Avoid the Pitfalls of Social Security Spousal Benefits

Learn what you need to know to avoid the pitfalls of spousal benefits.
Today, we are going to be talking about why taking a spousal benefit could actually have a detrimental impact to your lifelong social security income. The easiest way to explain this, I think is actually by way of an example. Let's imagine we have a husband and wife both are age 62. The husband was the higher wage earner and the lady of the house actually didn't earn enough credits to get a social security benefit based on her own earnings record. However, she is due a spousal benefit at some point.
One of the rules about spousal benefits is, in order for the lady of the house in this case to take the spousal benefit, her husband must be taking his benefit. Let's imagine they get together over dinner and decide that they want to start taking some social security income. So, what they decided to do is to both take their benefits at age 62. Now they have two checks coming in. She's receiving her spousal benefit, he's redeemed receiving his reduced benefit; and it's reduced because he took it early at 62, as opposed to waiting. And now they both have two checks coming in.
Let's also imagine that five years down the road, he passes away. So, what's the basic rule on spousal benefits is if you have two social security checks coming into the household, hers is lower, his is bigger. When one person dies and it doesn't matter who the lower check disappears and the higher one remains in this case, that higher check is actually a reduced age 62 benefit. So that means the survivor benefit for her is going to be a smaller check than if he would not have taken his benefit at age 62 and had instead delayed and earned additional credits and increase his social security benefit.
So, what we can see here is you really have to think through more than just one piece of the pie. You really need to do some contingency planning and “what if” scenarios.
What if one of us dies early? Will the other one be okay with that reduced single social security check? What if we both live a long time? Well, maybe it would make sense to delay our social security and get a bigger check and get more money from the administration over the lifetime of social security. That's not to say that there aren't times when taking social security at age 62 could make sense. What it means is your situation is unique, you have many variables that are specific to you and you alone and make sure you understand the contingency plans.
So, I hope you like what you heard today and that it made sense to you. Please subscribe to our channel, please like our page and you'll stay updated. And we'll, you'll be able to watch a multitude of videos, really short two to five-minute videos that cover a vast array of retirement topics that are important to you. So, thanks for joining us today, and you have a great day
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[@mariofiallos6880]

Thank you very much to Bowman financial advisor.

[@tonymanero5544]

Almost every expert don’t ask this question: while you are deferring to FRA or age 70, instead of drawing at 62 or FRA, are you drawing other funds to live ? Almost every expert assumes that while you defer SS benefits, you won’t need the money. If you can afford to live on salary of other annuity income, of course, defer to age 70, but it’s not to good idea to defer SS if you have to withdraw from DB assets such as 401k, IRA, etc. The use of other assets is generally worse than the alternative of deferring SS.

[@ralphparker]

There are some good cases made for drawing down retirement accounts that have RMDs either consumption or conversion to Roth (tax free) and delaying SS till the tax consequences are minimized. This assumes you have enough in IRAs to be an issue.

[@youngtimer964]

This example is flawed. Her benefit cannot be 1025/mo. It would be reduced much further than that since she is not anywhere near FRA.

[@ralphparker]

For a FRA of 67 (mine), my benefit at 62 is 70% of my FRA, spousal benefit is 32.5% of my FRA benefit. So for my wife, it would be more like $986. Devin Carroll on UA-cam is good about covering social security benefits and related material.

[@tracisanders3445]

True it’s a reduced benefit, however, she was able to enjoy her hubby, and he was able to enjoy 5 years of not working, and collecting SS at a reduced amount that he worked for! Collect the SS and don’t live off of your 401k etc. Financial companies and the govt never want anyone to retire early, that costs them both money made off of your money. Retire early if you can!