When Husband and Wife Receive Social Secuirty: Coordinating Benefits

You know that there are quite a few components to keep in mind as you and your spouse plan for your Social Security retirement benefits. It can be quite a challenge to work through all of them on your own. I recently ran across some old notes that I had from a seminar I attended that included a guideline that you might find helpful as you plan. The point of this rule of thumb is to attain the highest benefit for the longest surviving spouse.
The Spousal Coordination Rule of Thumb

First of all, we have to make some assumptions: we assume that the spouses are the same age (within a year); we’re using the rate of inflation as the rate to discount future money to present value; we assume that any money received in Social Security benefits is offset by not taking that same amount from your savings; in order for the rule to work, your savings must earn at least 1% more than the rate of inflation; and lastly, we are not making a “guesstimate” of the date of death for either spouse.

So here’s how it goes: if the lower Primary Insurance Amount (PIA) is greater than 1/3 of the higher PIA, then the lower earner should take benefits on his or her own record at age 62. Then the higher earner takes advantage of the Spousal Benefit upon reaching Full Retirement Age (FRA). Finally, the higher earner takes his or her own benefit at age 70, maximizing his or her lifetime benefit (and his or her spouse’s Survivor Benefit). If appropriate, that is to say, if the amount of the lower earner’s benefit is less than 50% of the higher earner’s benefit upon taking it at age 70, the lower earner should also take the Spousal Benefit at that time.

On the other hand, if the lower PIA is less than 1/3 of the higher PIA, once again the lower earner begins taking his or her own benefit at age 62, as soon as eligible. The higher earner files and suspends at FRA, providing a base for the lower earner to begin taking the Spousal Benefit at that time. And finally, the higher earner takes his or her own benefit at age 70, again maximizing the lifetime and Survivor’s benefits.

I won’t go into the details of all the specific calculations required for these two tactics to work their magic – because as with all rules of thumb there are bound to be specific differences in your own situation that will impact the outcome. Use these rules as a guide to help you think about the options, but put a pencil to the actual figures for your situation and make sure that they make sense for you. And if you need help – well, you know where to find me, right?

About the author

Jim Blankenship, CFP®, EA

Jim Blankenship is the founder and principal of Blankenship Financial Planning, Ltd., a financial planning firm providing hourly, as-needed financial planning and advice. A financial services professional for over 25 years, Jim is a CFP professional and has earned the Enrolled Agent designation, a designation that qualifies him as enrolled to practice before the IRS. Jim is also a NAPFA-registered financial advisor, which designates him as a Fee-Only Financial Advisor.

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4 Comments

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  • Hello, Marty –

    I don’t know of any reason why you would not be able to receive Social Security Disability payments at the same time. In fact, your wife’s benefit is now (after she reached her FRA), considered to be a retirement benefit, so only one of you would be receiving Social Security Disability at one time anyhow.

    The Social Security Administration’s website is a good source for calculators to help you understand what your benefits might be. Or you could call or visit your local SSA office.

    Hope this helps –

    jb

  • Hi Jim,

    I am a 61 y. old male who has had epileptic seizures since 2002.
    They are occurring during the day now when I am standing up (this past year) so I applied for social security disability.

    My wife is 70, retired at 62 and is disabled, on oxygen 24 hrs a day, does breathing exercises with a machine and takes 8 drugs just to breath. She did not file for disability.

    She gets $545. p. mo. SSI now. I would get about $1,786. (disability)

    Can we both get disability at the same time?

    I have 30 years ‘substantial earnings’. I have been an on-site construction superintendent during this time. I can no longer safely go on a job site, drive, use dangerous equipment, etc. And my memory is starting to go.

    How can I calculate what my wife and I would make together with just social security disability?

    Any help would be great.

    Thanks Marty

  • Hello, Jim (some will accuse me of having a conversation with myself!).

    Survivor’s Benefits will be available to your wife upon her reaching age 60 – at a reduced rate. And since your wife is disabled, she could actually begin receiving Survivor’s Benefits at any time after age 50 (with reductions, of course), upon your passing.

    Spousal Benefits would be available to her at age 62, also at a reduction from the 50% that she could receive upon her Full Retirement Age.

    I don’t believe the Disability Benefit has an impact on her ability to receive either of these benefits based upon your record.

    Hope this helps!

    jb

  • Hi Jim

    My wife (age 57)is on SSI disability, she gets about $260.00 a month, she was a house wife most of her life.

    I get SS now,$1,300.00 a month, When she get to 62 can she get the Survivor’s benefits on my SS, or is she stuck with her Disability rate?

    JIM

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