These are worthy strategies for maximizing government retirement income for married couples — even ones headed for divorce.

DELAY FILING

Follow the golden rule for Social Security planning: Delay filing for benefits. This helps protect against one of the greatest risks to retirement income — living longer than anticipated.

Longevity risk has become a major concern for planners as life expectancies continue to rise. Consider a married couple where both spouses are 65. There is now a 50% chance one will live till 92, and a 25% chance one will make it to 97.

(Bloomberg News)
One important goal of retirement planning is to maximize income for the surviving spouse. (Image: Bloomberg News)

Historically low interest rates make delaying a better deal than ever. With 10-year Treasuries paying barely over 1%, the guaranteed 8% increase for each year delayed in monthly Social Security payments for life is hard to beat.

COUPLES’ STRATEGIES

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With 10-year Treasuries paying barely over 1%, the guaranteed 8% increase for each year delayed in monthly Social Security payments for life is hard to beat.

Last year, Congress did away with the popular file and suspend strategy. However, other features that benefit married couples remain a pillar of Social Security.

The most basic is the spousal benefit. It provides 50% of the worker’s benefit to the spouse, who is at least 66 years old, even if that spouse never had a single day of Social Security-eligible earnings.

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The Most Useful — and Neglected — Social Security Planning Strategies
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The restricted filing strategy remains available for anyone born before Jan. 1, 1954. This approach works best when each spouse has a significant work history. Restricted filing allows a person at least 66 years old to claim spousal benefits while simultaneously allowing benefits based on his or her own work history to continue to accrue delayed retirement credits until age 70. At that point, he or she switches to his or her own, higher, benefit.

PLAN FOR SURVIVING SPOUSE

One important goal of retirement planning is to maximize income for the surviving spouse. When one spouse dies, household income can immediately drop significantly, while there may only be a modest decrease in expenses.

The survivor benefits provide the surviving spouse with the higher of either their own benefit, or 100% of their deceased spouse’s benefit. Best planning typically entails delaying filing for benefits of the highest wage earner as long as possible until age 70.

REMEMBER THE EX

If a client is divorced from a marriage of at least 10 years and not remarried, he or she is eligible to claim spousal or even survivor benefits based on the work history of the ex-spouse.

The ex-spouse need not even have filed for benefits, and it is not necessary to notify the ex-spouse. Surprisingly, if your client remarries after his or her 60th birthday, he or she can still collect survivor benefits based on the ex-spouse.

Paul Norr

Paul Norr

Paul Norr is a certified financial planner with Bucks County Financial Planning Group in Thousand Oaks, Calif.