Social Security represents a critical component of retirement income for many American couples, especially where one spouse has spent less time in paid employment or has a limited earnings record. Spousal benefits allow the lower-earning partner to receive a benefit amount based on the higher-earning spouse's record. As of January, more than two million individuals were receiving social security spousal benefits, which can be up to half of the primary earner's full retirement age benefit, replacing their own in many cases.
Yet, understanding the eligibility requirements, timing, and rules associated with spousal benefits is essential for optimal retirement planning among couples. Below, we detail five critical rules that every retired couple considering Social Security spousal benefits should know before making decisions.
1. Active Benefits of Spouse Are Mandatory for Eligibility
One fundamental requisite for claiming spousal Social Security benefits is that the spouse whose work record the benefits are based upon must already be receiving their Social Security retirement benefits. This stipulation presents a challenge when there is a significant age difference between spouses or if one spouse chooses to delay benefits well past their full retirement age.
This rule also means that if the primary benefit recipient voluntarily suspends their benefits, the spouse will lose eligibility for spousal benefits. In such cases, the spouse must then rely on any personal retirement benefit available through their own earnings record; if no personal benefit applies, then no payment will be made.
Furthermore, if the spouse is already collecting benefits when the other applies, the applicant must file for spousal benefits concurrently with their personal benefits. Collecting one type of benefit while delaying the other is not permitted. The Social Security Administration will automatically pay whichever benefit amount is higher at the time of claim.
2. Divorcees' Eligibility Without Active Benefits
While married couples require the spouse to be actively collecting Social Security benefits to qualify for spousal benefits, this condition does not apply to divorcees. Divorced individuals may claim spousal benefits based on their ex-spouse's earnings record regardless of whether their ex is drawing Social Security benefits.
Importantly, the Social Security Administration maintains confidentiality and does not notify the ex-spouse when benefits are being claimed on their record. To qualify under this provision, one must have been married to the ex-spouse for a minimum of ten years and have been divorced for at least two years. Additionally, eligibility ends if the claimant remarries.
3. Starting Personal Benefits Early with the Option to Switch to Spousal Benefits
If spousal benefits are unavailable because the spouse is not yet collecting Social Security, individuals still retain the option to claim benefits based on their own earnings record at any time. By doing so, they ensure some level of income rather than waiting indefinitely.
However, it is critical to submit an application for spousal benefits once the spouse begins receiving benefits. The Social Security Administration calculates the spousal benefit using the age at which the individual originally filed for benefits, emphasizing the importance of timing. Delays in applying for spousal benefits after the spouse starts can impact the monthly amount received.
4. Early Claiming Has a Larger Impact on Spousal Benefits
Those planning to claim spousal benefits must consider that filing for benefits prior to full retirement age reduces the spousal benefit by a larger percentage than it does for personal retirement benefits. This means early claiming results in steeper cuts and lower monthly payments when relying on spousal benefits versus personal benefits.
To illustrate, individuals with a full retirement age of 67 see a 35% reduction in spousal benefits if claiming at age 62, compared to a 30% reduction in personal benefits. This reduced payment gradually improves with delayed claiming until full retirement age, at which point no reduction applies.
| Claiming Age | Spousal Benefit Reduction | Personal Benefit Reduction |
|---|---|---|
| 62 | 35% | 30% |
| 63 | 30% | 25% |
| 64 | 25% | 20% |
| 65 | 16.67% | 13.33% |
| 66 | 8.33% | 6.67% |
| 67 | 0% | 0% |
These percentages indicate the reduction in benefits relative to full retirement age payments, adjusted monthly depending on the exact date benefits are claimed.
5. Delayed Retirement Credits Do Not Apply to Spousal Benefits
When Social Security beneficiaries claim retirement benefits based on their own work history, delaying benefit receipt beyond full retirement age up to age 70 yields increased monthly payments in the form of delayed retirement credits. This strategy can significantly enhance lifetime income.
However, for those collecting spousal benefits, such delayed credits do not accrue. Therefore, waiting beyond full retirement age to claim spousal benefits provides no additional benefit credit. Generally, this suggests that individuals depending on spousal benefits should file for Social Security no later than reaching their full retirement age.
Even individuals planning to claim primarily spousal benefits may benefit from applying for their personal benefits earlier, collecting a smaller amount from their own record while awaiting eligibility for the higher spousal benefit once the spouse claims their benefits.
Understanding these five governing rules provides couples with a foundation for making informed decisions regarding Social Security spousal benefits. Given the complexities involved, aligning the timing of claims and awareness of eligibility criteria is crucial to optimizing retirement income.