Social Security Claiming: The Case of the High-Earning Husband

This is the second in a series of biweekly articles featuring Social Security claiming case studies drawn from the ALM publication "2024 Social Security & Medicare Facts," by Michael Thomas with support from Jim Blair, a former Social Security administrator, and Marc Kiner, a planning expert with extensive experience in public accounting.

The Scenario: Married, With Very Different Work Histories

Bruce and Debbie have no ex-spouses they are eligible to draw benefits from since they are married. They have no children eligible for benefits on their earnings record.

Bruce is a high earner, and Debbie did not earn enough credits to be eligible for Social Security benefits from her own work record.

Both spouses have a full retirement age of 67, but given the particulars of their situation, Debbie cannot begin benefits until Bruce files his own application. Notably, if Bruce takes benefits before his full retirement age, he will not only reduce his own benefit but also the widow's benefit payable to Debbie if she survives him.

The importance of that benefit will have a lot to do with the decision Bruce makes when determining his filing date for Social Security, the authors explain.

Finally, Bruce has an actuarially expected death age of 85, while Debbie is expected to die at age 87.

What the Numbers Say

Under this set of conditions, Bruce has a full retirement age of 67 and a full monthly retirement age benefit of $2,302. Debbie also has a full retirement age of 67 — given they were both born in 1962 — but her own personal work benefit is $0.

According to the authors, the least effective strategy would be for Bruce to file early in December 2024 (when he turns 62) for his own worker benefit, which would tally $1,620. This is about 70% of his full retirement benefit. Debbie would file for spousal benefits at the same time, generating an additional $800, or about 70% of her full spousal benefit. She would then presumably get a survivor benefit of $1,620 for two years following her husband's death.

Under this claiming approach, Bruce would collect a total lifetime benefit of $447,120, while Debbie would collect $248,340, for a total of $695,460.

A more effective strategy: Bruce files in December 2024 for his reduced worker benefit of $1,620. However, Debbie waits to file for her full spousal benefit until age 67 in January 2028, at which time she would get monthly payments of $1,151. She would then once again be entitled to two years of survivor benefits of $1,620.

Under this claiming scenario, Bruce would collect a lifetime benefit of $447,120, while Debbie would collect $288,817, making for a total of $735,937 — or about $40,000 more than the first strategy.

A similar jump in benefits would come if Bruce and Debbie could rely on outside funds early in retirement and delay claiming. Specifically, if Bruce waits until late 2032 to file for his maximum benefit at age 70, he would get a monthly payment of $2,854. Debbie could then file at the same time for her full spousal benefit of $1,151, and she would become entitled to a $2,854 survivor benefit for two years.

With this approach, the couple would generated a collective lifetime total benefit of $773,423, with $516,574 paid to Bruce and $256,849 paid to Debbie — another increase of about $40,000 in total lifetime benefits.

According to the authors, the optimum claiming strategy would add a projected $15,000 to that total, and the difference in the approach may be surprising given the general advice that delaying benefits is always a superior strategy.

Specifically, Bruce should file at age 67 in late 2029 for his full worker benefit of $2,302. Debbie could file at the same time for her full spousal benefit of $1,151, and she would eventually become eligible for a survivor benefit of $2,302.

This approach would result in $788,435 in total lifetime benefits going to the couple, with $499,534 paid to Bruce and $288,901 going to Debbie.

Credit: Adobe Stock

Read our previous case study: When Should This Divorced Widow Claim Social Security?

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