How Couples Can Max Out Their Social Security Benefits


I hope you had a wonderful weekend. Today is National Vanilla Pudding Day! There had to be a day to mindlessly eat vanilla pudding and today is the day!

LRPC’s Monday Morning Minute for this week, “How Couples Can Max Out Their Social Security Benefits” (presented below) comes to you courtesy of Charles Schwab & Co. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share enlightening, useful information with you each week.

Bring yourself up-to-date on the recent changes in the law that relate to how couples may claim Social Security benefits. Learn how Schwab suggests couples maximize those benefits.

Have a wonderful week!


How Couples Can Max Out Their Social Security Benefits

By Carrie Schwab-Pomerantz, Charles Schwab & Co.

Key points

  • While new Social Security rules have eliminated some options for couples, there are still workable strategies to maximize benefits.
  • If you were born before January 1, 1954, you can still use the “restricted application” to file for a spousal benefit.
  • Other strategies for maximizing overall benefits, including spousal and survivor benefits, vary based on relative age and earning records but are worth exploring.

The 2015 Budget Act dramatically shifted the landscape for couples attempting to maximize their Social Security benefits. As you’ve discovered, just when many of us had our plans in place, we’ve been forced to reevaluate. Fortunately, there are some strategies that still work. But before I get into those, let’s review what’s changed.

No more ‘file and suspend’

First, the old ‘file and suspend’ strategy is no longer available to new filers. In the past, one spouse could file for benefits — which allowed the other spouse to file for a spousal benefit — then suspend their own benefit to let it grow. No more. Now when a person suspends their own benefit, they also suspend spousal benefits. This effectively prevents one spouse from collecting benefits on their husband’s or wife’s record while the other spouse holds off in order to accrue delayed retirement credits. It was great while it lasted.

Further restrictions on a ‘restricted application’

The second related, but different, change impacts what is known as a ‘restricted application.’ For many years, this provision allowed a married person to collect a benefit based on their spouse’s work record rather their own record as long as their spouse had already filed. In this way, at Full Retirement Age (66 for those born between 1943 and 1954), a spouse could file for a spousal benefit only (a restricted application) and then switch to their own increased benefit at a later date.

This possibility hasn’t been completely eliminated, but whether or not you can use it depends on your age. If you were born before January 1, 1954, you’re in luck. The provision is still available to you. Anyone younger isn’t eligible.

Couple strategies that still work

So where does this leave us with the new rules? Unfortunately, there’s no one-size-fits-all recommendation. Each couple’s financial situation, birth dates, relative ages, anticipated longevity, and earnings records factor in.

Because of this complexity, it generally makes sense to consult with an advisor who specializes in Social Security benefits before deciding. In the meantime, here are a few guidelines to consider:

  • A primary breadwinner should consider delaying filing to age 70. Assuming good health and the prospect of a long life, this makes sense for two reasons. First, it can eventually add up to a larger lifetime benefit. And second, it will mean an increased benefit for a surviving spouse.
  • It may make sense for the lower earning spouse to file for their own benefit at Full Retirement Age (FRA). The tactics will vary, however, depending on birthdate. Here are a couple of examples:

1. Let’s say, as the lower earner, you file for benefits at your FRA. Since your husband turned 62 before the end of 2015, at his FRA he could file a restricted application for spousal benefits. He could then switch to his own higher benefit at age 70. Plus, since you waited until FRA to file for your own benefit, your benefit could increase if the spousal benefit were higher than your own benefit.

2. If, on the other hand, your husband had not turned 62 by the end of 2015, and wasn’t eligible to file a restricted application, it would still likely make sense for you to wait until at least your FRA to file for your own benefit and your husband to wait until age 70 to file. Your benefit could still increase to a potentially higher spousal benefit of 50% of his FRA benefit.

3. Should your husband pre-decease you, you would receive a higher survivor benefit by his delaying to age 70 in either case.

  • If both partners have equivalent earnings records, it may make sense for both to delay filing until age 70. Provided that both anticipate a long life and can afford to postpone benefits, this would maximize both retirement benefits for themselves and survivor benefits for each other.
  • Married couples with a single income face a different set of issues. Although health and anticipated longevity certainly come into play, it often makes sense for the breadwinner to postpone benefits until age 70. While the couple will forego spousal benefits until the earner files, it will allow for the largest possible retirement and survivor benefits. Other couples, however, may want the earner to file once the spouse reaches FRA, which is when the spousal benefit maxes out (the spouse would need to be at their FRA to be eligible to claim the maximum spousal benefit). In this case, though, they are forfeiting the highest survivor benefit.

No easy answers

While the new law in some ways simplified things, it’s still a complex and important decision. So I can certainly appreciate that many people may take one look at all this and want to run for cover. But I strongly advise every person approaching retirement age to stop and carefully assess their Social Security choices. Timing is important and there are still strategies — especially for couples — that can result in a higher overall benefit. Sit down with your advisor to help you make the best decision based on your situation.


About LRPC’s Monday Morning Minute

Lawton Retirement Plan Consultants, LLC (LRPC) Monday Morning Minute is crafted to provide decision-makers with important information about the economy, investments and corporate retirement plans in a format that allows a reader to consume the information in less than 60 seconds. As an independent, objective investment adviser, LRPC has access to many sources of research and shares the best and most relevant information with its readers each week.

About Lawton Retirement Plan Consultants, LLC

Lawton Retirement Plan Consultants, LLC is a Milwaukee, Wisconsin-based independent, objective Registered Investment Adviser (RIA) providing investment advisory, fiduciary compliance, employee education, provider management and plan design services to retirement plan sponsors. The firm currently has contracts in place to provide consulting services on more than $400 million in plan assets. For more information, please contact Robert C. Lawton at (414) 828-4015 or or visit the firm’s website at Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser.

Important Disclosures

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance, tax, legal or investment advice. Each plan has unique requirements and you should consult your attorney or tax adviser for guidance on your specific situation. In no way does Lawton Retirement Plan Consultants, LLC assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations. Investors should carefully consider investment objectives, risks, charges and expenses. The statements in this publication are the opinions and beliefs of the commentator expressed when the commentary was made and are not intended to represent that person’s opinions and beliefs at any other time. The commentary does not necessarily reflect the opinion of Lawton Retirement Plan Consultants, LLC and should not be construed as recommendations or investment advice. Lawton Retirement Plan Consultants, LLC offers no tax, legal or accounting advice and any advice contained herein is not specific to any individual, entity or retirement plan, but rather general in nature and, therefore, should not be relied upon for specific investment situations. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser and accepts clients outside of Wisconsin based upon applicable state registration regulations and the “de minimus” exception.

Additional Important Disclosures

The information provided here is for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager. 

Social Security Changes Likely Soon


PSI Newsletter and Website Header 10.2.15

By Robert C. Lawton, AIF, CRPS, President, Lawton Retirement Plan Consultants, LLC

Are Social Security changes likely soon? I think so. Recently, six members of the House of Representatives, led by Representative Reid Ribble (R – WI), introduced the Save Our Social Security Act (also known as the S.O.S. Act). Key provisions of the Act, with my thoughts, are outlined below. Although the Act may not pass in the near future, it begins to set the template for Social Security changes which will be required to keep Social Security afloat. [Read more…]

The Future Of Social Security And You


MMM Newsletter and Website Header 10.2.15
I hope you had a great weekend. Welcome to March Madness!

LRPC’s Monday Morning Minute for this week, “The Future Of Social Security And You” (presented below) comes to you courtesy of Fidelity Investments. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. If you are short on time, make sure you review the major headings below.

Social Security is likely to be changed in the future as the federal government grapples with the likelihood that the trust fund will run out of money at some point in time. What are those changes likely to be? Read on below for Fidelity’s thoughts on what might happen.

Have a wonderful week!


The Future Of Social Security And You

 By Fidelity Investments

To sustain Social Security funding in the future, some changes may need to be made.

Social Security’s future

  • Payroll taxes are projected to be less than Social Security payouts.
  • Changes to full retirement age, payroll taxes, and cost-of-living adjustments have been proposed.
  • Depending on what happens with Social Security changes, you may need to retire later or rely more on your savings.

Social Security is a mainstay of many people’s retirement. It’s been around since the late 1930s, and currently provides benefits for almost 60 million Americans. But a changing workforce, fewer workers per retiree, and certain economic factors are putting pressure on the funding of Social Security benefits. To sustain the program, changes may need to be made.

Here are some of the current proposals that impact Social Security’s future and what they might mean for you. [Read more…]

Likely Social Security Changes


PSI Newsletter and Website Header 10.2.15
By Robert C. Lawton, AIF, CRPS, President, Lawton Retirement Plan Consultants, LLC

Recently, financial economist Larry Kotlikoff stated that in order to ensure the long-term solvency of Social Security, either “an immediate and permanent 32% hike in the Social Security payroll tax rate (from 12.4% to 16.4%, forever) is needed to pay existing benefits” or “an immediate and permanent 23% cut in all OASDI benefits” needs to occur.

I have had the pleasure of leading employee education meetings for more than 25 years. One concern that is always brought up during these sessions is Social Security: it seems that most people don’t believe that Social Security will be there when it is time for them to collect. Unfortunately, it is statements like the one Mr. Kotlikoff made that cause most people to worry about their Social Security retirement benefits.

For 25 years I have shared the same advice: “Don’t worry, you will be able to collect your Social Security benefit.” I would provide the same advice today, with one caveat. Social Security may look different than you imagine. Expect to see these changes in the coming years: [Read more…]