There's a lot more to Social Security than providing income for retired workers, and Social Security spousal benefits are a great example of this.
Social Security spousal benefits are designed to provide additional retirement income to married couples in which one spouse was the sole or primary earner. However, the details of spousal benefits aren't well-understood by many American pre-retirees. With that in mind, here's an overview of Social Security spousal benefits so you'll know what to expect, and what to do in order to maximize yours.
How much are Social Security spousal benefits?
The amount of a Social Security spousal benefit depends on the primary earner's work record. Specifically, a spousal benefit can be as much as half of the higher-earning spouse's Social Security benefit at their full retirement age.
For example, let's say that you are entitled to a Social Security benefit of $1,500 per month at your full retirement age. If your spouse, who was a stay-at-home parent and had little earnings of their own, claims Social Security at their full retirement age, they could be entitled to a monthly spousal benefit of $750. There are a few variables that can affect the amount of a spousal benefit, such as the spouse's Social Security benefit from their own work record (if any) and their age when claiming the benefit, both of which we'll get to shortly.
Additionally, it's important to mention that there is a family maximum that can be paid out, which varies between 150% and 180% of the worker's full retirement benefit. So, if another person, such as a child of the worker, also qualifies for benefits, it could limit the amount of your spousal benefit.
What if you're entitled to a benefit of your own?
One thing to keep in mind is that your own Social Security benefit will always be paid first. In other words, the Social Security Administration will apply the current benefit calculation formula to your own work record in order to determine your Social Security retirement benefit.
If your own Social Security benefit is less than half of your spouse's full retirement benefit, a spousal benefit will kick in to make up the difference. Let's say that two spouses of the same age are entitled to Social Security retirement benefits of $1,500 and $400 per month, respectively. The latter spouse would be entitled to an additional $350 per month in order to make their full retirement benefit equal to half of the primary earner's benefit. They would receive $750 per month, $400 of which comes from their own work record and $350 of which is a spousal benefit.
On the other hand, let's say that two spouses were entitled to benefits of $1,500 and $1,100 on their respective work records. In this case, no spousal benefit would be paid, since the lower-earning spouse's benefit is already greater than half of the higher earner's benefit.
Early or late retirement and spousal benefits
Just like with Social Security retirement benefits, spousal benefits can be reduced if the recipient chooses to claim them before reaching full retirement age. However, the reduction rules are slightly different. Specifically, a spousal benefit can be reduced by:
- 25/36 of 1% (8.33% per year) for each month before normal retirement age, up to 36 months early.
- 5/12 of 1% (5% per year) for each month beyond 36, as early as age 62.
Unlike standard Social Security retirement benefits, however, there is no such thing as delayed retirement credit for spousal benefits. In other words, if your full retirement age is 67, your spousal benefit will not be increased if you choose to wait longer than that age to claim.
Requirements to get a spousal benefit
To qualify for a spousal benefit, there are two basic criteria that need to be met.
First, you need to be at least 62 years of age, the same as with Social Security retirement benefit. Alternatively, you can qualify at any age if you're caring for a child (under 16 or disabled) who is entitled to benefits on your spouse's work record.
Additionally, and this is an important requirement to keep in mind, your spouse must be drawing his or her own retirement benefit before you can claim a spousal benefit on their work record. Even if you're at your full retirement age, if your spouse hasn't applied for their own benefit yet, you cannot claim a spousal benefit until they do.
How to apply
Here's the easy part. You apply for Social Security spousal benefits with the exact same application that is used for standard retirement benefits. This is available online, and the entire application should take about 15 minutes to complete. As I mentioned earlier, your own benefit will be considered first, and then a spousal benefit can be applied if you're entitled to one.
If you prefer, you can also apply by phone or in person at your nearest Social Security Administration office. However, the online application is far more efficient.
Spousal benefits can be a valuable part of your retirement strategy
For couples who are entitled to them, spousal benefits can provide much-needed retirement income. For example, if a retired worker is entitled to a $2,000 monthly benefit on their own work record, but their spouse didn't work, a $1,000 monthly spousal benefit effectively increases their inflation-protected retirement income stream by 50%.
Because it can be such an important part of your retirement income, it's important to know what to expect and how the program works, so you can plan your retirement strategy accordingly.