Social Security benefits are earned benefits. They're also a crucial source of income for most older Americans who may have too little invested for their future or risk running short of funds while still in retirement.
Unfortunately, many people don't fully understand all of the benefits they're entitled to -- and could be missing out on some of the income they deserve, as a result. This is especially true for married people or those who have divorced. If they don't know the rules for spousal benefits, they could potentially lose out on as much as $1,672 in monthly retirement income in 2022.
Don't miss out on spousal benefits you may be entitled to
Spousal benefits are available to people who are currently married, as well as to individuals who have divorced after at least a decade of marriage. A divorced spouse can't be remarried in order to claim benefits based on their ex's work history.
Spousal benefits are worth up to 50% of the amount your ex-spouse can collect at full retirement age (FRA). In 2022, the maximum benefit at full retirement age is $3,345.
That means someone who is entitled to spousal benefits could get up to half that amount -- or up to $1,672. This is a hefty amount of financial support. If you haven't worked or earned less than your higher-earning spouse, you need to be aware of your eligibility for these benefits.
How much in spousal benefits could you receive?
While $1,672 is the maximum monthly spousal benefit, chances are good you won't end up with that much money. In order for your spousal benefits to be that high, you'd need to claim them at your own full retirement age. If you start your checks early, the amount you'll get will shrink.
Your spouse would also need to be entitled to the maximum benefit available at full retirement age. Only a very small percentage of people are eligible for that much money. To get it, your spouse would have had to earn an amount equal to or above the "wage base limit" each year for at least 35 years.
The wage base limit is the maximum income subject to Social Security tax and changes annually. In 2022, for example, it will be $147,000. Your spouse would need to have earned the inflation-adjusted equivalent of that amount for 35 or more years. If they earned less, their benefit at FRA -- and thus your spousal benefit -- would be smaller because it's based on average wages.
Still, the spousal benefits you receive could be worth more than your own Social Security checks if you didn't earn much or didn't work enough to become eligible for your own retirement benefits. So make sure you understand when and how you get them.
Eligibility for spousal benefits
If you're currently married, you'll need to wait for your spouse to start their own payments before you can claim your spousal benefits. That rule also applies if you've been divorced for less than two years -- but not if you've been divorced longer.
You also can't double-dip with your own benefits. You can receive either your benefits or spousal benefits, but not both at the same time.
Spousal benefits become available as early as 62, but if you want to get as close as you can to the maximum of $1,672 (or earn that maximum if your spouse's work history allows it), you'll need to wait until your FRA to claim.
Understanding these rules can help you avoid missing out on crucial income that could help support you in your later years.