Why Couples Should Think Carefully Before the Higher Earner Claims Social Security Early

Barron’s recently explored two Social Security claiming strategies that can help workers start benefits as early as 62 and not undermine the income they will need, a potentially helpful approach during the pandemic. Readers followed with a number of questions about taking Social Security before reaching full retirement age or later. Here is a look at one common pitfall when one spouse claims early.

I know it’s not a good idea to start Social Security early at 62, but I’m thinking of doing it anyway because my husband is 78 and I’m not making much on my job. But I’m also worried about what this will do to me after he dies. If I start Social Security soon I’ll get only $720 a month. My husband started Social Security at 66 and now gets $1,800 a month. What will happen to me as a widow?

Many are shocked to find out that their Social Security income plunges after a spouse dies. So you are wise to be thinking about the impact now, although the best time is before either spouse starts Social Security.

Retirees often don’t realize that when a spouse dies, the government stops sending two monthly Social Security checks. Then, the surviving spouse gets only the largest of the two before the death. So for a simplified example, if your checks never changed and you were getting a $720 check every month, and your husband was getting $1,800, your $720 monthly checks would stop after he dies. Suddenly, instead of having $2,520 a month to live on, you would have only $1,800 as a surviving spouse.

Of course, Social Security benefits do climb over time with inflation. So, to play out the impact using your example and an annual cost of living adjustment of 2%: If your husband dies 10 years from now, you will end up with about $29,800 for the year with his single benefit, rather than the $43,700 from the two checks you received as a couple the previous year, says Elaine Floyd, who trains financial advisors in Social Security strategies through the Horsesmouth education firm.

Adjusting to a roughly $14,000 drop in income likely requires more than a little belt-tightening. It illustrates why financial advisors try to talk the highest-paid spouse in couples to delay starting Social Security at least until full retirement age—currently about 66½ and rising to 67 for anyone born in or after 1960. (Find your full retirement age at the Social Security Administration website.)

When people start Social Security at 62, they lock in a 25% pay cut compared to what they would get if they waited to start at full retirement age close to age 67. If they wait until 70, they maximize their Social Security income for life—giving themselves about 30% more a month than if they started with full benefits at around age 67. And the crucial point for couples is that the boost in Social Security will get passed on to a surviving spouse living on one Social Security check a month.

Because there is nothing you can do at this point to change the impact of your husband’s claiming strategy and based on the age and income differences between you and your husband, there would be no reason for you to delay Social Security past 62, Floyd says.