Social Security Claiming Strategies


Social Security is based on an individual’s lifetime earnings, using the highest 35 years of earnings. These earnings are used to calculate the Primary Insurance Amount (PIA), which is the amount paid to an individual at Full Retirement Age (FRA). An individual’s FRA is determined by their year of birth.  Individuals can claim a reduced amount as soon as age 62, or they can delay their claim up to age 70.  There is a guaranteed 8% annual increase with the PIA each year delayed after FRA up to age 70. The following explores the various Social Security claiming strategies available to retirees and will provide insights into optimizing these strategies to enhance overall retirement planning.

Spousal Benefits for Married Couples

Married couples have the ability of when to claim additional spousal benefits. Spousal benefits are available to the lower income spouse. A spousal benefit can be a maximum of 50% of the primary worker’s PIA if the spouse claims this benefit at FRA and can go as low as 32.5% if the spouse claims this benefit at age 62. The following are examples of when to claim spousal benefits.

Lower-Earning Spouse’s PIA is less than 50% of Higher-Earning Spouse’s PIA

  • Lower-earning spouse claims their PIA as early as possible.
  • Higher-earning spouse claims at 70.
  •  Once the higher-earning spouse claims at 70, the lower-earning spouse claims the additional spousal benefit.
  • This strategy generates income sooner while maximizing the higher-earning spouse’s benefit over both lifetimes.

Lower-Earning Spouse’s PIA is more than 50% of Higher-Earning Spouse’s PIA

  • Both spouses delay claiming Social Security to age 70.
  • This strategy will maximize lifetime benefits over average or long-term life expectancies.

Divorced Spouse Benefits

Divorced spouses face a unique set of rules when claiming Social Security. The following highlights the rules:

  • The marriage lasted 10 years or more.
  • The person receiving the divorced spouse benefit is currently unmarried.
  • The ex-spouse is at least age 62.
  • If the divorce was more than two years ago, the ex-spouse does not need to have filed for benefits.
  • Divorced spouse benefits can be anonymous.

Survivor Benefits

Social Security Survivor benefits are paid to widows, widowers, and dependents of eligible workers. The following is a summary of just the widow(er) benefits.

Older Widow(er)

If a spouse dies while both are receiving benefits, the widow(er) may switch to the higher benefit. If the widow(er)’s benefit is higher they will keep that benefit. If not, they will switch to the higher survivor benefit, which will generally be equal to the decedent’s benefit at the time of death. It’s important to note that the widow(er) will only be receiving one benefit, the higher of their own benefit or the survivor benefit.

Younger Widow(er)

If a spouse dies at a young age, the widow(er) will be eligible to claim a survivor benefit as early as age 60. At the time of the decedent’s death, the Social Security Administration will calculate a “death PIA” which is approximately equal to the decedent’s PIA. This would be the amount the decedent’s retirement benefit would have been had they lived and worked to full retirement age. If claimed at age 60, the widow(er) will receive 71.5% of the deceased worker’s “death PIA”.

Earnings Limit Rule

There is a limit to how much an individual can earn and still receive Social Security benefits. This limit is applied to all Social Security benefits, including Survivor benefits. This limit gets adjusted every year. In 2023, the earnings limit is $21,240 per year if the individual is under their full retirement age for the entire year.  Social Security will be reduced by $1 for every $2 earned over this limit. In the year the individual reaches full retirement age, the earnings limit increases to $56,520 and Social Security benefits will be reduced by $1 for every $3 earned over this limit. Once an individual reaches their full retirement age there is no earnings limitation. Only gross employment wages and net income from self-employment are considered earnings. There is a special earnings limit rule for individuals who file for benefits mid-year and have already earned more than the annual earnings limit amount. This rule will allow for the payment of a full Social Security check for any whole month the Social Security Administration considers the individual as retired. With the special rule, if an individual is under full retirement age for the entire year, they are considered retired in any month their earnings are $1,770 or less and the individual did not perform substantial services in self-employment. In the year the individual will reach full retirement age, they are considered retired in any month their earnings are $4,710 or less and they did not perform substantial services in self-employment. Once the next year starts, the deductions are based solely on the annual earnings limit.

Social Security claiming strategies can be complex. Schedule a meeting with your MAI Wealth Advisor to discuss the best strategies that will benefit you.

Information updated as of Friday, July 28, 2023.

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