Q & A
When should my wife and I apply for Social Security?
Complete Question: I am 66, but still working. My wife is 62. She’s still working, but is planning on quitting soon. We’re not sure when to apply for Social Security because we don’t really understand all the rules. For example, should I take my Social Security now because I’m full retirement age? Also, I heard that my wife should take a benefit off of my Social Security and then switch when she is 70. Does this mean we’ll both get a benefit off of my earnings? Does this sound like something we should do? We’re just really confused.
Answer: The rules and timing of when to file can be confusing, especially when you take into account income, spouses, ages, etc. and the fact that everybody’s situation is different. In general, at the ages of 66 and 62, you are both eligible to file for benefits, but of course there are some catches you need to be aware of.
Your wife must first be eligible for a spousal benefit. In order for that to happen, you have to apply for your benefit first. However, if you do not want your benefit, but you want her to get a spousal benefit, there is another option that is only available to you because you are full retirement age (FRA). It’s called “file and suspend”. What you would do is “file” for your benefit, and then “suspend” your application until you are ready to start getting your own benefit (up until the age of 70). In the meantime, since you filed your wife can claim a spousal benefit off of your record.
Depending on how much the spousal benefit is as compared to how much your wife’s own benefit would be, you may hit another obstacle. When someone is younger than FRA (66), Social Security will automatically pay whichever benefit is higher that the applicant is entitled to. At the age of 62, many spouses are subject to a very low spousal benefit because of the significant reductions. To compare, let’s say that both you and your wife are entitled to a Social Security benefit of $1,000/month based on your own records at full retirement age. This means that at age 66, her spousal benefit will already be reduced by 50% to $500. At the age of 62, cut that amount down by another 30%, making her spousal benefit only $350/month. However, her own benefit at age 62 is reduced by 25%, making it $750/month. Therefore, Social Security will automatically pay her the $750 off of her own record since it’s larger than the $350 spousal benefit.
Basically, your options are limited when you are younger than 66. However, there is another option for you two called “Restricted Application” since you are over FRA. This would allow you, not her, to take the spousal benefit and allow your own benefit to grow until you are 70. Using the same benefit numbers above, what would happen is she would take her benefit of $750/month, you would take the spousal benefit of $500/month, and at the age of 70, your own benefit would be $1,320/month ($1,000 x 132%).
I know this is a lot to take in, but it is necessary to understand the implications of the different options before making any decisions. You need to consider your current financial situation and weigh your needs against the additional income Social Security will bring you now versus later.