Maximizing our Social Security Benefits

Although we are still quite a long ways from being eligible for Social Security benefits, I've looking into ways we can maximize our benefits. For our situation, a strategy know as the 62/70 solution appears to be most promising, allowing us to have the proverbial cake and eating it too.

The 62/70 solution is relevant when the the lower paid spouse is younger, by less than eight years, and the older and higher paid spouse is delaying until 70 to receive the maximum Social Security benefits. While the higher paid spouse is waiting, the younger spouse can file for reduced Social Security benefits at 62, which enables the older spouse to collect spousal benefits at full retirement age. (12/13/09 update: Getting spousal benefits isn't likely for the higher paid spouse. I check with Social Security and they said the older spouse would automatically gets the higher of their own or spousal benefits when filing for Social Security payments at full retirement age.) Thus, the couple can collect Social Security payments, while waiting for the higher benefits to take effect at age 70 for the older spouse.

At 70, the older, higher paid spouse can apply for the higher Social Security benefits, and the younger spouse will be eligible spousal benefits at full retirement age. If the spousal benefit is higher than the younger spouse's retirement benefit, the Social Security payment will be increased to the level of the spousal benefit.

The benefit of the 62/70 solution is two fold:

1. The couple can collect some benefits while waiting for the older spouse to reach 70 and maximize the Social Security payment. Otherwise, the couple receives no payments while waiting for age 70.
   
2. When one spouse dies, the surviving spouse will continue to collect the maximum Social Security payment of the higher paid spouse.

My understanding of the 62/70 solution seems almost too good to be true. Therefore, I plan to confirm my understanding with our financial planner, and the Social Security administration before proceeding with this approach as a firm plan.

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This is not financial, retirement or Social Security advice. Please consult a professional advisor.

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