Social Security retirement benefits aren't just for retired workers. In many cases -- almost 2.4 million, as of the latest data -- spouses of retired workers get a larger benefit than they otherwise would. However, spousal benefits aren't well understood by many Americans. Here's what spousal benefits are, and what they could mean to your retirement.

Senior couple at a table reviewing paperwork.

Image source: Getty Images.

What are Social Security spousal benefits?

Essentially, spousal benefits are designed to provide retirement income to spouses who either didn't work, or earned significantly less than their spouses over their working lifetime. Stay-at-home parents are one good example of spousal benefit recipients, as many people who stayed home to raise children for years don't have as much in earnings over their lifetimes, and therefore wouldn't be entitled to much of a Social Security benefit based on their own work record.

The simple way to describe Social Security spousal benefits is that if your Social Security retirement benefit isn't at least half of your spouse's benefit, a spousal benefit will be given to make up the difference. For example, if your spouse is entitled to a monthly benefit of $1,500 at their full retirement age, and your work record only entitles you to $500 per month, an additional $250 will be added to your benefit to make it half of your spouse's amount.

Eligibility and other rules

When determining your eligibility for a spousal benefit, your own retirement benefit is calculated first. This is done by looking at all your lifetime earnings adjusting each year for inflation, and then considering your 35 highest-earning years. These are then averaged to determine your lifetime monthly average earnings, and applied to a formula to calculate your Social Security retirement benefit at full retirement age, also known as your primary insurance amount, or PIA.

Next, the Social Security Administration determines your spousal benefit by calculating your spouse's benefit at full retirement age, and then dividing by two. Your total monthly benefit amount is the greater of your own benefit or your spousal benefit.

There are also a couple of rules regarding spousal benefits which have only been in effect for a short time that are worth mentioning:

  • To collect a spousal benefit, your spouse must be collecting his or her own Social Security retirement benefit.
  • You must file for your own retirement benefit and your spousal benefit simultaneously. You can't choose one, and delay the other, as you previously could.

The effects of early or late retirement

Just like with standard Social Security retirement benefits, you can collect a spousal benefit as early as age 62, as long as your spouse is collecting their own retirement benefit. However, also like standard Social Security retirement benefits, your spousal benefit can be permanently reduced if you claim it before your full retirement age.

It's important to mention that the reduction percentages for early spousal benefits are slightly different than those for standard retirement benefits. And, there is no increase for delaying your spousal benefit beyond your full retirement age, unlike standard retirement benefits, which can continue to grow until you reach age 70.


Social Security Retirement Benefits

Spousal Benefits

Reduction per month before full retirement age (up to 36 months)

5/9 of 1% (0.56%)

25/36 of 1% (0.69%)

Reduction per month before full retirement age (beyond 36 months)

5/12 of 1% (0.42%)

5/12 of 1% (0.42%)

Monthly increase for delayed retirement, up to age 70

2/3 of 1% (0.67%)


Data source: Social Security Administration.

What this means is that if your full retirement age is 67, your spousal benefit can be permanently reduced by 35% if you claim it at age 62. Be sure that you take this into account when deciding the best age to claim your benefit.

How to use spousal benefits in your retirement planning

Up until about a year ago, there were some pretty lucrative loopholes in the spousal benefit program, such as the "file-and-suspend" strategy. Unfortunately for new retirees, Congress has done away with these.

However, spousal benefits should still be taken into consideration when planning your own retirement strategy.

For example, let's say you and your spouse are both 66 and are still working, so you are considering letting your Social Security benefit grow for another few years. However, if your spouse anticipates collecting a spousal benefit on your work record, you might be better off filing at your full retirement age instead of waiting.

As I mentioned earlier, there are no delayed retirement credits for spousal benefits. And one of the requirements for collecting a spousal benefit is that the primary worker must be collecting his or her own retirement benefit. Therefore, it rarely makes financial sense to delay Social Security beyond your spouse's retirement age, if they expect a spousal benefit.

This is just one example of how a spousal benefit can affect your overall retirement strategy. The bottom line is that Social Security spousal benefits will affect the retirement income of millions of American workers, so it's important to know what they are and how they work.