefit first in order for you to be eligible for a spousal benefit. The same rule applies if he wants to get a spousal benefit – you would have to apply for your own benefit first.
You may hear that there are some strategies for getting around these rules – and there are. However, they are only available once you have reached full retirement age. So until you or your husband are 66, this is what will happen if you apply. The good news is that you will have the other options available to you in the future. For example, let’s say you go ahead and file for your benefit based on your situation that you described, and your husband leaves his benefit alone. When he reaches his 66th birthday, he can choose to file a restricted application. This will allow him to receive only spousal benefits while his own benefits build. This is just one of a few strategies you both can examine when the time comes. But for now, your options are limited.