Maximize Social Security Income
One of your baby boomer clients' top concerns is outliving their retirement savings.
The decision about when to collect Social Security retirement benefits is a key
factor in creating a successful retirement strategy.
For married couples, the decision of when to collect Social Security (SS) is more than just a question of longevity. Clients may be able to switch between different types of benefits throughout their lifetime in order to maximize their SS income. Although each client's situation is unique, most would benefit from adopting one of the four simple strategies below. These strategies aim to maximize lifetime benefits for married couples and work best for couples that are close in age. Use BlackRock's patent-pending Social Security Benefits Estimator to illustrate these strategies for your clients
Please Note: All timelines are for illustrative purposes only. The timelines assume a full retirement age (FRA) of 66 for both spouses.
Married Couple - Large Difference in Benefits
This combination frequently occurs when one spouse earned significantly lower amounts and/or exited the workforce for a period of time. It seeks to maximize survivor benefits while providing income to the couple early on.
- Lower Earner files for and collects reduced individual benefits at age 62 (75% of PIA).
- Lower Earner files for unreduced adjusted spousal benefits at FRA (equal to 50% of Higher Earner's PIA minus Lower Earner's PIA).
- Higher Earner files and suspends at the appropriate time, allowing Lower Earner to file for adjusted spousal benefits.
- Higher Earner collects increased individual benefits at age 70 (132% of PIA). These increased benefits would be passed onto the Lower Earner as survivor benefits if the Higher Earner passes first.
Married Couple - Small Difference in Benefits
This scenario is becoming more common as households split earning power more equally. It seeks to maximize survivor benefits and assumes that the couple will not need SS benefits early on.
- Lower Earner files for and collects "spouse only" benefits at FRA. This is possible even if the Lower Earner's PIA is greater than half of the High Earner's PIA.
- Higher Earner files and suspends at the appropriate time to allow Lower Earner to collect spousal benefits.
- Lower Earner files for and switches to increased individual benefits at age 70 (132% of PIA).
- Higher Earner collects increased individual benefits at age 70 (132% of PIA).
Married Couple - Small Difference in Benefits (Alternative)
- Higher Earner files for and collects "spouse only" benefits at FRA.
- Lower Earner files and suspends benefits at appropriate time to allow Higher Earner to collect spousal benefits.
- Higher Earner files for and switches to increased individual benefits at age 70 (132% of PIA).
- Lower Earner collects increased individual benefits at age 70 (132% of PIA).
Survivor benefits are unique from other retirement benefits because clients are able to take them as early as age 60. This allows clients to collect income from survivor benefits while allowing their individual benefits to grow.
- Surviving spouse collects reduced survivor benefits at age 60 (71.5% of deceased spouse's PIA).
- Surviving spouse switches to individual benefits at age 70 (132% of PIA).
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