Social Security spousal benefits: Maximizing your retirement income

Social Security spousal benefits are designed to provide additional financial support to married couples where one spouse has earned significantly less over their lifetime or has limited work history. The spouse with the lower earnings record can receive up to 50% of their partner's full retirement benefit, depending on when they choose to claim.

To be eligible for spousal benefits, you must meet the following criteria:

• Your spouse must have already filed for their own retirement benefits.
• You must be at least 62 years old or caring for a child who is under 16 or disabled.
• You must have been married for at least one year.

The amount you receive in spousal benefits depends on several factors, including your age when you claim and your spouse's full retirement age benefit. If you claim spousal benefits before reaching your full retirement age (which varies based on your birth year), your benefit amount will be permanently reduced.

It's important to note that if you're eligible for both your own retirement benefit and a spousal benefit, Social Security will pay your own benefit first. If the spousal benefit is higher, you'll receive an additional amount to bring your total benefit up to the spousal benefit level.

The maximum spousal benefit you can receive is 50% of your spouse's full retirement age benefit. This amount is only available if you wait until your own full retirement age to claim spousal benefits. If you claim earlier, your benefit will be reduced.

For example, if your spouse's full retirement age benefit is $2,000 per month, the maximum spousal benefit you could receive is $1,000 per month, assuming you claim at your full retirement age. However, if you claim at age 62 (the earliest possible age), your benefit would be reduced to about 32.5% of your spouse's full retirement age benefit, or $650 per month in this example.

It's crucial to understand that delaying your claim for spousal benefits beyond your full retirement age does not increase the amount you'll receive. Unlike personal retirement benefits, spousal benefits do not earn delayed retirement credits.

Before recent changes in Social Security laws, it was possible to use a strategy called "file and suspend" or "restricted application" to collect spousal benefits while allowing your own retirement benefit to grow. However, these options have been largely eliminated for most people.

For those born on or after January 2, 1954, deemed filing rules apply. This means that when you file for either your retirement or spousal benefit, you are deemed to be filing for both. You'll receive whichever benefit is higher, but you can't choose to receive only one while letting the other grow.

There is one exception to this rule: If you're caring for a child who is under 16 or disabled, you can receive spousal benefits without being deemed to have filed for your own retirement benefits. This allows your own benefit to continue growing until you decide to claim it.

To be eligible for spousal benefits, you generally need to have been married for at least one continuous year before applying. However, there are a few exceptions to this rule:

• If you're the parent of your spouse's child, the one-year marriage requirement doesn't apply.
• If you were already eligible for spousal benefits from a previous marriage, you can receive benefits on your new spouse's record immediately after marriage.

For divorced individuals seeking ex-spousal benefits, the marriage must have lasted at least 10 years, and you must currently be unmarried.

If you get divorced, you may still be eligible for benefits based on your ex-spouse's work record, provided you meet certain criteria:

• Your marriage lasted at least 10 years.
• You are currently unmarried.
• You are at least 62 years old.
• Your ex-spouse is entitled to Social Security retirement or disability benefits.
• The benefit you would receive based on your own work record is less than what you would receive based on your ex-spouse's record.

If you meet these requirements, you can receive up to 50% of your ex-spouse's full retirement age benefit, just as if you were still married. Importantly, your ex-spouse doesn't need to have filed for their own benefits for you to claim, as long as they are eligible and you've been divorced for at least two years.

It's worth noting that claiming benefits on your ex-spouse's record doesn't affect their benefits or the benefits of their current spouse if they've remarried.

When it comes to maximizing your Social Security spousal benefits, there are several strategies to consider based on your unique circumstances:

• Delay claiming until full retirement age. If possible, wait until you reach your full retirement age to claim spousal benefits. This ensures you receive the maximum amount of 50% of your spouse's full retirement age benefit.
• Coordinate with your spouse's claiming strategy. If your spouse has not yet claimed their own benefits, consider the impact of their claiming age on your spousal benefit. Remember, your spousal benefit is based on their full retirement age benefit, not their actual claimed amount.
• Compare your own benefit to the spousal benefit. If you've worked and earned your own Social Security credits, calculate whether your own retirement benefit would be higher than the spousal benefit. In some cases, it may be advantageous to claim your own benefit instead.
• Consider your health and life expectancy. While delaying benefits generally results in higher monthly payments, it's important to consider your health and life expectancy. If you have reason to believe you may not live well into your 80s or beyond, claiming earlier might result in more lifetime benefits.
• Evaluate the impact on survivor benefits. If you're the lower-earning spouse, consider how your claiming decision might affect potential survivor benefits. In some cases, it may be beneficial for the higher-earning spouse to delay claiming to increase the survivor benefit.

Here are two scenarios to illustrate different spousal benefit strategies:

Scenario 1

John and Mary are both 62. John's full retirement age benefit is $2,400, while Mary has limited work history.

If Mary claims spousal benefits at 62, she'll receive about $792 per month (33% of John's full retirement age benefit).

If Mary waits until her full retirement age of 67, she'll receive $1,200 per month (50% of John's full retirement age benefit).

By waiting five years, Mary increases her monthly benefit by $408, which could be significant over a long retirement.

Scenario 2

Tom and Sarah are both 65. Tom's full retirement age benefit is $2,000, and Sarah's is $800.

If Sarah claims her own benefit at 65, she'll receive about $755 per month.

If she claims spousal benefits instead, she'll receive about $950 per month (47.5% of Tom's full retirement age benefit, reduced for claiming before her full retirement age of 66).

In this case, claiming spousal benefits provides Sarah with a higher monthly payment.

If you're receiving spousal benefits and are under full retirement age, your benefits may be reduced if you earn income from work above certain thresholds. In 2024, the annual earnings limit is $22,320. If you earn more than this amount, $1 in benefits will be deducted for every $2 you earn above the limit.

In the year you reach full retirement age, the earnings limit increases to $59,520 (for 2024), and the reduction is $1 for every $3 earned above the limit. Once you reach full retirement age, there is no earnings limit, and your benefits will not be reduced regardless of how much you earn.

It's important to note that these reductions are not permanent. Once you reach full retirement age, your benefit will be recalculated to give you credit for the months in which your benefits were reduced or withheld due to excess earnings.

If your spouse has passed away, you may be eligible for survivor benefits rather than spousal benefits. Survivor benefits can be up to 100% of the deceased spouse's benefit amount, depending on your age when you claim and other factors.

To be eligible for survivor benefits, you must meet the following criteria:

• You were married to the deceased for at least nine months before their death (with some exceptions).
• You are at least 60 years old (50 if disabled).
• You have not remarried before age 60 (or age 50 if disabled).

If you are caring for the deceased spouse's child who is under 16 or disabled, you may be eligible for survivor benefits at any age.

It's worth noting that survivor benefits have different rules than spousal benefits. For example, you can switch between survivor benefits and your own retirement benefits if it's advantageous to do so. This flexibility can be a valuable tool in maximizing your lifetime Social Security income.

Understanding Social Security spousal benefits is crucial for maximizing your retirement income. By considering factors such as your age, work history, and marital status, you can develop a claiming strategy that best suits your financial needs. Remember to coordinate your claiming decision with your spouse and consider how it might affect other aspects of your retirement planning, such as taxes and health care costs.

While the rules surrounding spousal benefits have become more restrictive in recent years, they still offer valuable financial support for many married and divorced individuals. By staying informed about the latest Social Security regulations and seeking professional advice when needed, you can make the most of your spousal benefits and secure a more comfortable retirement.