It is not very uncommon to end up in a marriage where there is a significant age difference between you and your spouse. And that age difference may not be the big problem – at least not before retirement approaches.
But as retirement approaches, you will be faced with some serious decisions, such as when to start drawing from your nest egg and when to sign up. Social Security. And for the latter, you really need to keep that age difference in mind.
Will your spouse end up counting on survivor benefits?
One of the good things about social security is that it covers not only workers who are entitled to benefits, but also their family members. If you die before your spouse, your partner will be entitled to survivors’ benefits from social security. And the amount your spouse collects each month in that scenario will be equal to the amount you received while you were living (provided they wait long enough to claim benefits).
This is why it is so important to apply for social security strategically if you have a much younger spouse. You are entitled to your full monthly benefit based on your salary history when you reach full retirement age, or OFF. FRA is either 66, 67 or 66 and a certain number of months – that depends on your year of birth.
In the meantime, you are allowed to start collecting social security at age 62. However, for each month you apply for benefits prior to your FRA, they will be reduced on a permanent basis. If you decide to sign up for benefits early, you could inevitably end up leaving your spouse with a lower monthly survivor benefit for many years.
On the other hand, if you are willing and able to delay your social security application beyond OFF, you can get a higher monthly benefit. For every year you take a break until the age of 70, your benefits grow by 8%. And once you increase your own benefit, you will set your spouse to also receive a higher survivor benefit.
Talk your options through
When there is a big age difference between you and a younger spouse, it can really put pressure from a social security standpoint. Therefore, it is a good idea to talk your options through together and come up with an archiving strategy that works for both of you.
It may be that your spouse does not want you to postpone your filing for too long because they would rather have you get more of these benefits while you are alive. If you claim benefits early, you may succeed in checking out some great trips out of your bucket list, while if you wait too long, your health may drop to the point that these trips are not feasible or desirable. Or you may have saved enough money so that it is not so important to get hold of a larger survivor from social security.
Either way, these are decisions you want to talk through. And ideally, you should have these conversations well in advance of retirement. That way, both you and your spouse will know what to expect, and the decision to claim social security may not end up being that difficult.