For many households, Social Security represents a significant source of retirement income. Understanding how spousal and survivor benefits in Social Security work can help couples make more informed decisions. These benefits are designed to provide income not just for individuals, but also for their spouses and surviving partners.
Spousal benefits allow one spouse to receive up to half of the other spouse’s full retirement benefit, depending on age at filing and eligibility rules. This can be particularly helpful if one spouse has little or no earnings history.
For example, if one spouse spent years outside of the workforce to care for family, spousal benefits may provide additional income. Deciding when to claim these benefits often depends on factors such as age, retirement timing, and the higher earner’s benefit amount.
Considering Survivor Benefits
Survivor benefits play an important role in planning for the financial future of a surviving spouse. When one spouse passes away, the surviving spouse may be eligible to receive the higher of the two Social Security benefits.
This consideration often influences decisions about when the higher earner begins Social Security. Delaying benefits can result in a larger payment, which then becomes the survivor benefit if needed. Couples may find it valuable to weigh these options together rather than separately.
Timing and Coordination
The decision of when to start Social Security is complex enough for individuals. When spousal and survivor benefits are added, the coordination becomes even more important. Couples need to think about both the near-term income needs and the long-term implications for a surviving spouse.
Factors such as life expectancy, health outlook, and other income sources can all play a role. A strategy that works for one couple may not be appropriate for another. Reviewing different scenarios can help clarify the impact of each choice.
Tax Considerations
Social Security benefits may be taxable depending on overall income. For couples, spousal and survivor benefits are included in the calculation. Planning withdrawals from retirement accounts alongside Social Security can help manage the tax impact.
Some households explore ways to balance distributions from tax-deferred accounts with Social Security income to reduce the portion of benefits subject to tax. This approach depends on individual circumstances and should be considered in the context of overall retirement planning.
Integrating With Other Retirement Income
Spousal and survivor benefits are only one part of a retirement income strategy. Pension payments, annuities, investment accounts, and other resources all interact with Social Security. Looking at the big picture can help couples align income with expenses across different stages of retirement.
Reviewing and Updating Plans
Because household circumstances and Social Security rules can change, it is valuable to revisit your plan periodically. Marriage, divorce, or the death of a spouse may affect eligibility and benefits. Regular reviews allow you to adjust as needed.
Social Security Planning: Going Forward
Spousal and survivor benefits in Social Security are key elements of retirement planning for couples. By understanding how these benefits work and coordinating them with other income sources, you can build a strategy that reflects both partners’ needs.
At Milford Financial, we work with clients to evaluate Social Security decisions in the context of their broader retirement plans. Contact our team today to schedule a conversation about how these benefits may fit into your household’s strategy.
