The Secrets to Maximizing Your Social Security as a Couple

Peter, very good to see you.

Welcome back, everybody. We have a juicy topic today, secrets of maximizing your social security as a couple. Social security claiming strategies for married couples can be more complex because you need to consider spousal benefits and survivor benefits.

So let's talk through some key questions, Peter. What is the most important consideration when deciding when to claim social security if I am married? Now keep in mind that the standard disclaimer language required whenever discussing social security as an outside entity that I, Peter Rashan, nor Rashan Planning are affiliated with nor endorsed by the Social Security Administration nor any other government agency, which is actually why we do give proactive guidance. They do not give that proactive guidance if you go down to the Social Security Administration office because they don't take the time to know the rest of your financial situation.

So they don't take on the liability of giving proactive advice or guidance. I think it's the stress that you will be placing on your personal assets through the claiming strategy that you implement. And there is a lot that goes into social security. You think just on whole year increments for one single individual, there are nine different choices to claim from 62 to 70. Well, if there's a couple, and again, only whole year increments without any of those advanced strategies, that's 81 different potential combinations. And then you add onto that the potential for spousal benefits and the considerations for survivor benefits. And there are really countless different scenarios for social security.

And most people don't think them through. They just go in, and it's time for me to start collecting. I'm of the age. I'm entitled to it. I'm 62, 65. This is the time that I envisioned retiring. I am full retirement age. And then they begin collecting without really thinking through the full ramifications of how that is going to impact their personal assets. And remember, with social security, it is a guaranteed lifetime stream of income, which is the benefit.

But you can't reach in and pull out extra if you have unexpected expenses or something that you want to purchase. And if you pass away early, the rest of your social security benefit doesn't pass generationally. So you've got to consider that those jobs, those things are what your personal wealth will do, your personal assets.

And therefore, we want to try to use social security to keep that security for our personal wealth and assets as much as possible. What's the most common mistake you see then when married couples are claiming social security? Not having a plan in place for it, not really thinking through the scenarios, not running the calculators. There's some great software out there that can really run these different scenarios and show you what the outcome will be, show you when those lines converge and the age when you will break even will be. But most of the tools and calculators that are available online only look at social security. They put it in a vacuum by itself, like a science experiment.

It's the only variable that exists in this experiment. And that's not the reality. Social security needs to be incorporated as part of your plan and include the personal assets. Because let's say that break even point was at like 79 or 80 years old, but entailed waiting and delaying, claiming and collecting. Well, if you're pulling down on your personal assets over that time, what if you didn't? And what would the return on those otherwise spent personal assets be?

That may push that break even point out several more years. And by the way, they do not take these things into effect or into account nor give advice or guidance when you go to the social security claiming office or file online. They take your order the day that you show up. They don't tell you if it is the best day to show up because they don't know the rest of your financial situation and they don't take on that liability. So what if one spouse is working and the other is retired?

How does that change the calculation? Or what if you're both retired? Yeah, well, I mean, again, it's very situational here. And if one spouse is retired, that may open the door to the possibility of claiming and collecting a little earlier, because the penalty for working and collecting social security before full retirement age is based on an individual, not a married couples situation. So we all have a full retirement age, right? It is these days it's more often than not 67 years old. It used to be 65. They moved it up and Nikki Haley made some very unpopular comments about moving it up even further.

But anyway, today, mostly it is about 67. If you are capable and able bodied and out there working and earning an income and claim and collect social security before that full retirement age, the government views you as double dipping and they will penalize you for earning before that age. Well, if one spouse is still earning, they don't collect their own benefit, but the other spouse being retired or a homemaker, maybe they do collect their benefit because they are not earning an income and wouldn't be subject to the, to that additional penalty. Hmm. All right. So I would like you to explain spousal benefits because you can claim spousal benefits and then switch my own later.

So what do I need to know about that strategy? That when you are doing that, when you are pointing at your spouse, that spouse needs to be claiming and collecting themselves, right? It used to be, they passed the bipartisan budget act back in 2015 and it used to be that one spouse could file and suspend and almost just kind of create the marker, but a false, a false claim. And then the other spouse could point to them and say, well, I want some of their benefits. And they did away with that.

They called it an unintended loophole that they closed in 2015. So now if you are going to point at your spouse and say, I would like to, to claim a spousal benefit, they themselves do need to be collecting. Also, you know, the social security system was intended to prevent poverty in the senior population and, and for disabled as well.

And in that vein, they, they did put in a caveat to protect homemakers, right? Cause what happens if two, two individuals are married for their whole life, one's the wage earner, one's raising the kids at home. And then suddenly at, at 62, the, the main wage earner decides to get a divorce that should not leave the homemaker penniless, right? So there's always been a place where a person can file off of the higher income spouse and that is the spousal benefit. But if you claim that spousal benefit again, before your own full retirement age, there is a reduction. The spousal benefit is typically thought of as half of the higher income earners, but that's only half. If you wait till full retirement age, if you yourself claim that benefit and start collecting your spousal benefit before your own full retirement age, then it is further reduced from that half. And by the way, social security is a pretty permanent kind of decision. You know, a lot of us don't have the forethought to think through financial decisions through the end of the month or the end of the year.

This is one that you are making and then it is going to impact you for the rest of your life. So think it through very carefully, but it can be a good strategy to maybe claim that spousal benefit while your own continues to grow and defer. And then this is kind of the one opportunity to two years later, have a little bit of a redo because you can then switch over to your own benefit if it has grown higher than that spousal benefit. And explain survivor benefits and how that should be part of my calculation.

It absolutely has to be. And again, this is one of those kind of shortsighted things. Unfortunately, I think this is one of the most important factors when making the decision on your social security because one person only receives one social security check. So if you have a situation of a married couple and one passes away, a social security benefit is going to disappear with them. And in an ideal kind of optimal social security situation, we've had two high wage earners and they are both collecting a maximum benefit during their joint mutual lives. That means the survivor is going to have a 50%, as much as a 50% reduction in social security income when the first spouse passes away. And even for that homemaker situation where they're claiming the half spousal benefit, it's as little as a one third reduction as much as a 50% reduction in social security for that survivor, which also means this again needs to be incorporated into your larger financial picture because there better be some assets there to replace and replenish that lost income because that surviving spouse may have years of healthy life thereafter that they're going to have to continue to fund and support. And we don't want a huge drop in lifestyle, quality of life and standard of living. And by the way, when one spouse passes away, expenses do not get cut in half.

Not very often. Maybe there's a slight reduction in a few things, but oftentimes I don't even find that it's a super significant reduction in total expenses. And it's quite a shock to the system when you lose a spouse, you haven't thought this one through, weren't aware that you would also be losing some social security. And by the way, at the same time, bumping up in tax brackets because you go from married filing jointly to single head of household. So all of these things kind of come into play in a well thought through and optimized social security strategy, which is a big part of the income side of the planning process for retirement. Clearly, so much more than an equation. It has to be a conversation with a professional. So Peter, if somebody would like to talk this through with you, I'm getting so many permutations. It's kind of mind boggling.

How can they get all to you? Yeah, give me a call. We can walk it through.

And I can't tell anybody the absolute best day because we don't know how long we're going to live or what the conditions of life are going to be. But we can give some really educated information to try to optimize the decision on Social Security and use it as a tool to protect our personal assets as much as possible. And I think that should be the goal of a well thought through Social Security strategy. So if you'd like to talk it over and incorporate it into your plan, give me a call.

It is part of our optimized retirement plan that we offer with no cost, no obligation is the Social Security component of the income element of that nine one nine three zero zero five eight eight six is the number to call nine one nine three zero zero five eight eight six. You can also go online. Rich on planning dot com is what it looks like.

It's my last name, Rashawn, but it looks like rich on planning dot com. So give me a call. Go online.

You can get in touch that way. And this is a very, very important element of a well thought through and confident plan for retirement. And you're stuck with it. So make it the right one. Peter, thank you so much for your time today.

Only one chance at an ideal retirement and Social Security is a big part of that. Peter, thank you. Indeed. Thank you.

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