Remember my theory that everything is connected? Well here is a good example and also a good example of the complexity of claiming Social Security benefits. Did you know there are over 500 ways to claim benefits?
In a case study, Financial Engines examined how much in additional benefits one same-sex couple would be eligible for. Of course, this same rather complex scenario also applies to a husband and wife.
In one scenario, Financial Engines profiles a fictitious couple — Henry, age 64, (current salary $80,000), and Logan, age 62 (who has had a lower-paying job interrupted by taking several years off). If Henry dies at 84 and Logan dies at 90 they would receive total Social Security benefits of $797,280 as two single people if they start collecting benefits at ages 64 and 62.
But if Henry and Logan claim Social Security as a married couple, their lifetime benefits would grow to $938,112, an increase of $140,832. That’s because Logan can now receive spousal and survivor benefits based on Henry’s higher earnings history.
And if Henry and Logan optimize when they claim Social Security they would get more than $1.1 million, some $202,176 more than if they claimed at ages 64 and 62.
How would they do that? With the “file-and-suspend” claiming strategy. According to Jones, Henry, at age 68, would file for earned benefits and immediately suspend — not take — them. That would let Logan receive spousal benefits while Henry’s earned benefits continue to grow. At 66, Logan files for spousal benefits, but also files a restricted application to exclude earned benefits. At 70, Henry starts collecting earned benefits. And at 70, Logan switches to earned benefits.
So given all that, what advice do experts have for same-sex couples?
Before you apply for Social Security same-sex or not, it pays to learn about the options available and the best plan to maximize your family benefits.
Categories: Social Security