Home > Finances by Ellen Le October 2012

Finances by Ellen Le October 2012


Flustered By Finances?Ask Ellen


Ellen will consider all legitimate questions and prioritize those of broadest concern. Please be patient if your question is not answered immediately. Email your questions to: WilmingtonChapter@hadassah.org with Ask Ellen as the subject. If Ellen selects your question, it will appear in her “Flustered By Finances?” column in the bulletin and/or on her webpage of the same name on our website.




Some friends of mine have decided to take 50% of their husband’s Social Security when they become eligible instead of their own Social Security disbursement. Please explain how this works, the advantages, etc.



The questioner brings up a very popular Social Security strategy. When a spouse reaches full retirement age, he or she has the opportunity to receive the higher of his or her own full benefit or 50% of his or her spouse’s benefit (called the “spousal benefit.”) For example, Stu and Phyllis are both 66 years old (people born between 1943 and 1954 reach full retirement age at age 66) and Phyllis earned considerably less than Stu. Assume that Phyllis’ benefit is $800 per month and Stu’s is $2,000 per month. Instead of taking her own $800 benefit, Phyllis can choose to take 50% of Stu’s $2,000 and receive $1,000 each month. In fact, the Social Security Administration will automatically calculate the higher number and offer it to you. Obviously, this strategy makes sense only if 50% of your spouse's benefit is greater than your total benefit. 

Also, Phyllis can choose to take a spousal benefit before she reaches her full retirement age of 66, as early as age 62 when she becomes eligible for a benefit. She would receive a reduced amount, something less than 50% of Stu’s full retirement benefit amount. The amount of Phyllis’ benefit is reduced by a percentage based on the number of months before she reaches full retirement age.

Note that while Phyllis is taking the spousal benefit, her own benefit is delayed and growing each year. If after several years her own benefit exceeds the spousal benefit, she can switch back to her own record.
Some important points:

  1. A spouse never had to work to receive a spousal benefit, but must be at least 62 to receive it.
  2. The principal spouse has to be taking a benefit before a spouse can take the spousal benefit unless they “file and suspend” their benefit.
  3. There is no reason to wait beyond full retirement age to take a spousal benefit because the amount won’t increase.

Though the details are beyond the scope of this article, there are two more complex spousal strategies that make sense for many couples. They are strategies to bring cash into the household while delaying and growing the higher earner’s benefit. The “file and suspend” strategy allows the higher earning spouse, at full retirement age, to delay receiving a benefit (earning an additional 8%/year till age 70) while the lower earning spouse collects the 50% spousal benefit. The “restricted application” strategy is similar to “file and suspend,” but in this case, the higher earning spouse collects the spousal benefit and delays his or her higher benefit in order to maximize the benefit.

Another very important point is that you should think of your retirement benefits and survivor benefits as two separate pots of money. The goal should be for the primary income earner to secure the largest retirement benefit possible because it will translate into a maximum benefit for a surviving spouse. Every family has their own unique financial situation. The decision of when and how to take social security benefits depends on the size of your investment assets, if you are still working, current income needs, ages, and life expectancies.

Two websites with good general information are:







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