When to Take Social Security: Claiming Strategies for Married Couples

Claim at 62 or wait until 70? For married couples the timing can swing six figures over a lifetime. Ryan walks through spousal benefits, survivor benefits, and how couples coordinate. Education, not advice.

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Welcome And What We Cover

SPEAKER_00 0:01

Welcome to the physical physical podcast. Join us to week is we sit down with the founder of Alchemy Wealth Management and author of your physical physical, Ryan Nelson. Tune in to gain valuable insights and practical tips as we simplify complex financial concepts into digestible lessons. From budgeting to retirement planning, this podcast is your go-to resource for mastering financial literacy.

Aaron Hoisington 0:33

Welcome everybody to this week's episode of the Fiscal Physical Podcast. My name is Aaron. I am here with Ryan Nelson, my co-host, good buddy, founder of Alchemy Wealth Management, also a published author, has done Ryan. How many how many triathlons have you done these days? Or Iron Man, sorry.

Ryan Nelson 0:50

How many how many Ironmans have you done? Full distance. I've done two. I'm not sure how many 70.3 Ironmans. Yeah, I don't know. Several. Yeah.

Aaron Hoisington 0:59

Very, very quite, quite active gentleman there for sure. So it fits well because now we're uh sitting in a couple of chairs talking podcasts today. So uh Ryan, what what's good what's good to do, man? How are you?

Ryan Nelson 1:09

Yeah, doing really well. Yeah, not much not too much on the new side. Uh yeah, doing

The Big Question For Couples

Ryan Nelson 1:13

well.

Aaron Hoisington 1:13

Awesome. Well I can't can't fault that by any means there. So uh, you know, these last couple episodes here, we've been uh you know diving into some good things here, and I think we got a really uh uh you know, obviously I'm I'm biased. I think all 138 of these episodes are great, but uh this one specifically I think is uh you know a really important one, you know, one that uh we've kind of covered previously a little bit, but we're gonna talk about uh quote unquote when to take social security. So hot topic as far as like people here like, oh, social security's going away and these kind of different things. We've covered that on on different uh podcasts here, but uh this one's gonna be you know around specifically with like uh with couples. So most people, you know, take for example like my parents. Um my dad's already retired and my mom's about to retire. So, you know, they they talk a little bit about like, oh, when should we take social security? So you know, that's the kind of the question I'd pose for you about when when should a person and a spouse start taking social security? What are the benefits of taking it early, later, all that good stuff here?

Ryan Nelson 2:13

Yeah, I love it. Yeah, so so if we're talking about social security timing, but specifically for spouses, yeah, I think the uh like all good questions, there's the right the answer is it depends. Yeah, right. And so I think there's no like single right answer. But if we're just talking about social security in general, right, so we can claim as early as 62 and we can wait as long as age 70. So there's kind of a lot, there's a lot of options, yeah, right. Any month between age 62 and 70, that's uh that leaves a lot of decision points, right? And so I think for couples, we really want to just make sure that it's a coordinated process. So not necessarily just, hey, we're a couple, we want to get our hands on our money as fast as possible, we're both taking it at age 62, or you know, we believe if we let it sit and grow as long as possible, we'll we'll get more money. So we both want to let it wait until 70. Like it really comes down to creating this coordinated process between the two of them, if that makes sense.

Aaron Hoisington 3:06

No, I that makes makes complete sense there as far as uh you know coordinated that I mean with a lot of things with uh with the marriage, you want to make sure you're on the same page or as close as possible when it comes to that there. But uh how how does being married, I guess, like affect like the math with it? Like uh what actually changes based on when I claim?

Ryan Nelson 3:24

Yeah, so so as far as so so what changes when you based on.

Aaron Hoisington 3:29

Yeah, what actually changes when you claim, yeah.

Ryan Nelson 3:31

So

Claiming Early Versus Waiting Until 70

Ryan Nelson 3:32

basically, yeah, there's a there's what Social Security Administration calls full retirement age, but they will let you take it earlier. So they'll let you take it before you reach reach quote unquote full retirement, and every year you take it before quote unquote full retirement, they just deduct a little bit how much so they penalize you in a way how much they're gonna pay you every month for the rest of your life. But the flip side is true as well. If you wait past your full retirement, every year you delay taking it, it grows by about eight percent. So they'll let you take, you know, a little bit extra every single month for the rest of your life. And so if you take it at age 72, you get deducted about 30% of what you would get if you took it at full secure at full social security age. And if you deal it for every year, you delay taking it, you get about an 8% increase in your social security. And so, and then benefits max out at age 70. So delaying past age 70, there's there's no further benefit. And so, you know, if if you think about for somebody who would get, say, about $2,000 a month at full retirement age, if they delay till age 70, they would start receiving about almost $2,500, a little less than $2,500 a month every month for the rest of your life. So a decent chunk of change. So that is sort of what actually changes with when you claim it. So short answer, when you claim it directly affects how many dollars per month you're gonna receive every month for the rest of your life. But then you had asked, I think, sort of how that math changes like how's it being married?

Aaron Hoisington 4:56

How does that like kind of affect like that uh you know that situation?

Ryan Nelson 4:59

Yeah, yeah, yeah.

Spousal Benefits And The Half Rule

Ryan Nelson 5:00

So what's interesting, and I think, you know, I I think a lot of people are aware of, but some people maybe haven't heard of or aren't aware of, is that a spouse can actually claim up to up to half at their own full age of retirement of their spouses. And so what's interesting is maybe there's a spouse that is like a a stay-at-home mom or a stay-at-home dad. And so they weren't paying into social security for 30 years. And so if you were to go pull up their social security benefits, it's like, hey, they're not gonna receive much in the form of benefit because they didn't contribute for 30 or 40 years while they were, you know, at home taking care of the kids, right? And so they can qualify for half of their spouse's benefit, which is pretty interesting. So if there's one breadwinner earning more money, the spouse that other that social security otherwise would have been on the smaller end can now qualify and receive half of the the higher income earning spouse's social social security. And so what's interesting is yeah, if you're coordinating it with those two checks, right? So so you know it it sometimes can make sense in with spouses particularly, especially when there's a discrepancy with a high income earner and a lower income earner, the oftentimes what we'll see is the low lower income earner can start claiming earlier and the higher income earner can wait. So it all depends on your age and your health and your income needs and how long you expect to live. But it's an interesting dynamic there.

Aaron Hoisington 6:28

Yeah. No, I think that that's that's super interesting that there's a yeah, it becomes like a coordination game kind of piece of it, versus like, hey, we're both, you know, we hit sixty-five, seventy, whatever, it's like, hey, cool, we're both taking at this point, versus like, hey, maybe you wait two more years because I didn't make as much money as maybe in my life or pay in as much to Social Security, kind of figure out what best works best.

Survivor Benefits And The Bigger Check

Aaron Hoisington 6:50

So on that flip side there, all great plans have an idea, you know, and then like what happens if a spouse passes away?

Ryan Nelson 6:56

Yeah, so so the I guess I don't know if cool is the right word here, but the the cool part is the survivor keeps the larger of the two checks. Oh, okay. Yeah. So in this example, let's say we had a stay-at-home dad, didn't contribute to social security as much. Maybe they were claiming just half of their spouses, and so the the wife was the breadwinner, earning a lot of money, had a larger spouse uh social security benefit, and then that wife passes away. In this example, the husband would be able to continue to res receive the spouse's larger benefit, which is kind of interesting. And so, so in this kind of example I was talking about before, the higher income earner that delayed taking their social security, and so we talked about every year you delay, your social security check keeps getting bigger and bigger and bigger and bigger, right? So we had the higher income earner delay taking their check kept getting bigger and bigger and bigger and bigger, and it almost acts as like this almost like insurance policy, right? Where you we know that's going to sort of survive for the last spouse. So no matter what spouse survives the other one, they'll be able to then inherit that larger social security benefit, if that makes sense.

Aaron Hoisington 8:04

Yeah, definitely. No, I mean it it seems like if I'm if I'm understanding it right, that like waiting really does help you the surviving spouse. Obviously, no one's planning for that death at that point, but you get to get kind of this point in life, like that is a conversation to have in kind of regard. So it does kind of help that surviving spouse. Yep.

Ryan Nelson 8:23

Absolutely, yeah. And so that bigger carry that bigger paycheck will carry on for whoever the survivor is, and it can help create like a steady source of income for yeah, whichever party is the surviving party there.

Aaron Hoisington 8:34

Now, now this is always an interesting one here. I guess like you know, those conversations about people that people don't want to talk about death, like this is kind of how it works. But like uh like how do

How To Decide With Real Variables

Aaron Hoisington 8:44

how does a couple actually make that call of like, yeah, cool, when do we take this?

Ryan Nelson 8:48

Yeah, I mean, so social security timing can be there's more variables there and it can be a little bit confusing. So yeah, you want to look at your health and your family's longevity, right? And see, you know, how many, right? You never know, but start to kind of get a realistic view of like, hey, how many year more years do we maybe have on this planet? And then you right, you want to factor in things like your savings rate and if you have any pensions. So if you were a teacher and you have a large guaranteed income through work, you know, we talked about the 4% rule a couple couple weeks ago. So figuring out, hey, based on my assets, maybe how much could I safely be taking from these assets on a recurring basis, right? And so I think there's you know, there's there's a lot of variables here. If you this is one of those things where you really can benefit from working with a professional. And so going in, looking at your specifics and numbers, I will say when it comes to social security timing, I find a lot of clients come in with preconceived notions. Sure. Some want to take it as early as possible. Let's say half the clients want to take it as early as possible, half the clients want to take it as late as possible. And I always try to encourage them to, hey, just have an open mind and let the data dictate when you should take it. And this would be a good example where every client sort of situation is unique. There really, I don't know, is a great rule of thumb for when to take Social Security. This really is where you might benefit from talking with a professional or working closely with the Social Security Administration's office, but making sure you're looking at your specific variables and details and not just basing your decision based off of a blog article you you saw online or something.

Aaron Hoisington 10:18

Yeah, no, I think that that that's super important when it comes to this. Because I mean, even coming into this podcast, like I've I've we've talked about social security before, but you know, if you make it that far, first off, good for you. That's phenomenal that far in life too. But like being able to, you know, now you're like, cool, how do we maximize this to not only benefit yourself, but your spouse and ultimately potentially like your family that is that is associated with that. So, you know, thinking about those different things and considering all factors versus like, hey, you know, I'm 70, I'm 65, I'm gonna take this right now, right? Kind of area of it. So it is you you harped on it too, like really is important to meet with the professional, talk about your options when you when you kind of get around this kind of kind of age, because you know, for some people it might make sense to make it at take it at 62 versus like, hey, like, no, if you can wait two more years, you're gonna get X amount more, and then it's gonna benefit you know your spouse when you get to that kind of piece of it if you happen to pass away at some point in your life. So cool, man. That was that was neat. That was a that was a fun little thing there. So I'll I'll let you uh, you know, I don't know if you have any final thoughts here, I'll let you kind of put a bow on this, if you will.

Ryan Nelson 11:18

Yeah, sure. So yeah, in summary, I don't think there is a best age to take social security, but what you do want to do is coordinate, coordinate with your spouse, right? Make sure that you're taking those two social securities like in conjunction, you're planning in conjunction with each other. And then, you know, oftentimes that results in maybe the lower income earner claiming earlier and the higher income earner claiming a little bit later. And by doing so, by waiting for that higher income earner or the bigger check, it helps protect both parties and and whoever ends up living the longest will can sort of inherit that higher that higher monthly income.

Aaron Hoisington 11:49

Excellent. Well, thank you so much, Ryan. Appreciate the the insight there. Everybody uh go ahead and hang tight with us. We'll be uh right back on the other side of this. Thank you for listening.

SPEAKER_00 11:58

And now to put the personal in personal finance.

What We Learned From Parents

Aaron Hoisington 12:04

All right, thank you so much, Ryan. I appreciate you still being here with us or with me on this uh the personal section here. This one is actually interesting because you know, I I I don't know if you guys notice, I love learning about people. I love learning about like you know, Ryan's childhood and like these his parents and all these different fun things that he has has grown up and how his memories different from differ from like my experiences and all these different things. So we just happen to be able to tie this into our main topic of social security. So, Ryan, I have a question. It is, what did your parents or grandparents teach you about social security or pensions growing up? Did that conversation come up at all in your house?

Ryan Nelson 12:43

Yeah, I don't know that I remember a specific conversation about social security or pensions. I'd say social security definitely like not I I that's something I probably like self-educated on later in life. Pensions, my mom is a school teacher in the Nevada purse system, and so you know, I was always familiar with like the fact that this pension exists and had a little bit of an understanding and knew that you know, at the end of the day, you know, teacher would get X amount of money at the end of their career based on how long they worked and how much money they earned. So I think just over the years I kind of got exposed to what a pension is. And you know, obviously it took, you know, down the road I learned a whole heck of a lot more about what how these divine benefit plans work and stuff. But yeah, I think that you know, I think at the at the end of the day, I think I I was exposed to to some of these concepts and and and others had to sort of self-educate. What about yourself?

Aaron Hoisington 13:37

Yeah, and I was thinking about this question, and I was like, I don't know as though like I've really I really like sat down and like was like my grandpa was like, this is how social security works or anything like that. I don't know as how many people have had that kind of conversation, but you know, for myself, like I kind of learned about it because in a situation we described in the main section of this, like uh my grandpa was the breadwinner of his family. My uh my grandma was the the homemaker, stayed at home. Really, we always made jokes that she never worked, like never, but I mean she did other things, obviously, but like and it just so happened that like my grandpa passed away before they had retired. Um they both uh both takes social security, and he happened to retire. And one of the things that we found out, I mean, it was kind of you know not the best situation, as you mentioned, like not a cool situation when uh happens, but it was that she gets his check then at that point, and and it was quite a bit more than hers. And this was social security at the time, or this was social security. Exactly, yeah, yeah. Social security. So I was like, oh, like that was kind of my first, you know, I guess exposure to like, oh, it's not you're not just locked into that overall. If you have a spouse, like that can that can change, and like starting to think about like, okay, interesting, like that is a nice little security blanket, I suppose, if like you're if you're the other person. My mom is also a school teacher, she's approaching retirement age at this point. So she's talked about her her pension and these different options as well, too. So but growing up, I didn't really know of anything about that. I was like, oh, okay, like, but now I'm I'm definitely more exposed to that information now as we kind of move forward. So curious to see kind of how it all plays out and once she actually retires. But uh, like I said, I don't can't remember a specific conversation. So sitting me down at you know, age 10 and telling me about social security. That's exactly how I feel.

Ryan Nelson 15:20

I don't know that there's ever like a formal conversation or discussion, but you know, you just pick up a little bit here and a little bit there, overhear a conversation there, you know, and so like certainly have had some exposure, but yeah, I don't remember like certainly around like a lecture, if you will, around social security.

Aaron Hoisington 15:35

Yeah, but I'd be curious too. I'd I I'd ask the listeners out there, like, when was your first exposure to Social Security? Like, do you feel like you understand it? I mean, we hopefully we have listeners of all different kinds of ages here. So as you start to get farther along in life, like maybe this is a conversation that you do have with your financial advisor, your CPA, and kind of figuring out these different different ways, or like, you know, maybe at a young age you were always just like, oh, I know exactly what Social Security and pensions are, like in which case, good on you. Like, but I'd be interested to hear the uh the the listeners' points of view on that for sure.

Why Social Security Feels Taboo

Aaron Hoisington 16:06

So yeah.

Ryan Nelson 16:06

And I I think to your point, that's like a you we've talked in the past about like money being this taboo talk it topic to talk about. And so there's a lot of families who you know who don't share with their kids how much they earn, or they're not sharing with their kid like how social security works. And so there's a lot of then you know, these kids turn into adults and they're they don't talk about it with their friends or their families or their their colleagues, and so yeah, you end up just finding yourself in this position where you're like, Yeah, I really don't know how social security works, and also it's not a like seemingly appropriate for me to talk about it with my friends, family, or coworkers. So I think it's it's one of those things where I think most people, if you if you were to pool most people, they'd probably not really know how social security works, but they think that everybody else knows how social security works, so they think they should know how it works. Right, yeah, right. But the reality is, yeah, but the reality is they're in the same boat as everybody else, where yeah, the vast majority of the population doesn't actually know how it works. So, yes, it's an interesting concept.

Aaron Hoisington 17:01

Yeah, that is that is a it is one of those topics that we like we've mentioned before. Like it's like oh, like you know, everyone just kind of sits around like, yeah, of course we all know uh this. Yeah, you know, I do. Yeah, you do it too, right? Yeah I'm I I definitely don't not know. Yeah. But uh awesome, Ryan. We'll appreciate everybody tuning in today. Gentle reminder these uh podcast episodes

Schedule Reminders And How To Reach Us

Aaron Hoisington 17:24

drop every Tuesday morning. Please uh you know set your calendar to that. We love uh haven't seeing everybody who's tuning in. And uh with that, I'll uh leave it up to you here, Ryan. As always, stay the course.

SPEAKER_00 17:36

Thank you for joining us for the Fiscal Physical Podcast. Until next time, happy listening. And as always, stay the course. If you have a question or topic suggestions, please email us at podcast at alchemywealth.com. If you enjoyed today's discussion, subscribe to the podcast to ensure you never miss an episode. And consider leaving us a rating and review on your favorite platform. This helps other listeners like you find the channel. For more resources, you can visit Alchemy Wealth Management's website at www.alchemywealth.com or find your physical physical book on Amazon. We'd be remiss if we didn't mention the personal finances just then. First of all, please don't take anything we say as advised. The presenting content is for informational and entertainment purposes only. It's not an offer or a solicitation, nor should it be construed or relied upon for tax, legal, or investment advice. It doesn't consider your personal financial situation or objectives and may not be suitable for you.