Maximizing Social Security Retirement Benefits for Married Baby Boomers – Part 1 of 4

As we all know and statistics confirm, the American population is aging, people in general are living longer than past generations did, and in many cases women outlive men. For these reasons, it is important for people in their sixties to make the best choices in how they elect to claim their Social Security retirement benefits. For some people – particularly for those with diseases that make a relatively early death likely – election to start receiving their Social Security retirement benefits as early as possible may be the best choice. However, for many, starting to receive their Social Security retirements later can result in a large increase in the total amount of benefits received over the rest of their lives. What most of us are unaware of is that married people have the option to receive Social Security benefits under their own work record, their spouse’s work record, or in some circumstances, both their own and their spouse’s work record. If the choices made are not optimal, the result can be less than maximum monthly benefits for two, three or even four decades – a very long time.

The members of the baby boom population (defined as those born between 1946-1964) born in 1946 are now 65 years old or have recently turned 66 years old. For the next 17 years, an average of more than 10,000 boomers per month will turn 65. This huge population of people needs to make decisions about when to start receiving their Social Security retirement benefits. Some have already elected to start receiving benefits as early as age 62.

The annual statement entitled “Your Social Security Statement” was mailed to taxpayers automatically for the past several years. The Social Security Administration stopped sending this statement automatically in 2011 due to budget constraints, but announced in February 2012 that it would begin sending the statements again to workers age 60 or older who are not yet receiving benefits.

The 2011 annual statement listed data for the worker’s benefits upon retirement or disability, and projected benefit data for the worker’s survivors. The 2011 statement also contained the following one-line comment in a list of potential benefits: “*Family – If you get retirement or disability benefits, your spouse or children may also qualify for benefits.” This line did not provide any data. The last page of the 2011 statement amplified this point as follows: “Family – If you’re eligible for disability or retirement benefits, your current or divorced spouse, minor children or adult children disabled before age 22 also may receive benefits. Each may qualify for up to about 50 percent of your benefit amount.” Despite this information, most people are completely unaware that this benefit exists, that they need to elect it in order to get it, and that it can make a huge difference in their benefits received over the rest of their lives.

The choices people in their 60s face are comparable to a three-legged stool. The legs are mortality, election, and taxation, and ignoring any leg will make the stool fall over. Each “leg” is discussed in subsequent posts on this topic, beginning with mortality in Part 2.