When claiming Social Security benefits as a retired couple, financial experts advise clarifying each spouse’s benefit amount, health, and estimated life expectancy before deciding whether to maintain a joint or separate checking account.
The Social Security Administration (SSA) dictates that each spouse gets their own benefit based on each person’s earning history. As a result, the higher-earning spouse naturally collects more in benefits than the lower-earning spouse.
“When it comes to Social Security, titling your bank or investment accounts jointly or separately doesn’t affect your actual benefits but the way you manage your money as a couple can influence how smoothly you navigate retirement, especially as you transition into drawing benefits,” Equanimity-Wealth.com certified financial planner (CFP) Michael Rodriguez told NTD.
A common drawdown strategy to maximize Social Security benefits is to claim the lower-earning spouse’s benefits early for household cash flow while delaying the higher earner’s Social Security income because each year, from 67 to 70, the benefit increases by 8 percent until the age of 70.
After 70, the 8 percent increase stops, and delaying the benefit is no longer permitted.
“Delaying can significantly boost income, especially for the higher earner in the couple, which in turn increases the survivor benefit down the line,” Mindful Financial Partners founder and CFP Melissa Murphy Pavone told NTD.
Since 1940, when SSA began paying benefits to retired workers, the longevity of older Americans has intensified.
Falconwealthadvisors.com founder Jake Falcon told NTD that complicating increased longevity is the average retiree's largest expense, which is healthcare.
As a result, Falcon recommends planning ahead with Health Savings Accounts (HSA) or dedicated savings.
“Couples should factor in Medicare premiums, supplemental insurance, and potential long-term care costs,” Falcon added. “Social Security can help cover these, but it’s rarely enough on its own.”
Although joint accounts provide continuity of bill payments and cash access if one spouse becomes incapacitated or passes away, AppriseWealth.com principal Philip H. Weiss notes that survivor benefits may only be deposited in the name of the surviving spouse.
“Survivor benefits must be claimed,” Weiss told NTD. “SSA has rules for paying survivor benefits. The SSA must be notified of someone's death. You must meet the SSA's criteria and comply with its process.”
When the higher earner passes away in a married couple, the surviving spouse becomes eligible for survivor benefits, which are up to 100 percent of the deceased spouse’s benefit, depending on their full retirement age (FRA), according to the SSA.
For this reason, Rodriguez advises that each partner in a marriage have their Social Security benefits deposited into the same joint account.
“It is important to make sure both names are on the account and each spouse sets that account as their deposit destination individually," Rodriguez added. “The SSA doesn’t blink at that."
Maintaining separate checking accounts is only recommended for retiring couples who live with complicated circumstances, according to independent investment adviser Aaron Brask.
"Unless a couple maintains separate finances due to second marriages or mixed families, I see no benefit to having their SS benefits paid into separate checking accounts," Brask told NTD. "Generally, I prefer my clients to have a central bank account."