This story was orignally published on Sept. 26, 2013. It is part of 12 Days of Wealth Management: The Year in Review.

The number one Social Security strategy is maximizing the two-life benefit, says Bob Stowe of Stowe Financial Planning.

The approach, which is applicable to a married retired couple, is to delay collecting on the greater of the couple’s two benefits the longest—until the beneficiary reaches age 70, if possible. The couple should commence the second, or lesser, of the two benefits when the beneficiary reaches full retirement age to maximize the payout, says Stowe, a fee-only financial planner, based in Plano, Texas.


There are two ways this can be done, he says. The first is called file and suspend, where the spouse with the greater benefit claims it, but doesn’t draw against it. A couple that can afford to wait would do this when the top earner reaches age 66, but would then allow the benefit to grow at 8% a year, untouched, until it tops out when the recipient reaches age 70. The advantage is that once the high earner’s benefit is claimed, the lower-earning spouse can now collect a spousal benefit of 50% of the top earner’s benefit, which could be more than the lesser-earner’s own benefit.


However, Stowe says, if the second spouse was also a worker and is entitled to a more generous benefit, then he or she would file a restricted application. This would let the second spouse receive the spousal benefit, while allowing his or her own benefit to continue to grow until the second spouse reaches age 70, at which point both spouses can begin collecting the maximum benefit.

In elaborating on this strategy, Stowe makes several other important points:

  • With Social Security payouts, some advisors think in terms of the crossover point. But when the client is a couple, he says, the crossover point doesn’t really matter, since the goal is to maximize the two-life benefit—not the crossover point. Because the odds favor one spouse outliving the other, and since the surviving spouse gets the larger of the two benefits—that’s the one you want to maximize, he says.
  • For a single client, the crossover point could matter. If the client lives to the average age of mortality, then whether the client starts collecting early and receives a smaller benefit for a greater number of years, or starts collecting later and receives a smaller benefit for a fewer number of years, the client will receive the same total dollars either way and it’s a wash.


But if the client expects to die early, then it makes sense to begin collecting early. Likewise, a client who anticipates living longer than average should delay collecting until age 70.

  • It used to be possible to begin collecting Social Security benefits, invest the payout, and then pay it back to the Social Security Administration at a later date and start over again at a higher rate. But SSA now limits the timeframe for paying back any benefits that were received to within one year of receiving them, effectively eliminating this strategy.
  • The people who work at the SSA “are really very helpful,” Stowe says, “and it’s very worthwhile for your clients to have a discussion with them,” before starting to collect.

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