Question: The husband, who is 63 and not employed, just filed for Social Security in order to purchase a downsized home. The wife is 62 and took a buyout in 2013. They have a $546,000 hedged annuity, and $329,000 in a rollover IRA. The husband’s Social Security is $1,874 per month, with expenses of $2,500 per month. Should the wife file for Social Security benefits or should they fill their income gap with withdrawals from the annuity and IRA? How long should the wife wait to file for Social Security?
Answer: They should, if possible, try to maximize their lifetime Social Security benefits. So I would urge the husband to withdraw his retirement benefit by repaying everything he’s received so far.
The strategy for maximizing their lifetime benefits may entail the wife applying for her retirement benefit at 65 in order to let her husband file just for a spousal benefit at full retirement age (66), the wife suspending her retirement benefit at full retirement age and then starting it up again at 70, and having the husband collect his retirement benefit at 70.
The alternative is for the husband to file for his retirement benefit and suspend its collection when his wife reaches full retirement age, then restart his retirement benefit at 70, while she files just for a spousal benefit at her full retirement age and starts her own retirement benefit at 70.
Which scenario is best depends on their earnings records and their maximum ages of life. But, in general, I would have them spend their non-Social Security resources to get over the hump and wait to collect much higher Social Security benefits, albeit at a later date.
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