In 2024, Social Security experienced a significant shift, and for many retirees, it marks the end of a long-standing rule related to spousal benefits.
Those who reached 70 on January 1, 2024, are now affected by this rule change, and understanding its implications is crucial for anyone planning to maximize their Social Security benefits.
If you’re married or nearing retirement age, this article will help break down the details and what actions you should consider making the most of your Social Security income.
What Changed in 2024?
Previously, Social Security allowed beneficiaries to switch between their own benefits and spousal benefits to maximize their overall payment. This was especially advantageous for married couples, who could delay their own benefits and claim spousal benefits in the meantime. Once they reached the age of 70, they would switch back to their benefits, which would have grown due to delayed retirement credits.
However, the Bipartisan Budget Act of 2015 brought this option to an end for those born after January 1, 1954. Now, as of 2024, this rule is officially no longer applicable. Here’s what you need to know about the changes:
Key Considerations for Your Social Security Benefits:
| Action Step | Benefit to You |
|---|---|
| Review Estimated Benefits | It’s important to check how much you will receive and plan the right time to claim Social Security. |
| Avoid Early Claims | Claiming before your full retirement age could permanently reduce your benefits. |
| Consider Delaying, but Not Always Until 70 | Waiting can increase benefits, but spousal benefits are capped, even if delayed beyond full retirement age. |
1. Review Your Estimated Benefits
The first thing you should do, if you haven’t already, is create an online account with the Social Security Administration. This account allows you to view your estimated benefits at different claiming ages. For married couples, it’s essential to coordinate when each person will claim benefits, as the lower earner may be entitled to either their benefit or 50% of the higher earner’s benefit.
According to experts like Matthew Allen, CEO of Social Security Advisors, planning ahead is key. Couples should have an open discussion about the best time for each partner to start claiming, especially considering the removal of the spousal benefit maximization strategy.
2. Avoid Early Claims if Possible
Although it’s tempting to claim Social Security as early as age 62, this can result in a permanent reduction of up to 30% of your benefits. The full retirement age for most workers is now 67, and delaying benefits until then can significantly increase your monthly payout.
For example, if your full retirement age benefit is $2,000, claiming at 62 could reduce it to $1,400 per month – a loss you can never recover.
This reduction also affects spousal benefits. If your spouse claims early, their spousal benefits are tied to the primary beneficiary’s reduced amount, leaving you with lower benefits for life.
Must Read: Big News! 2025 Social Security COLA Increase Date Revealed!
3. Delaying Benefits Until 70 Might Not Always Be Best
Delaying your Social Security benefits until age 70 can be a great way to maximize your own payout. However, spousal benefits are an exception to this rule. Spouses are only entitled to 50% of the primary beneficiary’s full retirement age benefit, regardless of whether the primary beneficiary waits until 70 to claim.
This means that even if your spouse delays their benefits, your spousal benefit will not increase beyond 50% of their full retirement age amount.
For example, if your spouse’s full retirement age benefit is $2,000, your spousal benefit will be capped at $1,000, even if they delay their claim until 70. So, delaying benefits until 70 might not be the best option for both partners in a marriage.
Tax-Friendly States for Retirees
For retirees looking to stretch their Social Security income further, certain states offer tax-friendly environments. Here are a few states with no Social Security tax and lower property or income tax rates:
- Delaware: No state or local sales tax, low property taxes, and no Social Security taxes.
- New Hampshire: No sales or state income tax, though property taxes can be high.
- Wyoming: Low property tax, no state income tax, and no tax on Social Security benefits.
Each state’s tax laws can impact your overall retirement income, so it’s wise to consider relocating to maximize your retirement dollars.
Must Read: Missed Your September Social Security Disability Payment? Here’s How to Claim It?
Summary
The 2024 rule change is a significant shift for retirees relying on spousal benefits. If you were born after January 1, 1954, it’s time to reevaluate your Social Security strategy. Speak with a financial advisor or utilize Social Security’s online tools to explore the best options for your financial future.
Ensuring you maximize your benefits will require careful planning, especially in light of these changes. Don’t delay; take action today to secure your financial stability in retirement.
Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.