Why Married Retired Couples Should Pay Attention to the Social Security Two-Life Benefit

Financial experts said the top Social Security strategy is to maximize the two-life benefit. This strategy applies to retired married couples, and it involves delaying collection of the larger of the two peoples’ benefits longer. This is done until the target beneficiary reaches the age of 70. The lesser of the two benefits is later commenced when that person reaches retirement age, and this helps maximize Social Security payouts.

File And Suspend With this method, the spouse entitled to the greater benefit claims it. However, that person avoids drawing against the benefit. Couples who are financially able to wait to draw the benefit after the top wage earner reaches the age of 66 must allow the benefit to grow at an annual rate of eight percent. That money must remain untouched until the person turns 70. At that point, it is maximized. The spouse who earns less is able to collect 50 percent of the higher earner’s maximized benefit. In some cases, this is more than what the lower earner’s benefit would have originally been.

Restricted Application In some cases, the lower earning spouse may not benefit from the first option. If that individual would receive a more generous benefit than 50 percent of the higher earner’s benefit, he or she would file a restricted application. This type of application lets the lower earner claim a spousal benefit, but it also lets that individual’s benefit grow until the higher earner turns 70. At that point, both individuals can collect their maximum benefits.

Important Considerations Experts also pointed out several other important considerations connected to these strategies. Many advisers think about crossover points with Social Security payouts. However, those crossover points are not relevant for married couples, because the adviser’s goal is not to target the crossover point but the two-life benefit instead. Since a surviving spouse receives a larger benefit and the odds are likely that one will outlive the other, targeting this benefit is key. For people who are single, crossover points are more important to consider. A single person could start collecting early and receive a smaller benefit, or he could wait until later and still receive the same amount. Regardless of the age the person lives to be, he or she will still receive the same benefit.

Eliminating Investing Payout Strategy When individuals expect to pass away at an earlier age, it is more sensible to start collecting benefits early. In addition to this, people who expect to outlive the average mortality point should delay claiming benefits until they reach the age of 70. In the past, it was possible to collect Social Security benefits, use the payout to invest and then pay the Social Security Administration back later. After doing this, a person could start over at a higher rate. However, there are now time frames for paying back benefits received during the span of one year, so that put an end to that type of strategy.

To learn more about options and what choice is best for individual circumstances, call ACBI at 203-259-7580 or visit our website.


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