This Social Security Mistake Could Impoverish Your Spouse

Perhaps you're nervous that Social Security's coffers will run dry quicker than forecast. Or you're worried that your retirement will be cut short by an unforeseen illness. Maybe you just want to take your cash and run.

So for one of these reasons, you intend to apply for Social Security as soon as you're able.

You could be making a huge mistake.

In fact, taking Social Security benefits early could be a decision that eventually makes life difficult for your spouse.

Here's Why

You see, your spouse can receive a Social Security payment based on his or her own earnings record. But if your earnings were significantly higher over your career, then your spouse is also eligible for a "spousal benefit."

This "spousal benefit" equals 50% of the higher-earning spouse's Social Security benefit at full retirement age (for more specifics on your specific full retirement age, check out the Social Security Administration's website).

However, if the higher-earning spouse passes away, the surviving spouse is then entitled to receive 100% of his or her spouse's benefit in the form of a "survivor benefit." The surviving spouse simply waits until his or her full retirement age to be eligible.

Why Taking Social Security Early Could be a Disastrous Move

As I said, the survivor benefit is based on the amount the higher-earning spouse was receiving when he or she passed away.

Yet this number is not set in stone. If the higher-earning spouse chooses to wait until age 70 to receive his or her Social Security benefit instead of age 62, the monthly payments will be 76% higher, adjusted for inflation. And even if he or she passes away first, the spouse will confidently continue to receive this higher payout.

Which means that the important decision of when to begin receiving benefits not only affects your own quality of life, but also your spouse's when you're no longer around.

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This is why experts advise that couples work together to maximize their Social Security income -- both for enjoying life together and for planning for the unfortunate reality that one spouse will likely outlive the other.

One of the most effective ways to achieve this is for the higher-earning spouse to delay benefits. So keep your spouse in mind as you plan for a wealthy retirement -- together, and when one of you is left on your own.

This article was written by Motley Fool analyst Adam J. Wiederman. Click here to read Adam's free report on the most effective tactics to ensure a wealthy retirement.