Today, we are going to be talking about why taking a spousal benefit could actually have a detrimental impact to your lifelong social security income. The easiest way to explain this, I think is actually by way of an example. So, let's imagine we have a husband and wife both are age 62. The husband was the higher wage earner and the lady of the house actually didn't earn enough credits to get a social security benefit based on her own earnings record. However, she is due a spousal benefit at some point. So, one of the rules about spousal benefits is, in order for the lady of the house in this case to take the spousal benefit, her husband must be taking his benefit. So, let's imagine they get together over dinner and decide that they want to start taking some social security income. So, what they decided to do is to both take their benefits at age 62. So now they have two checks coming in. She's receiving her spousal benefit, he's redeemed receiving his reduced benefit; and it's reduced because he took it early at 62, as opposed to waiting. And now they both have two checks coming in. 

Let's also imagine that five years down the road, he passes away. So, what's the basic rule on spousal benefits is if you have two social security checks coming into the household, hers is lower, his is bigger. When one person dies and it doesn't matter who the lower check disappears and the higher one remains in this case, that higher check is actually a reduced age 62 benefit. So that means the survivor benefit for her is going to be a smaller check than if he would not have taken his benefit at age 62 and had instead delayed and earned additional credits and increase his social security benefit.

So, what we can see here is you really have to think through more than just one piece of the pie. You really need to do some contingency planning and “what if” scenarios. 

What if one of us dies early? Will the other one be okay with that reduced single social security check? What if we both live a long time? Well, maybe it would make sense to delay our social security and get a bigger check and get more money from the administration over the lifetime of social security. That's not to say that there aren't times when taking social security at age 62 could make sense. What it means is your situation is unique, you have many variables that are specific to you and you alone and make sure you understand the contingency plans. 

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